FIFA Has Big Plans for the Transfer Market

So Pat actually brought this to my attention the other day; FIFA has released a report that details plans to overhaul the rules, regulations, and practices around the transfer market.  It’s in the extreme early stages, but if it goes further, it could potentially change the entire scope of the transfer world.

It is part of a greater initiative that FIFA President Gianni Infantino believes should occur to more clearly define regulatory measures to make the game cleaner at every level, from capping loanees, to regulating transfer fees.

“After 15 years it is time to seriously revise it and bring in maybe a little bit more transparency and a little bit more clarity in terms of the rules,” said Infantino recently.

At the very highest level, FIFA is basically taking a look at the way money is transferred right now in the world, and proposing ways that it can be smoother, less shady, and more efficient to everyone.

There’s a lot of things to talk about here, but I’ll focus mainly on their proposal for clubs requiring disclosure of transfer fees, a cap to the number of players out on loan, and restrictions on fees in general.

Transfer Fee Disclosures

In case you didn’t know, many clubs, particularly in England, will not disclose player transfer fees to the public. For the longest time I never understood why a team wouldn’t release the agreed transfer fee to the public.

In general, though, it comes down to good PR. Actually, I guess it comes down to not bad PR. The club wants to ensure that they’re perceived as a club that only seeks players for the best value in the market – meaning that they’re not wasting money. But the perennial issue with this, is a lack of transparency from pundits and fans toward the club.

In the 2013 summer transfer market, only five of the 115 permanent transfers that were made were made public. That means the other 108 transfers that occured (not including free transfers) were undisclosed. That’s a high amount of unknown money being thrown around.

You can see the actual breakdown of transfers whose fees were disclosed to the public vs. not-disclosed over the years, from what sources were able to gather (Source: FIFA):

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A perfect example was the transfer of Marouane Fellaini from Everton to Manchester United:

“Having passed up the opportunity to sign Fellaini for his £23.5m buyout clause, United were forced to fork out £27.5m to persuade Everton to sell just a month later, making a mockery of the £28m joint bid for Fellaini and Leighton Baines, only two weeks ago.”

“How does United’s executive vice-chairman Ed Woodward sweep this one under the carpet? “An undisclosed fee”, read the club’s official statement. Except Everton, needing to explain the sale of a star player to their fans and presumably delighted about the extra £4m, could not resist letting the fee slip, leaving United red-faced.”

Why does this matter?

It’s like seeing the “back to school” deal on a Macbook Pro in the Apple store, where you buy a laptop and get free Beats headphones for say, $1,200. That’s a decent deal. Now imagine for argument’s sake, you have 100 million people watching you make this purchase.

But, instead of grabbing this deal, you wait a week. The “back to school deal” is now over, and the Macbook Pro is now $1,800 without the beats headphones. And then, you STILL buy the Macbook pro for an inflated price!

Your 100 million fans wouldn’t be too happy about waiting and wasting your money like that.

In a nutshell, that’s why we see undisclosed fees in England. It eliminates transparency, and it saves-face for the movers and shakers involved in buying a new player that might not be the best use of their money.

It also is just a matter of hiding things from fans that they think they might have a right to know. I wouldn’t want to support a club that’s making shady deals that, as a fan, would have liked to see used in a better way.

The new FIFA report that was released, is aiming to eliminate the hiding of those fees. While this is putting the question to rest, in some ways, it makes me wonder: Do fans have the right to actually know how much a team is spending on players? 

I think the divide can exist on that one, though I do think that a right isn’t the same as should in this case. That’s another topic of discussion, obviously.

Inflation and Agents

On top of this, there is a call to put a limit on the amount of money that clubs can pay for a player. It’s akin to a salary cap, but it’s malleable. They’re working on an algorithm that would be used on a player-by-player basis, to ensure people don’t overpay or underpay for a player.

Following Neymar’s move to PSG last summer, there were a lot of calls for Financial Fair Play (FFP) to step-in and stop the move. However, there were enough pieces of the puzzle to fit into his former value to Barcelona, and his current value to Paris St. Germain, that the roughly $500 million transfer (when all said and done) could go through.

But while big transfers mean big money moving around, it also comes with a few caveats that have so far been unaddressed.

From the NY Times: “Central to the changes would be the creation of the clearinghouse, which would be administered by a third-party organization that would in turn hire a commercial bank to handle payments. Among the benefits of such a structure, the report argues, would be greater transparency in a market that has more than doubled in size just since 2011.”

Let me simplify this for those who might not know too much about soccer and transfers. Basically, in the past ~5 years, there have been new world-record fees topping one another. The world record fee went from, let’s say ~$90 million, to close to ~$400 million (including buyouts and everything) in that relative span. Again I’m very generally ballparking numbers.  

FIFA is starting to realize that that’s probably not a good thing, and that right now the regulations in place to stop teams paying whatever they want, aren’t really stopping them. What I’ll get to in a second also, is that agents can take advantage of these rising prices and take higher commissions from players being traded, and make a ton of money without anyone really noticing – and it’s currently not illegal.

Inflation is obviously a big concern, with the entire transfer market DOUBLING in size in 7 years. That’s insane.

Part of the proposal would cap an agents’ commission from a player’s transfer. Right now, there’s speculation that it could be capped at 5% of the transfer fee, or wages. Right now, there are some managers taking as much as 40%.

“In 2017, almost $500 million was paid in fees to agents, a 105 percent increase from 2013. The focus on financial rewards has ‘allowed a small group of agents to wield influence on players and clubs,’” FIFA’s task force said.

That is a crazy amount of money being thrown around without accountability. Some lower-level agents will pocket huge percentages of player transfers just for their own benefit, without care to the player. This damages the game, in FIFA’s opinion.

Infantino plans to implement a system that will limit the amount of money agents are able to make on commission. Right now, obviously, everything is just a proposal, but there are talks that exams would be required of agents before they broker deals, to ensure they’re mutually beneficial.  

This would stop agents like Mino Raiola from pocketing $50 million from transfers like Paul Pogba. Limiting crazy transfer fees, and capping the percentage of agent commission might help stabilize the market that world soccer has developed, in FIFA’s eyes.

The Loan Cap

Last but not least, they would like to put restrictions on loaning players. For big clubs like Chelsea and Juventus, who are known for buying young talent and loaning them out often, this might have a big impact.

Right now, Chelsea has 40 players out on loan to other clubs, Juventus with 26. That’s a ton of players to keep under contract, but not play for your team.

The idea behind this, is that a club will purchase a young, promising talent, and loan the player out to develop. This gives the club the knowledge that they have that talent locked up, meaning a competitor doesn’t have him or her.

It gives the player a chance for growth abroad, while remaining under contract with a huge club at a young age. This gives promise to the player, as well as give proper growth through such a large club. The idea is bigger club = better training.

Fifa wants to limit the number of players one club can lend each season to either “six or eight,” according to Daily Nation, and a ton of other sources.

“The aim would be to ‘guarantee the sports equality between clubs’ and to stop clubs, particularly in England and Italy, signing large numbers of players and loaning them out immediately.”

For many looking into those systems, there is a perception that this isn’t fair to other clubs who would otherwise use these talents. It’s like saying, “you need to share.”

Put differently, it’d be like bringing a box with all your toys to a friend’s house to play, and not sharing. It makes no sense to bring all of my toys over, because there’s no way I could play with every single one of them at once.

But it also isn’t fair to others for me to bring an entire box of toys and then not let others play. That’s A.) Not fair and not cool and B.) Makes our playdate less fun.

By the same token, FIFA believes that this ruins the league, to a degree.

A note: this doesn’t include players who are under the age of 21 being put out on loan. There’s no limit on youth players being put out for loan.

This applies only for players who are over that age limit. Loan spells were meant for player development into maturity. After a certain point that no longer applies, and begins to contribute to that “hoarding” mentality.

To give you an idea, there’s at least eight Chelsea players out on loan right now over the age of 21, who Chelsea would either have to keep or sell. Eight doesn’t seem like a lot to put back into other teams, but dozens of teams who’d have to put those players back into other team lineups could change the scope of the league.

FIFA’s next commission meeting is scheduled for London on September 24 and could lead to recommendations for the Fifa Council meeting in Kigali, Rwanda, in October 25-26. Plans wouldn’t go to a vote for a while, and changes might not happen for a while even still.

But changes such as this would really change the state of the transfer market, and would force some big changes from big clubs. More to come, but give us your thoughts and let us know your opinion! Podcast topic to definitely come on this.  

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