How much does a transfer cost? Well a lot more than just the headline figure....
There have been a lot of questions about how a move for former Huddersfield Town player Jordan Rhodes could break down as he looks to be on his way out of Middlesbrough before the Transfer Window shuts tomorrow evening at 11pm.
With wages, bonuses, tax and the agent's fees all to consider, the Examiner has done some back-of-a-beer-mat calculations to try to gain a true extent of how much a transfer ACTUALLY costs.
Starting Point - The Transfer Fee
Let’s take £10m as the starting point of an hypothetical transfer just to make the maths easy.
Start by adding 20% standard rate VAT payable on all domestic transfers (but not on deals between EU countries which may explain why so much spending goes in that direction).
And also why so many clubs end up getting winding up orders because of debts to HMRC.
And then you have to add the Football League transfer levy of 5% .
So you are already up to £12.5m before the ink is dry.
Then there is the signing on fee. If a player doesn’t ask for a transfer then he is entitled to a slice of the action, which is usually around the 10% mark .
So that is up to £13.5m before a ball is kicked.
Then there are the possible clauses and bonuses that are built in.
In this case let’s assume there is a promotion bonus of £1m and other performance triggered payments, top flight survival say, of up to another £1m .
So that is £15.5m before you even consider wages.
Ah yes wages...
The usual formula is that whatever the fee is, project that again over the life of the contract.
So a £1m player could expect £1m over four years, or £250,000 a year, or £5,000 a week. Give or take.
A £4m player would expect £4m over four years, or £1m a year, or £20,000 a week. Give or take.
And yes, and £8m player you can double that again to £2m a year or £40,000 a week, give or take.
If big players come in on free transfers they start talks from a notional value and expect the standard wages for that level and then a split the difference dividend out of the money saved.
So a free agent who is probably “worth” £4m would probably expect the £4m in wages plus maybe another £1m from the notional saving. And so on.
So let’s assume our £10m player is on £50,000 a week. Over four years... that is £8.32m .
And, it gets worse: incredibly football clubs are actually business and players actual employees.
So clubs have to pay 13% national insurance contributions on that wage packet. That is a whopping £1,069,900 on top of the basic cost.
So where are we at? A wage commitment of £9,389,900 over four years . Give or take.
Add that to the £15.5m basic cost of the transfer before a ball was kicked and we have a total of £24, 889,900 . Give or take.
Right, so far so eye-wateringly stupid for a man who may or may not kick a ball into a net for a Championship club.
Then you have to add the extras. What extras? All of them.
A player with that price-tag and a pushy agent will be angling for every single extra going.
Appearance bonus? Goal bonus? Win bonus? Bonuses tied to where in the table Boro finish next year? Automatic annual pay-increases? Top wage parity with anyone new who comes in? Anyone who plays Championship Manager will know how sensitive agents are to these boxes being ticked.
It wouldn’t be unusual for an agent to ask for £2,000 plus per game . At 40 games a season that is £80,000. Times four. That’s £320,000.
Goal bonus? Maybe £2,000 a shot? At 15 goals a season. That another £30, 000. Times four. Or £120,000
So the package now is up to up £25,329,900.
He will want his cut. After all this is a very complex big money deal and it is not easy juggling all these factors.
Agents will commonly ask for a big whack up front while clubs prefer is spread out over the life of the deal so as to dissuade him from moving a player on.
However you slice it, an agent would probably would probably ask for £1m on a £10m deal . And also take a percentage of the players income. Win/win.
So we are up to £26,329,000.
And then there are other things: the player may get a loyalty bonus, again spread out of the life of the deal as an incentive to stay the course.
If he is moving from abroad he may ask for moving costs to bring his family over. Or school fees. Or regular flights home. Club class.
And a sponsored car. And free boots and kit. Although at some clubs he may need to pay for lunch. But it’s not a deal breaker.
So you can see how the costs of a big money deal can soon stack up. It is all very well demanding clubs “show ambition” and spend big but like an iceberg, most of the weight is below the surface.
Transfer deadline day