Football is probably the only market in the world where humans are traded on this magnitude. As the English Premier League exceeds more than £1 billion this transfer window, and with all the money trading hands, we look at what actually goes into these deals:
What does a transfer actually cost?
When you consider every aspect that is included in a football transfer; the wages, the bonuses and those controversial agent fees, it becomes a lot more than just a headline figure.
The starting point
The transfer is the first port of call. If we use the world record signing of Manchester United midfielder Paul Pogba from Juventus for £90 million as an example, you will see why this transfer took all summer to complete.
Luckily for Manchester United, Britain is still part of the EU (despite Brexit). If we were not part of the EU, then they would have to add another 20% standard rate VAT on top of all domestic transfers. However, there is still a Football League transfer levy of 5%. Which equates to about £4.5 million.
The Signing On Fee
Next, comes the signing on fee, and if the player doesn’t request to move to the club himself, then they will usually claim 10% of the transfer fee. That is a cool £9 million for Pogba.
Usually, with a contract of this scale, it will be packed with clauses and bonuses. For a box to box midfielder like Pogba, the bonuses in his contract may include a couple of thousand pounds for each assist or clean sheet. For winning the league with Manchester United he is likely to earn a few more million
With these bonuses and signing-on fees, Pogba would have earned over £10 million before he had even kicked a ball for Manchester United.
What about the wages?
What usually happens with wages is:
Whatever the original transfer fee is, you then project that once again over the course of the contract, in this case, 5 years. It means Pogba is earning a staggering £220,000 a week- after tax.
However, for a free agent like Pogba’s teammate Zlatan Ibrahimović, the wage process becomes more complicated. Big name free transfers like Ibrahimović usually command a huge wage anyway, and because they are free, the money saved from the national saving also goes into their wages.
On top of this, because football clubs are businesses, and the players are their employees, it means the clubs also have to pay another 13% in national insurance contributions on that wage packet.
Not only does the agent haggle for every bonus imaginable, they are also going to want their share of this mammoth and complex money deal. In the case of Paul Pogba, the agent fee appeared to be a long and drawn out final hurdle, which his agent ultimately walked away with £20 million.
The Final Perks
Here are just a few of the perks Pogba can expect from his deal:
- Loyalty Bonuses
- First class travel
- A free Chevrolet (Manchester United’s sponsors)
It’s hard to say how much the Pogba transfer cost overall. But with the transfer, wages, bonuses and agent fees, it’s fair to assume it is well over £200 million. Not bad for a 23- year old.