Writers of Pro Football Prospectus 2008

11 Jun 2009

Transfer Fees?

The big news outside the US today involves Manchester United winger/striker Cristiano Ronaldo, who's about to sign with Real Madrid after a world record transfer fee of £80 million was agreed by the two clubs.

Ronaldo is expected to receive a contract in the range of £180,000 a week, meaning that he'd end up earning about $15.4 million a year in salary, right around upper echelon of NFL players.

With that in mind, I've got two questions.

First, do you believe that NFL teams should be allowed to buy or sell players? It's always seemed like Bowie Kuhn's decision to block Charlie Finley from selling players to the Yankees and Red Sox in the 1970's sort of set policy on the issue across US sport. I suspect someone with a better sense of history would be able to explain if that's not the case.

Personally, I figure that it would make the most sense for baseball clubs to be able to sell players considering the wealth and payroll disparities between teams, but I think that it's an idea worth discussing with regards to football.

Second -- and here's the more tantalizing question -- How much do you think a team would pay for a star player? This is strictly cash from owner-to-owner here, not trading players or picks in the process.

(No, I'm not trying to make this a ROBO-PUNTER thread.)

Posted by: Bill Barnwell on 11 Jun 2009

31 replies , Last at 16 Jun 2009, 3:43pm by Anonymous11

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Re: Transfer Fees?
by kwameF (not verified) :: Thu, 06/11/2009 - 11:57am

Outside of the young franchise QB (i.e. Jay Cutler) it seems the days of giving big money for one star is over. Of course there are always exceptions like Jerry Jones and Daniel Snyder but in general, teams are all about roster flexibility and getting the most for less. Also, is this buying players factor the salary cap?

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Re: Transfer Fees?
by kwameF (not verified) :: Thu, 06/11/2009 - 11:58am

Just realized I didn't answer the first question. Should players be bought and sold? If the players agree to it in collective bargaining yes. I don't have a problem with it from a competitive stand point.

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Re: Transfer Fees?
by tuluse :: Thu, 06/11/2009 - 12:47pm

Albert Haynesworth and Asomugha disagree.

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Re: Transfer Fees?
by theprophecy :: Thu, 06/11/2009 - 11:57am

I know that buying/selling players, unrestricted movement between teams, no draft, etc. is the capitalist ideal, but I just can't get behind it. If the only thing determining which team is best is the amount of money spent to acquire the team, what's the point in having teams that aren't rich? Places like New Orleans, Green Bay, Buffalo, etc would basically become glorified AAA squads for Washington, Dallas, and New York. If you're not a fan of one of the richest 5 or 6 teams, you'd likely never see a championship in your lifetime. That doesn't sound like much fun to me.

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Re: Transfer Fees?
by poboy :: Thu, 06/11/2009 - 2:17pm

As a Saints fan, I'm not planning to see a championship in my lifetime, regardless :)

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Re: Transfer Fees?
by crack (not verified) :: Thu, 06/11/2009 - 3:38pm

Man U paid 20 mill for Ronaldo and sold him for 131 million. At the same time Newcastle United is up for sale for 100 million. If Newcastle United had been able to turn a decent player into Ronaldo they could just transfer him for cash, that would probably help them more than just having Ronaldo.

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Re: Transfer Fees?
by TXNiner :: Thu, 06/11/2009 - 12:03pm

At first I didn't think it would be a good idea to allow the buying and selling of players. It would mean the owners with a lot of revenue would be able to buy from the lower revenue teams and the rich get richer, poor get poorer, etc. But after thinking about it, it doesn't sound like a bad idea. It would basically be like a trade with cash instead of another player or draft pick. It would also allow a team in need of a player to replace one who goes down with injury to pick up a quality player (as opposed to practice squad players) without having to give up what might be an important part of a playoff team.

I could see owners like Jerry Jones paying similar numbers to the ones above, like $150 million or so, for top tier guys like Adrian Peterson, Tom Brady (pre-injury), etc. Supplemental players, like a Donald Driver type, would probably fetch around $25-30 million. It would be a great thing to see though what some owners would pay for certain players depending on need or (perceived) greatness.

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Re: Transfer Fees?
by solarjetman (not verified) :: Thu, 06/11/2009 - 12:07pm

I don't think the NFL could flip a switch and start allowing trades of players-for-cash even if it wanted to; it would be necessary to integrate such a system into salary cap rules, and that would involve lots of negotations between the owners and the players' unions. So the realistic question would be "do you support whatever system of trading players for cash the players' union and owners would come up with?" I don't know what that system would be, but what teams would actually do under such a system depends massively on the salary cap implications. Would the money paid by the buying team for a player count towards their salary cap? What about the selling team's cap? Would the player's salary count at all towards the selling team's cap? I can see scenarios where teams pay another team to take a player off their hands if the rules aren't written correctly (this would almost certainly happen if the transfer system were added to the NBA).

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Re: Transfer Fees?
by tuluse :: Thu, 06/11/2009 - 12:46pm

I don't see the need for it in the NFL. There are already plenty of equalizing systems in place (salary cap, draft, compensatory picks, shared revenue). It just seems unnecessary.

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Re: Transfer Fees?
by moses74 (not verified) :: Thu, 06/11/2009 - 1:04pm

The buying of selling of players in soccer cripples the game. When you look at the NFL one of the best aspects of the game is the Any Given Sunday competitive balance. Another great aspect is the college draft. These ideas just don't exist in soccer. If you look at the game in the UK (which is where I'm from) traditionally the small clubs have acted as feeders to the top flight, developing young talent and nurturing their ability to play at the top level.

The way transfer fees have careered out of control means that the ability of all but the top 3/4 richest clubs have no chance of competing for the top trophies, and at the same time have stripped the ability of the smaller clubs to identify and develop players. The Man U's, Chelseas, Arsenals cherry pick the very best players from the academies of smaller clubs, pay them inflated wages and hoard them against future performance. Then if a club happens to develop a quality player his agent gets in his ear, whispers how much money he could make at the top clubs, and no one can compete when they come in to buy him. If you think the Favre/Ochocinco situations are ludicrous, then the Berbatov/Ronaldo fiascos for the last couple of years have been much worse.

Of course, there's no guarantee of success - look at the Robbie Keane deal for Liverpool. Huge sums squandered. But the club continues to roll on, just like the 'skins do when they miss on a free agent.

I think ultimately the reason that this won't happen in the NFL is that there are owners who won't be held to ransom by the players, and the knowledge that each club being financially viable is crucial. Newcastle lost hundreds of millions in value this year, Leeds have been bankrupted, Luton too - there's no way that the long standing owners in the NFL would allow a new business model to come in and potentially expose the league to bankrupt franchises, or loss of value of the assets.

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Re: Transfer Fees?
by HoleInZone :: Fri, 06/12/2009 - 6:07am

This is a very good analysis.

Put simply, the European football model is not in good shape. That is illustrated rather well by the fact that Milan, an absolute powerhouse financially and on the field, have been pretty much forced to sell their best player to cover costs. The smaller clubs have no chance with the system as currently designed.

The way the system has evolved in Europe has been messy, and the result of litigation as opposed to collective bargaining. The cross border nature of transfers adds a degree of difficulty of course, but the football authorities have been almost negligent in failing to see where things were going.

As a result free agency and huge contractual freedoms were forced on them via the European Courts (Bosman, Webster, Kolpak rulings) as opposed successfully managed into the game's administration.

As Moses74 notes, increasingly there is therefore diminishing benefit for smaller clubs in developing players since:

a) The big clubs throw more money at scouting so pick off the best 12-16 year olds globally;

b) Clubs can only sign younger players(under 18) to relatively short term contracts.

c) Even before Free Agency on contract expiry, big clubs can pay up (to the 'selling' club) the remaining amount on a deal when it has 18 months left and take the player. Since that contract is likely to be a fairly low value (given that it is being paid by a less wealthy club), smaller clubs don't receive any premium for talent development.

d) There is absolute Free Agency at the end of contract (with no compensation)

In summary, for smaller clubs, young talent is harder to find and more difficult to benefit from. Transfer fees at lower levels are subsequently paid less and less and the gap between rich and poor gets bigger and bigger, damaging competitive balance badly.

I should add that that disparity is as relevant between clubs inside and outside of the English Premier League's top 6 as it is in the English top division and the lower tiers.

In addition, the decreasing transfer fees and more lax contract rights make wage pressures hugely inflationary as players are constantly renegotiating contracts with the leverage of being able to move on to another club. This is a big problem given the free movement of labour in Europe as their are scores of potential clubs to move to.

In summary, the transfer system here is a mess and best avoided by the NFL. The salary cap and trade system, while not perfect (and in a smaller, more controllable market), is a few evolutionary stages ahead of where we are in European football.

Anyway, apologies for the hastily written rant. Some of us Europeans look enviously at the way the NFL is run given the route our beloved game is taking here now that the clubs, and not the footballing authorities, are running the game.

NB: Interesting (if a little flawed) Financial Times piece here (http://www.ft.com/cms/s/0/1829dd92-56ae-11de-9a1c-00144feabdc0.html)

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Re: Transfer Fees?
by Dr. Both Kinds of Football (not verified) :: Thu, 06/11/2009 - 1:07pm

Transfer fees are necessary in world soccer because players frequently transfer from one league to a different league; they are possible because FIFA (more or less) regulates almost all soccer in the world. By contrast, transfer fees are not necessary in the NFL because transfers into or out of the NFL are much less common than within-NFL transfers, and they would be challenging to administer because there is no world (gridiron) football regulating body.

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Re: Transfer Fees?
by Key19 :: Thu, 06/11/2009 - 1:39pm

I've always thought that the idea of being able to trade cap room was interesting. Think about it: This offseason, Tampa Bay could've traded for some very good players who were on teams that have little-to-no cap room. Just for example, "we'll give you a 6th round pick and $2.5 million in cap room for Player X." That would not only help Tampa Bay, but in the instance that someone gave a terrible player WAY too much guaranteed money, they would be able to cut that player loose, not take as big of a cap hit, and even get a late round draft pick in return. This would allow teams like the Raiders (just for example) to get rid of Javon Walker's ridiculous contract in a better way, and if Tampa really thought they could get something out of Walker, they would be able to get him by lessening Oakland's dead money penalty. As it is right now, getting rid of Walker would do more harm than good (in my opinion). Furthermore, it would give teams an out on Top 10 draft picks who don't fulfill expectations but still generate interest in the league. If Stafford disappoints in Detroit, there could be a way for them to get him off their team and onto another squad who thinks they can use him. With his current contract in the current system, such a move would be near impossible for Detroit. Why keep a guy around until his contract has played out enough that you can realistically trade/release him? No team will want 6 year veteran Matt Stafford if he's yet to be successful at that point, but if they could trade for him after say 3 years they might feel they could fix him up and make him successful. Maybe a better example is Alex Smith. There could be teams out there that think "as long as we don't have Kwame Harris starting in front of him, this guy could be a solid QB for us!" Same goes for David Carr. "If we don't put Swiss Cheese in front of him, maybe he could become decent." Of course, by the time Carr got out of Houston, he was already too far gone to be fixed. But if teams could've traded for him earlier due to cap money trades, they could've maybe got him going before it was too late.

Due to the cap, there would of course be limits on how much cap room you could trade for a player. And really, it would probably work out more in favor for the teams that are fiscally responsible with their cap figures, because they will have all the leverage in trades. The perennial big spenders would likely be the ones losing players, rather than the financially weaker clubs who have more cap room.

Honestly, I haven't really thought this whole idea through, but I just figured I'd throw it out there and see if anyone had anywhere else to go with it or saw any major flaws with it.

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Re: Transfer Fees?
by tuluse :: Thu, 06/11/2009 - 1:45pm

I like your idea.

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Re: Transfer Fees?
by Eddo :: Thu, 06/11/2009 - 2:06pm

This sounds somewhat similar to the NBA's system, but better, in that salaries wouldn't have to match up.

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Re: Transfer Fees?
by ddb4 (not verified) :: Fri, 06/12/2009 - 2:27am

The NBA has what's called a trade exception.

From Wiki:

"If a team trades away a player with a higher salary than the player they acquire in return (we'll call this initial deal "Trade #1"), they receive what is called a Traded Player Exception, also known colloquially as a "Trade Exception". Teams with a trade exception have up to a year in which they can acquire more salary in other trades (Trade #2, #3, etc) than they send away, as long as the gulf in salaries for Trade #2, #3, etc are less than or equal to the difference in salary for Trade #1. This exception is particularly useful when teams trade draft picks straight-up for a player; since draft picks have no salary value, often the only way to get salaries to match is to use a trade exception, which allows trades to be made despite unbalanced salaries. It is also useful to compensate teams for losing free agents as they can do a sign and trade of that free agent to acquire a trade exception that can be used later. Note this exception is for single player trades only, though additional cash and draft picks can be part of the trade."

Not quite the same, due to the NBA rule that the salary amounts in a trade have to come close to balancing out, but a certain amount of overlap.

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Re: Transfer Fees?
by Jimmy :: Thu, 06/11/2009 - 4:31pm

The biggest difference between soccer leagues and the NFL in these terms is the existence of a college system that develops players. In soccer leagues teams have to sign young players when they are 16 and develop them themselves either for their own first team squad or to sell to bigger clubs as a way of developing extra revenue. In the US young football players are generally developed by colleges and then drafted. The colleges generate hige revenues by attracting and developing exiting talent and the NFL has a steady stream of young talent at its disposal.

Obviously young players are best served by receiving good coaching but it is also a matter of getting playing time. If there were a viable professional alternative to the college route I wonder if some exceptional young players might be better off ingnoring college.

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Re: Transfer Fees?
by Jimmy Oz (not verified) :: Thu, 06/11/2009 - 6:38pm

No. High draftee wages for busts are still more of a crippler, so while trading for draft picks isn't always an equaliser, fixing the rookie wages to a scale would be better.

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Re: Transfer Fees?
by Theo :: Thu, 06/11/2009 - 11:10pm

If buying players was an option wouldn't NFL owners have done it already?

Did you know that only now, after this $ 120 Million transfer (yes, they might wake up) some of the UEFA bosses are thinking about restrictions.
If I where in control I would implement a salary cap in the Champions League and a roster limit of 30 throughout Europe. With an extra 20 'under 20' contract players.

Real Madrid bought Kaka for $83M last week.
Today they bought C. Ronaldo for $120M (80M GBP).
They're also planning to buy midfielder Ribery and striker Villa. They won't come cheap either.
The crazy thing with Real Madrid is, that the new president is buying these players. He promised that in his election speeches. It's very vague where the money comes from.

Madrid still have vd Vaart, Robben, v Nistelrooy and Drenthe in the squad. They're all in the Dutch national selection - not to shabby - yet they're expected to be sold. Some have been playing there for only a year or 2 - bought by the former president. They will be sold or will be sitting on the bench, while they could as well play for another team. As if the Patriots buy Carson Palmer, just to warm the bench.

In soccer, rich clubs can buy whatever player they want for whatever price. Because in the future, there will be profit. Sounds familiar? Yes, it's the base of the monetary crisis we're in today.
Lesser teams can't compete and there is no restrictions from the Fifa or Uefa bosses.
Rich get richer and poor get poorer. The anti-NFL.

Also, soccer is more often than nog pretty boring.

And that my friends, is in a nutshell what's wrong with soccer.

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Re: Transfer Fees?
by Key19 :: Fri, 06/12/2009 - 12:56am

That may be true, but I think that spending 2+ hours watching games that quite often end in ties is pretty darn close for being as big of a problem.

I really feel like I waste my life when I watch a soccer game that ends in a tie. It's the most unsatisfying feeling in sports. Resolve the games somehow. I don't care if purists don't like PKs or whatever. At least make the game produce a winner and a loser. That is and will always be my biggest beef with the sport. The World Cup elimination games are so incredibly great to watch, and it's largely due to the fact that they're FORCED to produce winners! If every soccer game guaranteed that a winner and loser would be determined, I think so many more people would watch the sport. I don't know how many would stop watching it, but I can't imagine it would be that many. Who actually likes ties?

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Re: Transfer Fees?
by Sifter :: Fri, 06/12/2009 - 3:23am

I don't mind ties if the 2 teams are pretty evenly matched. If one team has set up camp in the others penalty box all game, but was just unlucky, then ties aren't so cool.

But the biggest issue with soccer/football is the DIVING. It's awful. Players rolling around like they've been shot when the defender has merely brushed them, or often hasn't even touched them at all. Just because both teams do it doesn't mean it's cool.

And the 2nd worst is the way the players get up in the face of the refs whenever the decision doesn't go their ways. The refs need to card players more for this intimidation.

Those 2 factors combined just mean soccer players come across as cheats and sore losers. I don't know many LIKEABLE players. We like their SKILLS, but the way they play just gives the finger to sportsmanship.

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Re: Transfer Fees?
by squishy (not verified) :: Sat, 06/13/2009 - 1:47am

amen on #1. when diving can cause the ref to mistakenly give yellow/red cards and/or grant free kicks and penalty kicks, and there is no "cost" to it, then the system is encouraging players to dive. personally i would like to have post-game video review of divers, and suspend them 1 game for each dive.

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Re: Transfer Fees?
by JMO (not verified) :: Fri, 06/12/2009 - 9:58am

All the world minus north america already watch soccer. Why on earth would you change league systems just to accommodate people who obviously aren't really that into the game anyway?

The worst thing you can do with any sport is to change the rules/structure of the league/whatever to draw in fans from outside your cultural base.

Personally as a soccer fan, I don't love draws but in league play they seem reasonable. Also the 3 pts for win/1 pt for draw system was brought in to encourage teams to attack. If you could feasibly park 11 men in front of goal every game and spend alot of time practicing penalty kicks and hope to win that way..then that would be terrible and would produce terrible games.

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Re: Transfer Fees?
by tuluse :: Fri, 06/12/2009 - 3:30pm

As long as we're complaining about soccer, I don't like the continuous clock and stoppage time.

Why can't they stop the clock when the ref blows the whistle, and start it again when the ball enters play, just like the NBA does?

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Re: Transfer Fees?
by lobolafcadio :: Fri, 06/12/2009 - 6:27am

It wouldn't work in the NFL because all the owners are working together, or at least are trying to keep every franchises viable.
And don't discount injuries. Injuries in soccer can be serious, but an injured soccer player can usually came back, not so in football.
Transfers without a salary cap would be an horrible thing in NFL, at least 5 "star" players per team would hold out every year to change team and only 6 clubs would compete annually for the SB.
At least, the current system, even without a salary cap, guarantee every team a chance to get 4 to 5 years from their rookies.
Never forget European sports is build on clubs which are independant entities, while American sport is build on closed leagues.
Just as a draft is impossible/counter-productive for soccer, transfers are impossible/counter-productive for NFL.

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Re: Transfer Fees?
by Anonymous11 (not verified) :: Fri, 06/12/2009 - 12:25pm

Soccer has transfer fees but it also has some other differences from the major US sports leagues.

1. No salary cap
2. Multiple leagues that are strong. The Premier league is probably best but the leagues in Italy and Spain have good teams as well as some good teams in other countries.
3. There is a relegation/promotion process in soccer where for example in England three of the 20 teams get "relegated" to the second tier league each year and three of the tier 2 teams are "promoted".
4. One other minor factor, teams "loan" out players to give them experience or for profit and then those players can get sold to that club as they are found to be suited to the club or become a fan fave, so forth.
5. The European Union have different employment laws from the US.

I guess I would say that there is stronger demand for star players in soccer and also the weaker teams are likely to go away and when the do get relegated, they can transfer those players to have more reasonable wages in the lower league.

Also, baseball can do some of this. You can include some money in trades and if you want to pay over slot or sign international players you can turn around and trade prospects for stars, often stars of small markets that know they will not be able to afford them. In basketball, small market Memphis trades Pau Gasol to more affluent LA for cap space, a draft choice and a young player. All those thing boil down to money.

Football seems to have the least activity in terms of trades of players. Not sure why: could be that teams have different schemes, there is a salary cap, its all one league rather than multiple leagues like soccer. But maybe the main reason is that it just has not been done: it would be interesting to see but the NFL is the most lucrative league in the world and I doubt the decision makers want to mess with success as it were.

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Re: Transfer Fees?
by squishy (not verified) :: Sat, 06/13/2009 - 1:56am

just want to add my two cents to why there isn't more trading in football -> football is the ultimate team game. it takes weeks for a defensive player to get acclimated to a team's scheme, and most people think it takes an offensive player even longer as every offensive play is scripted. i can't recall any player signed mid-season and produce at a high level for his team, excluding kickers and punters. so the window for trading is really from right before the draft to june.

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Re: Transfer Fees?
by Karl Cuba :: Fri, 06/12/2009 - 12:41pm

When the 49ers acquired Steve Young from Tampa the final piece of the deal was Eddie DeBartillo throwing in $1 million in cash.

The absence of soccer style transfers in the NFL is largely due to the differences in structure between the different games as well as the methods used to integrate new talent into the leagues.

The reciprocal question is; how would the Premiership look with a draft?

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Re: Transfer Fees?
by JMO (not verified) :: Fri, 06/12/2009 - 10:19pm

The Premiership with a draft would be barren as players quickly went to other leagues to escape a league imposed pay scale.

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Re: Transfer Fees?
by Jtizzle (not verified) :: Sat, 06/13/2009 - 11:24am

A draft would never work in the Premiership for 2 main reasons:

1) There is no college system to speak of, so there is nowhere to draft them from
2) The fact of relegation/ multi-tiered leagues makes it impossible. What do you do? Let team 92 (which would equate to Torquay next year) pick player number 1? Could you honestly envision Wayne Rooney playing for them? furthermore, Premier League clubs would never want any of the players on offer. The only other option is to make the draft only available to the top 20 Premier League clubs, at which stage you find the inequality worsening and essentially excluding the rest of football from ever getting a foothold.

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Where Real Madrid gets his money...
by Anonymous11 (not verified) :: Tue, 06/16/2009 - 3:43pm

Off the original topic, but there was a question of how Real Madrid was going to pay for its massive signings. The last time Real Madrid brought in big salaries, the galatico era under this same president, there was a fishy deal with the city of Madrid to sell its training grounds for some huge sum and then that training site was leased back for like a dollar a year.

This is not uncommon in soccer, a lot of teams are very affluent or owned by Russian oligarchs or rich Mid East oil consortiums. American sports leagues like to have a stable ownership situation and tend to bristle at maverick owners like a Charles Finley Mark Cuban or evenly slightly Jerry Jones or Snyder. Jones and Snyder might be frowned more opun if the wealthy translated to more success than it has.

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