Football
Jake Cohen 8y

How much Paul Pogba, Zlatan Ibrahimovic, N'Golo Kante actually cost

When looking at how much a particular player cost his new club, transfer fees do not tell the whole story. Far from it.

There are a number of factors that go into the equation. In the Premier League, there is also a "transfer levy," which mandates that whenever a club buys a player, it must pay an additional 4 percent of the transfer fee to the league; the Football League charges a 5 percent levy. Training compensation, solidarity payments, image rights payments and agent fees can also add to the cost, but this article will focus on the main costs involved, namely amortised transfer fees and wages.

"Amortisation" is an accounting term. Applied to football, it simply means that when a player is purchased, his transfer fee is spread out over the length of his contract. For example, when a club buys a player for £40 million and that player signs a five-year contract, that £40 million is spread out evenly over five years, at £8 million per year.

In practice, transfer fees will be paid to the selling club in a lump sum or in a few installments, but when clubs are setting their transfer budgets, they do so through the lens of player amortisation. This is also how UEFA and the Premier League view transfer fees for the purposes of their financial fair-play regulations.

This is how clubs calculate player costs -- not by the nebulous and frequently cited "net spend" calculation, which is not something big football clubs consider. For one, net spend is just transfer fees in subtracted by transfer fees out. It completely ignores wages, which are the biggest costs any club has. It also fails to account for free transfers. When a player leaves on a free transfer, his wages come off the books, which allows the club to reinvest that money. Similarly, when a player signs on a free transfer, his wages and signing bonus represent a significant added cost for his new club.

Why has net spend been something we've clung to for years as an indicator of club finances? It's mostly due to the inherent lack of transparency in the football industry. Accurate wage data is hard to come by, and net spend conveniently ignores wages. Unfortunately, because it ignores wages, it doesn't tell us much about how clubs calculate player costs. For reference, the average Premier League wage bill is more than £100 million and represents about 60 percent of club revenue.

To calculate player costs whenever a club buys a player, it's simply a matter of dividing the transfer fee over the player's contract length and adding his wages:

[transfer fee / contract length] + [weekly wage * 52]

ESPN FC crunched the numbers to show how much some of the biggest Premier League signings of the summer are really costing their clubs.

Paul Pogba to Manchester United

£89.3 million transfer fee, five-year deal (plus one-year club option) at £210,000 per week = £28.8 million per year

Paul Pogba is the most expensive footballer in the world. He earns that distinction even though his reported wages do not include performance bonuses or his image rights deal. These will add, at bare minimum, the equivalent of another £60,000 per week to Pogba's total compensation package, to say nothing of agent fees.

However, in just a few years, he'll likely be considered a bargain ... as long as you forget that Manchester United let him leave on a free transfer four years ago.

Let us explain. Top clubs have only just scratched the surface of their global commercial potential, which means we can expect commercial revenues to continue to skyrocket for clubs such as Manchester United. Additionally, the already enormous Premier League broadcasting deals will continue to be increasingly lucrative as international rights deals skyrocket and digital rights continue to be exploited.

By 2019, club football will have billions of pounds more than it does now, and as we saw this summer, more money in the market leads to transfer inflation. Expect this trend to continue.

Henrikh Mkhitaryan to Manchester United

£35 million transfer fee, four-year deal at £180,000 per week = £18.1 million per year

There are conflicting figures (from £26.3 million to £35 million) over his transfer fee, likely as a result of some currency confusion (note that £26.3 million equates roughly €35 million) and some imputing the performance-based add-ons while others don't. Regardless, Mkhitaryan would be one of the Premier League's most expensive players.

However, versatile midfielders in their prime who scored 50 goals and assists across all competitions last season (including 26 goals and assists in less than 2,600 Bundesliga minutes) usually come with a hefty price tag. In this case, it was a price "win-now" Manchester United was happy to pay. Should Mkhitaryan not work out for whatever reason, he should retain some resale value, given his age. He turns 28 in January.

John Stones to Manchester City

£47.5 million transfer fee, six-year deal at estimated £120,000 per week = £14.16 million per year

The centre-back market has exploded ever since Chelsea managed to sell David Luiz to PSG for what was then regarded as a shocking fee of £37 million (not £50 million, as originally reported, but still a hefty sum). That was two years ago, but it seems a lot more reasonable now, doesn't it?

Stones is a young English defender for whom Chelsea was seemingly prepared to spend huge sums last summer but found Everton an unwilling partner. In the end, Man City are making a significant outlay, but as with their signing of Leroy Sane (£37 million transfer fee, five-year deal at £70,000 per week = £11.04 million per year), what seems like an exorbitant cost now will likely come good in the near future. Stones just turned 22 in May, and for a player who has been regarded as supremely talented, albeit error-prone at times, spending every day with Vincent Kompany could do wonders.

N'Golo Kante to Chelsea

£30 million transfer fee, five-year deal at £150,000 per week = £13.8 million per year

Arguably the league's best midfielder last season, Kante has been Europe's most prolific tackler two years running. He got a huge wage increase from the £40,000 per week he was earning at Leicester City (and the £100,000 weekly salary the Premier League champions were offering him to stay) to move to Chelsea this season, but with a relatively cheap transfer fee and at just 25 years old, Kante should represent excellent value.

Sadio Mané to Liverpool

£34 million transfer fee, five-year deal at £115,000 per week = £12.78 million per year

The past two years, Liverpool have spent around £100 million on Southampton players but have earned one fewer league point than the Saints over that period (123 versus 122).

Mané is an exciting, attacking player who can play on both sides of the pitch, as well as in a central attacking role. At 24, he has plenty of resale value, but Liverpool are paying top price for him. One hopes that they will start identifying these players earlier, like Southampton did. Of course, this is much easier said than done, but when these players can be purchased for a third of the price (like when Southampton bought Mané on deadline day in 2014 for under £12 million), that's where the best value can be found.

Granit Xhaka to Arsenal

£30 million transfer fee, five-year deal at £125,000 per week = £12.5 million per year

Xhaka immediately becomes Arsenal's third-most expensive player, behind Mesut Ozil and Alexis Sanchez. A holding midfielder, Xhaka is a big, strong tackler and a good passer, which makes him seemingly well-suited for the Premier League. He turns 24 in September and has plenty of resale value as well as time to improve before he hits his prime.

Zlatan Ibrahimovic to Manchester United

No transfer fee, one-year deal at £220,000 per week = £11.4 million per year

This deal is a perfect example of why "net spend" isn't relevant to how clubs do business. A net spend calculation would indicate that Ibrahimovic isn't costing Manchester United anything this season, when in reality, he is costing a considerable sum. In addition to reported wages, players who sign on free transfers are often given substantial sign-on bonuses, though these bonuses are rarely, if ever, reported.

Given his still considerable talent and the short-term nature of the deal, it's not a big deal for United to splash this sort of cash on a striker who will turn 35 in October -- and no, he won't pay for himself in the form of shirt sales.

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