Is transfer fee expense 1 of the big reasons why elite soccer players are earning relatively less...

[pc4th]

than baseball players or basketball players?

Assume that the elite players transfer from a BIG CLUB to another BIG CLUB (not from South America to Europe).

Here's my analysis.

#1: REVENUE: The top 10 football clubs are earning a lot more than the top 10 baseball teams

1 EURO = $1.3 EXCHANGE RATE

1 (1) Real Madrid €292.2m €275.7m

2 (6) Barcelona 259.1 207.9

3 (4) Juventus 251.2 229.4

4 (2) Man United 242.6 246.4

5 (3) Milan 238.7 234.0

6 (5) Chelsea 221.0 220.8

7 (9) Inter 206.6 177.2

8 (7) Bayern M 204.7 189.5

9 (10) Arsenal 192.4 171.3

10 (8) Liverpool 176 181.2

#2 Transfer fee expense YEARLY for football clubs

With the rare exceptions, baseball teams do not have a transfer fee expense.

Average transfer expense per year (from 2001 to 2005).

Chelsea: $83.7 million a year
Real Madrid: $41.67 million a year
Manchester United: $36 million a year
Barcelona: $25 million a year
AC Milan: $22 million a year

How would the like of Yankees and Dodgers fare if they have a $40 million expense each year instead of ZERO?

#3: Yearly salary for elite soccer players relative to elite baseball and basketball players

MLB

Rank Player Salary Team
1 Rodriguez, Alex $ 26,000,000 New York Yankees
2 Bonds, Barry $ 22,000,000 San Francisco Giants
3 Ramirez, Manny $ 22,000,000 Boston Red Sox
4 Jeter, Derek $ 19,600,000 New York Yankees
5 Mussina, Mike $ 19,000,000 New York Yankees
6 Bagwell, Jeff $ 18,000,000 Houston Astros
7 Clemens, Roger $ 18,000,000 Houston Astros
8 Sosa, Sammy $ 17,000,000 Baltimore Orioles
9 Piazza, Mike $ 16,071,429 New York Mets
10 Jones, Chipper $ 16,061,802 Atlanta Braves
11 Johnson, Randy $ 16,000,000 New York Yankees
12 Brown, Kevin $ 15,714,286 New York Yankees
13 Hampton, Mike $ 15,125,000 Atlanta Braves
14 Park, Chan Ho $ 15,000,000 Texas Rangers
15 Schilling, Curt $ 14,500,000 Boston Red Sox

NBA

1. Shaquille O'Neal (Mia) ..... $27,696,430
2. Allan Houston (NY) ......... $17,531,250
2. Chris Webber (Sac) ......... $17,531,250
4. Kevin Garnett (Min) ........ $16,000,000
5. Dikembe Mutombo (NJ) ....... $14,989,285 [released]
6. Jason Kidd (NJ) ............ $14,796,000
6. Jermaine O'Neal (Ind) ...... $14,796,000
8. Shareef Abdur-Rahim (Por) .. $14,625,000
8. Ray Allen (Sea) ............ $14,625,000
8. Anfernee Hardaway (NY) ..... $14,625,000
8. Zydrunas Ilgauskas (Cle) ... $14,625,000
8. Allen Iverson (Phi) ........ $14,625,000
8. Stephon Marbury (NY) ....... $14,625,000
8. Latrell Sprewell (Min) ..... $14,625,000
8. Antoine Walker (Atl) ....... $14,625,000
16. Michael Finley (Dal) ....... $14,609,375
17. Grant Hill (Orl) ........... $14,487,000
17. Tracy McGrady (Hou) ........ $14,487,000
17. Jalen Rose (Tor) ........... $14,487,000
17. Keith Van Horn (Mil) ....... $14,487,000
21. Tim Duncan (SA) ............ $14,260,641
22. Kobe Bryant (LAL) .......... $14,175,000

Soccer

Around $10-12 million for the elite players. Ballack and Henry are among the top 5 earners.

#4: IF the elite soccer teams has no transfer expense, they would have $30-40 million EXTRA each year, what would they do with this money????

They likely use 60% or more of that to attract top talents. Thus, salary increases.

p.s. This is not a popular topic because the thread is suggesting that elite football players who are earning WAY WAY TOO MUCH might be able to earn a lot more. However, this is for academic, the WHAT IF question. WHAT IF the elite soccer clubs have zero transfer expense and get all the players on free like American Big Four Leagues (NFL, NBA, MLB, NHL)? What would happen to the elite soccer players salary? Increase? Decrease? Stay the Same? If you don't want to discuss this, please stay away from this thread.

Also, as an observer and researcher on this topic, I believe that transfer fee will be part of the game for many years to come. (unless all the elite players decided to sign an agreement to ALL go on a free transfer). So don't worry, they won't be earning 1.5 times their current salary anytime soon.

[Catel]

Soccer, NBA or MLB, it's TOO MUCH !

I don't understand how you can be paid 20M per year for putting a ball on a net...

[Prenn]

FFS, here we go again...

[Naughty by Nature]

5 top Yankee players are paid a combined 95 million a year, that is too much.

Lets look at European way, take Real Madrid wages then:

Beckham & Raul : $12 million a year,
Casillas : $11 million a year
Van Nistelrooy: $9 million a year
Cannavaro: $8million a year

5 top Real Madrid players are paid a combined 52 million a year. Real Madrid saves 43 million on wages for thier 5 top players and can use that money for a possible transfer.

[nicephoras]

The US market operates under a monopolistic system and there is no outlet for those players. Those are not optimal market conditions which is why this occurs.
This is simply not, in any way, comparable to football.

[nicephoras]

Also, as an observer and researcher on this topic, I believe that transfer fee will be part of the game for many years to come. (unless all the elite players decided to sign an agreement to ALL go on a free transfer). So don't worry, they won't be earning 1.5 times their current salary anytime soon.

If there were only 50 clubs in Europe and no other clubs could be promoted or relegated, with that 50 club league signing its TV rights away in a combined package, football players would earn vastly more than baskebtall or baseball players.
The US has 32 teams (approximately) in both major sports for a population of about 300 million. Europe has THOUSANDS of clubs for a population of 450 million. Therefore, if there are about 10 million fans per club in the US, there are 10,000 fans per club in Europe. See why clubs in Europe have less money?

[leg_breaker]

Why does he have to post this over and over again?

[comme]

Why does he have to post this over and over again?

Unwitting genius!!

Repped.

[Leto]

The US market operates under a monopolistic system and there is no outlet for those players. Those are not optimal market conditions which is why this occurs.
This is simply not, in any way, comparable to football.

Exactly. Why is this so hard for some people to comprehend?

[RichardL]

#4: IF the elite soccer teams has no transfer expense, they would have $30-40 million EXTRA each year, what would they do with this money????
.high class hookers & cocaine?



Look, next year clubs in the premiership will have an extra £10 million to spend. They could decide to lavish it on their star players, or maybe they'll keep salaries proportionally the same like they have done with every single other jump in cash that there's been.


American sports pay huge salaries to stars and peanuts to the rest because that's the way things work there. It's not about finances as they do exactly the same in MLS, paying low-end premiership wages to the top players, and making the lesser players earn salaries that make them envious of the big earners at the KFC drive-in window. It's just sporting culture, and it works because those lesser players have no choice.

[guado]

than baseball players or basketball players?

Assume that the elite players transfer from a BIG CLUB to another BIG CLUB (not from South America to Europe).

Here's my analysis.

#1: REVENUE: The top 10 football clubs are earning a lot more than the top 10 baseball teams

1 EURO = $1.3 EXCHANGE RATE

1 (1) Real Madrid €292.2m €275.7m

2 (6) Barcelona 259.1 207.9

3 (4) Juventus 251.2 229.4

4 (2) Man United 242.6 246.4

5 (3) Milan 238.7 234.0

6 (5) Chelsea 221.0 220.8

7 (9) Inter 206.6 177.2

8 (7) Bayern M 204.7 189.5

9 (10) Arsenal 192.4 171.3

10 (8) Liverpool 176 181.2

#2 Transfer fee expense YEARLY for football clubs

With the rare exceptions, baseball teams do not have a transfer fee expense.

Average transfer expense per year (from 2001 to 2005).

Chelsea: $83.7 million a year
Real Madrid: $41.67 million a year
Manchester United: $36 million a year
Barcelona: $25 million a year
AC Milan: $22 million a year

How would the like of Yankees and Dodgers fare if they have a $40 million expense each year instead of ZERO?

#3: Yearly salary for elite soccer players relative to elite baseball and basketball players

MLB



NBA



Soccer

Around $10-12 million for the elite players. Ballack and Henry are among the top 5 earners.

#4: IF the elite soccer teams has no transfer expense, they would have $30-40 million EXTRA each year, what would they do with this money????

They likely use 60% or more of that to attract top talents. Thus, salary increases.

p.s. This is not a popular topic because the thread is suggesting that elite football players who are earning WAY WAY TOO MUCH might be able to earn a lot more. However, this is for academic, the WHAT IF question. WHAT IF the elite soccer clubs have zero transfer expense and get all the players on free like American Big Four Leagues (NFL, NBA, MLB, NHL)? What would happen to the elite soccer players salary? Increase? Decrease? Stay the Same? If you don't want to discuss this, please stay away from this thread.

Also, as an observer and researcher on this topic, I believe that transfer fee will be part of the game for many years to come. (unless all the elite players decided to sign an agreement to ALL go on a free transfer). So don't worry, they won't be earning 1.5 times their current salary anytime soon.


you got to be kidding......


shut up already.

[nicephoras]

American sports pay huge salaries to stars and peanuts to the rest because that's the way things work there. It's not about finances as they do exactly the same in MLS, paying low-end premiership wages to the top players, and making the lesser players earn salaries that make them envious of the big earners at the KFC drive-in window. It's just sporting culture, and it works because those lesser players have no choice.

That's not true - the average salary of an NBA or an MLB player is quite high. There's more disparity in the US, but that's only because all salaries are higher to begin with.

For pc4th, keep in mind that the NBA has a requirement that a certain percentage of league revenue must be allocated to the salary cap (i.e., to be spent on player salaries). That ensures this disparity.

[impalemeplz]

That's not true - the average salary of an NBA or an MLB player is quite high. There's more disparity in the US, but that's only because all salaries are higher to begin with.

For pc4th, keep in mind that the NBA has a requirement that a certain percentage of league revenue must be allocated to the salary cap (i.e., to be spent on player salaries). That ensures this disparity.

i think its the same in the NFL where a certain percentage is allocated for salary cap but then you have the "tightass" pats and eagles who will not pay up and leave more then 10 million off the cap.

this brings us to the point of free agency and these self imposed salary caps that the eagles and pats have makes free agency even more rampant. cant really blame them tho cause it has brought them winning records over the last 6 years with both teams missing the playoffs only once each.

[Paul_NL]

Hopefully there will be a salary-cap one day in the mold of the NHL. Works perfect

Only way you could maybe change is that every team can assign 2 or 3 players who have been with a team very long and can earn more then the cap allows

[pc4th]

http://sport.independent.co.uk/football/news/article2264655.ece

Lampard to hit pay jackpot over rule
By Nick Harris
Independent 13 February 2007


Frank Lampard and Steven Gerrard could use a little-known Fifa rule to negotiate new contracts at Chelsea and Liverpool that could earn them close to £175,000 a week and push them towards the world-record deal David Beckham recently announced with LA Galaxy. Purely for playing, Beckham will earn around £10m a year (£200,000 a week), with the rest made up of endorsements. On a like-for-like basis, Lampard and Gerrard could earn almost as much.

The rule which could help them is Article 17 of Fifa's transfer regulations, under which players can unilaterally cancel their contracts after a "protected period" expires, if they pay "buyout" compensation to their clubs, based on wages.

The three-year protection period on Lampard's current five-year deal runs out this summer, so he could theoretically leave then for around £8m, two years' wages. The protection period on Gerrard's four-year deal expires in summer next year, when he could leave for one year's wages, or around £5m.

Lampard's market value is closer to £25m, and Gerrard's next year will probably be around £20m. It is the difference between these figures and the much lower buyout costs that they could pocket in bumper new deals. Lampard wants a five-year deal starting this summer to take him to 2012. Using another Chelsea salary as a benchmark, Andrei Shevchenko's £6m per year, and adding the "differential" between Lampard's buyout and market values, he could argue for £181,000 a week, or £9.4m a year. He would settle for less.

This is not EVEN A FREE TRANSFER. And yet Lampard could be earning the BIG BUCK.

Arguably the most extraordinary example of the power of Article 17 to date was its role in Matthew Upson's January move from Birmingham to West Ham. Upson could have invoked Article 17 this summer, and left Birmingham for £1.5m at most. This would have been on the basis of a year's wages (£750,000), and a slice of his original fee. Birmingham did a deal that will earn them £7.5m instead, albeit with some of that due to Arsenal as a sell-on fee.

"In a normal situation where we could have realised his value in the summer, we wouldn't have sold," said Birmingham's chairman, David Gold. "But we became aware [of Article 17] and acted in the best interests of the club."

An example of how Upson could have earned a bit more money if he decided to become a free agent/ Article 17 player.

Here's a very detailed news piece about this Article 17 if you want to read about it.

http://sport.independent.co.uk/football/comment/article2264652.ece
Stars will buy into 'pay as you go' system
An obscure Fifa rule could revolutionise the way the transfer market operates. Nick Harris reports

[pc4th]

The US market operates under a monopolistic system and there is no outlet for those players. Those are not optimal market conditions which is why this occurs.
This is simply not, in any way, comparable to football.

So if the US market is not monopolistic (it is free market instead) doesn't that mean the basketball/baseball players would get paid EVEN more? Imagine how the top baseball players would be able to get if the Yankees or Red Sox don't get tax for overspending.

All that matter is SUPPLY for Elite soccer players and DEMAND for Elite soccer players. The equilibrium will determine the price.

Supply of elite players = limited
demand for elite players = depends on how much Man U/Chelsea/Real/Barca/Milan/Juventus are willing to pay. If they have $40 million extra each year because there is no transfer fee expense, you can bet they will spend a big chunk of that $40 million to attract these elite players. Hence, the wages of these elite players will increase. It's simply logic really.

Example: Man U/Chelsea/Real/Barca/Milan/Juventus has $150 million for player payroll. Because they have ZERO transfer fee expense, they now have $190 million to spend. Guess who benefit?

[pc4th]

http://sport.independent.co.uk/football/comment/article2264652.ece

Offered the chance to sign Frank Lampard for £8m this summer, or Steven Gerrard for £5m next year (when 28, and in his prime), many of Europe's biggest clubs would jump at the opportunity. Theoretically, it could happen, and Chelsea and Liverpool would be powerless to stop it.

Why? Because a piece of legislation that is more than five years' old has recently started to alter the way the transfer system works.

In short, it allows players unilaterally to break a contract after a "protected period" expires. This is after three years if they signed when under the age of 28 or two years if they signed when 28 or over, regardless of how long their contract is. They have to pay compensation to do this, calculated using a formula based on wages and their original transfer fee, but it means they can effectively "buy out" their contract.

The rules that allow this are misunderstood across the industry. They are not new, as widely reported, having been in place since September 2001. They are not simple or risk-free to exploit, hence the first case of a player invoking them only arrived in summer last year, when the Scotland defender, Andy Webster, left Heart of Midlothian for Wigan Athletic.

But with that precedent set, the effects could be huge, not least in boosting player power further when negotiating deals.

Lampard is the most valuable and prominent player in England who could exploit the rules this summer, to cancel his Chelsea contract. Xabi Alonso could do the same at Liverpool this year and Gerrard next year.

IN A FREE TRANSFER/FREE AGENT MARKET like in the U.S., the elite players would all do a Ballack. Wouldn't "many of Europe's biggest clubs would jump at the opportunity"? To sign an elite player for ZERO transfer fee.

http://sport.independent.co.uk/football/comment/article2264652.ece
Other players at major clubs who could pay to go soon.

Arjen Robben (Chelsea) summer 2007, for two years' wages plus two-fifths of £12m fee.

Claude Makelele (Chelsea) summer 2007, for one year's wages.

Luis Garcia (Liverpool) summer 2007, for two years' wages plus two-fifths of £6.5m fee.

Gabriel Heinze (Man Utd) summer 2007, for two years' wages.

Gary Neville (Man Utd) summer 2007, for 18 months' wages.

Alan Smith (Man Utd) summer 2007, for two years' wages plus two-fifths of £7m fee.

Freddie Ljungberg (Arsenal) summer 2007, for two years' wages.

Jamie Carragher (Liverpool) summer 2008, for one year's wages.

Thierry Henry (Arsenal) summer 2008, for two years' wages.

And lastly, think of the free agent Beckham. Elite players are learning a thing or two from Ballack and now Beckham. Soon, more and more elite players will become free agent and reap the profits.

[pc4th]

If there were only 50 clubs in Europe and no other clubs could be promoted or relegated, with that 50 club league signing its TV rights away in a combined package, football players would earn vastly more than baskebtall or baseball players.
The US has 32 teams (approximately) in both major sports for a population of about 300 million. Europe has THOUSANDS of clubs for a population of 450 million. Therefore, if there are about 10 million fans per club in the US, there are 10,000 fans per club in Europe. See why clubs in Europe have less money?

You're WRONG. Elite clubs in Europe has more money than American elite clubs. Compare the revenue of the top 5 European clubs vs. the top 5 baseball clubs and you see that elite soccer clubs clearly dominate the elite baseball clubs. And that is all that counted because elite clubs are the ones that are employing the star/elite players. Why compare the Tampa DevilRays and Wigan of the world when they are not employing a Ronaldinho a Henry, or a Ballack.

This thread is about the elite players, not the average players nor even the above average players. I am just talking about the salary of the Elite soccer players (15-20 players out of thousands of professional players).

If you are still not convince, let's compare Yankees vs. Manchester United with both having the same revenues and the same number of players.

-------------------NY Yankees -----Manchester United
Revenue: ---------- $300 mil --------$300 mil
Transfer expense:---$0--------------$40 mil
Wage expense: ----$240 mil --------$200 mil
Profit:--------------$60 mil ---------$60 mil

From the above, the Yankees are able to pay more for these elite players than Manchester United because the Yankees has $240 million and Manchester United only has $200 mil even though everything else are the same.

Because of having $0 as transfer fee expense, instead of $40 mil each year, the Yankees can afford to offer FIVE elite players $8 million more each year and still make the same profit as Man U. So if the like of Chelsea/Man U/ Real/Barca/ Juventus have $40 mil extra each year, they can pay FIVE elite players $8 mil more each year. That's one major reason why elite soccer players are earning relatively less. And why if all the elite players go on free transfers, they will make a WHOLE LOT more.

[nicephoras]

If you are still not convince, let's compare Yankees vs. Manchester United with both having the same revenues and the same number of players.

-------------------NY Yankees -----Manchester United
Revenue: ---------- $300 mil --------$300 mil
Transfer expense:---$0--------------$40 mil
Wage expense: ----$240 mil --------$200 mil
Profit:--------------$60 mil ---------$60 mil

Do you have links for these numbers? There are more issues, of course - Utd. have 11 starters, while the Yankees have at least 17 (5 starting pitchers, a closer and then the 11 position players). The nature of baseball (easily translateable; you know what you get, as opposed to buying expensive talent from another league, less chemistry required, etc.)

Furthermore, you don't understand markets - because there are so many more clubs, the prices of the top talent will be depressed. That's how it works. The bigger the market, the fewer the imperfections.

[nicephoras]

So if the US market is not monopolistic (it is free market instead) doesn't that mean the basketball/baseball players would get paid EVEN more? Imagine how the top baseball players would be able to get if the Yankees or Red Sox don't get tax for overspending.

Same as they do now. The luxury tax hasn't stopped the Yankees and the Red Sox from being in the salary stratosphere.

All that matter is SUPPLY for Elite soccer players and DEMAND for Elite soccer players. The equilibrium will determine the price.

There is no cut-off for "elite" versus "non-elite". Who is one and who is not? Furthermore, unlike the US, where you can construct a fantasy lineup in baseball and have it work, it won't in the US. You can have a great player at every position in baseball, you can't in football. You need water-carriers. Furthermore, while it is easy to determine who is "better" by easily measurable statistics in baseball, you can't in football. Is Eto'o a better striker than Henry? ******** if I know. No one does.

Supply of elite players = limited
demand for elite players = depends on how much Man U/Chelsea/Real/Barca/Milan/Juventus are willing to pay. If they have $40 million extra each year because there is no transfer fee expense, you can bet they will spend a big chunk of that $40 million to attract these elite players. Hence, the wages of these elite players will increase. It's simply logic really.

Except that things are generally more complicated than you think. Lets say Chelsea gets more money. How many more "elite" players can we buy? Seriously, who else do we need? Where would they play? Its not like baseball where you can have three awesome outfielders or 5 top of the line starters. It doesn't work like that.

Example: Man U/Chelsea/Real/Barca/Milan/Juventus has $150 million for player payroll. Because they have ZERO transfer fee expense, they now have $190 million to spend. Guess who benefit?

The owners from pocketing the extra money, most likely. Why pay that money to players when there's no real competition? If you're competing with 5 clubs on salaries, they'll never rise too high. There are far more "elite talent" attacking forwards than there are clubs who can buy at the "elite level". Therefore, players want to play for those clubs as much as clubs want to buy them. And you can't hoard them, because having Ronaldinho and Riquelme playing alongside each other is pointless. Baseball is not football and your examples don't work.