The value of Lukaku
As an industry, one of our biggest challenges is determining value in the transfer market. Valuations are often done on gut feel, or skewed by recent deals (which in turn are often done on gut feel, and so on). We also know that having a smart starting point can have a strong impact on the final price.
The first thing to remember with valuations is that, in practice, no player has a single ‘market value’. That’s because any one player has vastly different values to different buying clubs – not to mention the fact that the seller has their own considerations to make.
Take Romelu Lukaku, who was sold to Manchester United from Everton this summer for a reported £90m including add-ons. The market conditions dictated this price, but we can imagine how different circumstances might have led to a different valuation, based on changing buyer power:
In scenario A, imagine Manchester United had given Zlatan Ibrahimovic a two-year deal in 2016, and that the Swede had performed all season without a major injury. Here, the need for Lukaku is lower, as is the upside from signing him, leading to a deflated valuation. In the absence of other buyers, perhaps Everton do not sell.
Then consider scenario B. If Manchester United’s other strikers – Anthony Martial and Marcus Rashford – had underperformed in 2016-17 and suffered injuries, the impact Lukaku could have on Manchester United’s performances – and therefore revenue – is much more significant. According to our model, Whereas Lukaku might earn United an extra 5 points a season over a fully-fit Rashford, he might earn them 7-8 over a half-fit and underperforming Rashford, as United would need to call upon other even more inexperienced options.
Finally, scenario C. Imagine three or four other Premier League teams also have a need for a top-class striker, and the supply in the market is more limited. This creates demand for elite players like Lukaku, which drives up his value – particularly when the buying clubs are rivals. This doesn’t mean his value is necessarily distorted, but it may reach a stage where his price exceeds his value to Manchester United and they end up turning down the deal.
Each of these scenarios create very different outcomes. While impossible to account for all market conditions, Acquisition offers a more nuanced approach to player valuations and helps clubs get a sense of where the market would typically be against their own valuation. Player valuations will always be some combination of art and science, but it helps to go beyond a black-and-white view and take a more considered approach.