The overvalued market
Football, like any other industry, is subject to the laws of supply and demand. Just as Ibiza’s popularity as a holiday destination pushes up the price of a drink on the island, the transfer fees required to acquire footballers is related not just to the quality of players in that market, but how many clubs are also shopping there.
France’s Ligue 1 is a good example of this. The top division in a country renown for talent development, it attracts scouts from all over Europe. While many players in France are good enough for the richest four European leagues, there is also heightened demand. So much so that our analysis of transfers into the Premier League suggests players from France have cost 17% more than the ‘market rate’ for similar players – without any additional performance benefit.
Finding value therefore often requires treading new ground – but where? We know that there are undervalued markets out there, including, for example, the Swiss Super League. Basel may face relatively weak opponents each week, but our World Super League model suggests that if they were playing in France, they would be Ligue 1 fifth-best team, just above Bordeaux. In other words, these teams probably have similar-quality players.
Both these clubs happened to have sold their best player this summer, but for hugely different fees. Bordeaux’s Malcom has attracted interest from top European clubs for many months, and went for a reported €41 million to Barcelona. Basel’s Mohamed Elyounoussi – albeit two years older – has had less attention, and sold for a reported €18 million to Southampton.
Smart clubs know that they don’t just need to find good footballers, they need to find good footballers at value. This often means going against the grain and finding factors, national markets or even clubs that other teams underrate. Not every transfer can be a success – not even those bought from known markets – but finding value gives us a bit more margin for error.