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Talent factories

Powering international trade is the idea of “comparative advantage”: a country benefits by concentrating on the commodity that it can produce most efficiently, exporting this good, and then using the proceeds to buy in the commodities it is less efficient at producing. Even if another country is more efficient all-round and can produce everything at a lower cost, there are still benefits from trading. 

A similar problem faces many football clubs in the transfer market. There might be other clubs with better-funded academies, larger scouting networks, or closer access to player agencies, but that doesn’t mean player trading can’t be used to gain an advantage. 

 

Talent factories

These clubs excel at producing exciting young talent. For some, like Sporting, Bilbao and Schalke, the youth setup is essential to their business model: fees generated from the sale of academy graduates accounted for 75 per cent or more of these clubs’ transfer income over the past five windows. 

Top of the list for fees generated was Benfica, who sold 19-year-old starlet Joao Felix for just over €125m this summer. This wasn’t an isolated success for the academy: Bernardo Silva, Renato Sanches, Goncalo Guedes, Joao Cancelo and Andre Gomes have all left the club for good fees over the past five years.

But as we discussed in last week’s blog, clubs like Benfica and Ajax benefit from being small market leaders: they are in a strong position to recruit their country’s best talent. This can be hard to replicate for smaller clubs in bigger markets, who are competing with better-established and richer academies. 

Some clubs thrive despite this. Bristol City have sold academy products for a combined total of €33m over the past few seasons, with the recent sale of Lloyd Kelly to Bournemouth bringing in close to €15m and Bobby Reid’s move to Cardiff last summer earning the club over €11m.

 

Finishing schools

Even if our academy isn’t producing the very best, we can still benefit financially from developing young talent. Those that are willing to take a risk and give minutes to young players can reap the rewards by significantly increasing their value. This is the niche clubs like Dortmund have found. By attracting young players with the promise of extensive playing opportunities, they have been able to acquire some of the most exciting talent from under the noses of clubs with greater financial firepower.

 Again, this approach can work for clubs outside of Europe’s elite. Nearly 50% of Burnley’s transfer income over the past five seasons has come from selling on players who they bought young and developed. Michael Keane, Danny Ings and Kieran Trippier were sold for a combined €41.7m, almost half of the club’s transfer income since the beginning of the 2015/16 window.

 

Golden Oldies

While developing the next generation of talent can be profitable, there are an ever-increasing number of clubs trying to pursue this strategy. There could be an edge in focusing on the other end of the market.

Buying players towards the tail-end of their career and looking to realise value on them can be difficult: there is a risk of paying big for a player on a downward trajectory who then can’t be moved on. But some clubs operate effectively in this market. 

Beşiktaş have been very active in trading older players over the past few seasons. Demba Ba and Jose Sosa were bought at the ages of 29 and 30 respectively, before being sold for a combined profit of €10m. And Ryan Babel (then 30) and Fabri (29) were both acquired on free transfers, before being sold two years later for €2m and €6m respectively. West Ham and Köln have had similar success in rejuvenating the careers of older players before selling them at a profit. 

Our club doesn’t need to be the very best at something to benefit from player trading. We can still profit by finding a strategy that works well for our club’s particular attributes and focussing on that niche.

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About Sophie Tomlinson

Sophie Tomlinson has created 8 entries.