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The import-export business

We often assess clubs’ efficiency by looking at how well they perform given their wage budget, or revenues. But most clubs are constrained at a more fundamental level by the league they are in. There is a strong relationship between a country’s GDP and its clubs’ revenues. The challenge then for smaller leagues is to grow their revenues beyond what can be expected given the economy they are based in. How can they attempt to rebalance the playing field?

One of the justifications for transfer fees is to help with exactly this. Trading employees for a fee would be absurd in almost any other labour market. But in football it is crucial, both for giving fair compensation to clubs who develop and train players and for helping to maintain sporting competition. 

In some leagues, the cross-border nature of the modern transfer market has weakened this effect. Take Ligue 1 as an example. PSG had a net spend of €810m over the past decade. This was 11 times that of the next nearest club, Olympique Marseille. Before the internationalisation of transfers, this huge net spend would have redistributed revenues to other clubs within the French league, helping to maintain competition. As it was, 83 percent of PSG’s spending went to clubs outside of France.

Whereas the top clubs are by far the largest spenders within the big five leagues, the opposite is true elsewhere in Europe. Benfica, Sporting and Porto had the lowest net spend in Portugal over the past decade, bringing in combined total revenues of almost €2bn from player sales. Benfica made a net profit of €640m over this period, an amount that would have almost entirely funded Bayern Munich’s purchases during this time. Other names to feature at the top of the 2010s net profit list include Ajax,  Lille, RB Salzburg and Udinese.

The Portuguese league as whole punches above its weight. Portugal’s GDP is just over a quarter of the size of the Netherlands’, yet the average quality of the teams in its top division is higher and it supports three teams that are competitive in Europe. In fact, we currently rate Benfica as the best European team outside the big five leagues. Of course, Benfica has one of Europe’s most lucrative academies. But how do some of the remaining clubs get an edge?

Their tactic is to act as a gateway to European football. Portugal was Brazil’s largest player export market over the last decade. Portuguese clubs leveraged a common language and greater knowledge of the Brazilian market to acquire talent that wasn’t accessible to other clubs. This strategy enabled Porto to make €75m over the decade, but it wasn’t just the biggest clubs that had success in this market, with Rio Ave, Braga, Estoril and Chaves all also profiting.

Of course, clubs and leagues outside Portugal are less well-placed to tap into the Brazilian market. So if your club is looking to expand its network overseas to access a new talent pool, what are the key things to consider:

  1. Which overseas leagues are of a similar quality to the league your club plays in? And are they dominated by just a couple of teams that you should focus your efforts on or is the quality level fairly even?
  2. Out of these leagues, where are player wages and club revenues lower than your own, perhaps offering opportunity for value?
  3. Where do you plan to eventually sell on any imported players? Most transfers are for very low or even zero fees, so identifying leagues of the right standard, playing style and visa requirements to then sell players on to is essential.

It can be hard to focus on the long-term in the frenzy of the January transfer window, but with careful planning we can make the transfer market work in our favour.

About Sophie Tomlinson

Sophie Tomlinson has created 10 entries.