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How much should Özil have been offered?

At the beginning of February 2018 Mesut Özil accepted a new 3.5 year deal at Arsenal worth an estimated £18.2 million a year. Unfortunately for Arsenal, since then Ozil has only played 47% of Premier League minutes, clearly below expectation for a high-earning player. By viewing the market at the time of the offer through the lens of our models can we answer the question: how much should Özil have been offered?

The most valuable assets of any football club are the players; the biggest expense of any football club are the player’s wages.Therefore, maintaining a healthy wage structure is a crucial consideration when running a club. An understanding of the relationship between a player’s contract and their market value can prove enormously beneficial when entering into contract negotiations. Setting predetermined upper limits, obtained via an objective look at the market, can prevent clubs from overspending and distorting their wage structure.

With the transfer market plagued by uncertainty, it has never been more important for clubs to assess the architecture of their player’s wages. One way to measure the health of a club’s wage structure is to look at the proportion of contract adjusted value that is lost by looking one year into the future (assuming no new signings, no contract extensions and no changes to the performance level of players). Of teams in the big 5 leagues Villarreal are highlighted as having the healthiest wage structure, losing just 17% of their squad value. They are followed closely by Borussia Dortmund (18%) and Atletico Madrid (18%), both buoyed by the recent signing of long term contracts by valuable assets. At the other end of the spectrum things go from bad to worse for Paderborn who, having just been relegated from the Bundesliga, are projected to lose 73% of their squad value. With just 1 year left on Lionel Messi’s contract Barcelona also feature among the bottom 10, projected to lose 43% of their squad value.

At the time of Özil’s contract signing we estimate that Arsenal were projected to lose 26% of their squad value over the next 12 months, healthier than the average big 5 squad. The disruption since caused by Özil’s inflated wage therefore seems even more unnecessary. Based on factors such as his on pitch contribution, summarised by our Player Contribution Model, and age, our model estimates that, at the time, Özil had a market value of £30 million. Our research suggests that for a peak age player the ratio of 3 years worth of wages to the 3 year contract adjusted value of a player should not exceed 1.0. This provides an upper estimate for Özil’s wage of £10 million a year, a little over half of what he received. Entering into negotiations armed with this type of information can help clubs use their budget more efficiently by understanding when the value for money has disappeared.

About Alex Fassone

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