Chelsea Rumours Archive May 27 2020

26 May 2020 22:43:39
Ed002, would you mind reposting your excellence summaries on:
A) how transfers are conducted and
B) the breakdown of costs involved in a transfer deal?

{Ed002's Note - (a) The scouting staff will prepare reports on players and provide an idea about price; coaches will look at the players but have no idea about price; they will go to a Director of Football (or perhaps a mix of the finance director and others responsible for the monies) and say we would like this player and we think he will cost £x. Checking against available budgets, the club will likely approach his agent to ask if the player might be interested in the move and a broad idea about the package the player would want, and any broad idea about what the club would want - and what terms they may be open to (cash up front, spread over a year etc.). This sits inside the overall transfer process which looks something like this:

The same way as any other club do. The process should be along the lines of: Clubs will typically informally ask an agent (a) if the player is going to be available, and (b) would the player consider a move to the club. There may be some broad discussion on the sort of deal that would be offered but no more than that. If the answer is yes, it is then necessary for the club to approach the player's club to ask if they would be willing to sell and if they would grant permission to speak to a player's agent formally to negotiate about a transfer and even to the player about actually making a move. This will typically involve the showing of serious interest (perhaps through an offer) or actually agreeing a fee and responsibility for any significant costs (agents fees etc.). Once this has happened the club will be able to speak formally to the player's agent and perhaps the player himself to look at the package that will be involved. Many players are looked at and discussed at a high-level with agents and clubs; a subset of those have an offer placed; a subset of those involve discussions with the player's club; a subset of those involve discussions over terms, and; a subset of those go ahead.

Agents will often try and get more specific details of wages and other financials before they should - but most clubs are happy to follow this process. Players will often talk to other players about moves but, whilst wrong, is tolerated as it would be impossible to manage.

Alternatively, a selling club may ask an agent to find a new club for a player and he will talk directly to potential selling sides about the fee, personal terms and interest.

The rest of the time agents will be on fishing trips trying to find interest in their players.

In terms of what happens when the negotiations take place, broad agreement (player available and open to discussions, understanding of the price) will already have been reached. The clubs will meet to discuss the details of the transfer fee, other costs associated with the move and the structure of the payments and any additional fees (e.g another €5M for winning the Champions League etc.) but this does not take a "few days".}

(b) It might be an apt time to explain again about the cost of transfers (excluding wages). What is paid by the buying club would typically include:

(a) Transfer fee - the big number.
(b) Any levy applied by the local FA – 5% for the Premier League.
(c) Tax due on the transfer fee – typically this will be VAT (at varying rates across Europe) some or all of which should be reclaimable.
(d) Agent fees – this may be to one or more agents (as an example, Liverpool have spent £44M plus VAT on agent fees (nearly double the next highest) last season alone).
(e) Tax due on the agent fees – typically this is VAT at the local rate where the agent bills from – it is not reclaimable.
(f) Intermediary fees – this may be to one or more sponging leeches (what do you mean you have a super agent?) .
(g) Tax due on the Intermediary fees – typically this is VAT at the local rate where the Intermediary bills from – it is not reclaimable.
(h) Signing on fee to the player (possibly including non-reclaimable VAT if the player is VAT registered).
(i) Legal fees.
(j) VAT on legal fees which is reclaimable.
(k) Moving/relocation costs for the player.
(l) VAT on moving/relocation costs which is reclaimable.
(m) Solidarity and Traing Contribututions (see below).
(n) Paying up insurance costs to the selling club (usually waived).

What is paid by the selling club would typically include:

(a) If the player is under 24 and moving between different football associations, a Solidarity contribution paid to his previous clubs responsible for his training - this is 5% of the transfer fee received (apportioned 5% of the contribution for each year from the season of his 12th birthday to the season of his 15th birthday and 10% of the contribution for each season from his 16th to 23rd birthdays). This is generally (there are exceptions) recoverable from the buying club but responsibility (that is meant to be with the buying club) can be assigned to the selling club.
(b) If the player moves to a higher category club (all clubs being categorised 1 to 4) then Training Compensation is due for the period of age 12 to 21. Compensation is due to all clubs when the player turns from amateur to professional and thereafter only when he moves from his final training club to another club. The initial training compensation is levied at the training costs associated with Category 4 clubs. The subsequent figure is agreed between the sides or tribuneral if necessary. This is generally (there are exceptions) recoverable from the buying club but responsibility (that is meant to be with the buying club) can be assigned to the selling club.
(c) Any monies owed to the player if he did not request a transfer – again this is 5% of the transfer fee received.
(d) Any monies owed to the player in terms of his contract (typically outstanding owed wages (not future wages) and bonuses).
(e) Any money contractually due to a previous club as the result of a sell-on clause.}

27 May 2020 03:16:09
Outstanding Ed, thank you for this.

27 May 2020 06:05:11
Thank you very much!

27 May 2020 11:53:44
Brilliant!

27 May 2020 13:49:35
Wow incredibly detailed response, the Liverpool agent fee figure is baffling too, they get paid extortionate sums at times. Cheers ed.

27 May 2020 16:18:56
Fantastic answer.