Covid-19 whittles footballers’ value

17 May, 2020 - 00:05 0 Views
Covid-19 whittles footballers’ value

The Sunday Mail

Coronavirus is widely expected to see the era of massive inflation of football transfer fees abruptly come to an end.

With the financial security of many smaller clubs threatened, Europe’s richest clubs are apparently poised to swoop for a host of discounted talents in the next transfer window — but the price-tag of some players may prove more resilient than they expect, according to a new report.

Due to the extremely contagious nature of the current Covid-19 pandemic, the international machinery of elite football has ground to a halt.

While it makes sense to have suspended football indefinitely on health grounds, the current hiatus of the sport has laid bare the crumbling financial structure at the heart of the beautiful game.

As there is no new football to screen, many television companies are threatening to demand a reimbursement of their broadcast fees for the 2019/20 season; fees which a number of clubs have long spent.

In this complex environment clubs are not all being affected the same way.

As is the case with a recession in any market, many of the wealthiest and most powerful entities in football are looking to leverage the current crisis to consolidate their domination of the sport.

Previously financially strong clubs have been able to weather the Covid-19 lock-down easily, maintaining sustainable liquidity without match-day revenue — enabling them to take advantage of financial desperation among smaller clubs to prize their top players away at discount prices.

Clubs more reliant on match-day income and player trading activities will be more severely affected in the immediate fallout from the pandemic — but according to KPMG research, they will not be the only ones.

The smaller clubs will be forced to sell players, often for less, to make ends meet, is also expected to have a knock-on impact on clubs whose business model depend on player trading.

In recent years, a massively inflated transfer market has enabled the likes of AS Monaco, Olympique Lyonnais and Ajax to cash in on their well-known abilities to develop new generations of elite players.

Monaco in particular managed to rake in a colossal €282 million from its sales since 2016/17 — though a large portion of this relates to French wonder kid Kylian Mbappé’s €180 million move to Paris Saint Germain — and so the club’s business model may have to adapt rapidly as the post-Covid-19 transfer market deflates.

However, there may be other factors at play which mean that some players’ price-tags remain high — even if not quite at the levels seen last year.

The remaining length on a player’s contract is without a doubt one of these.

Usually, remaining years on a contract are often an important variable in determining a player’s value, because the current employer faces the risk of losing the player as a free agent once his contract runs out.

In this unique situation, such a circumstance is likely to have a higher impact than usual: the more time a player has until the expiration of their contract, the more limited the impact on their value will be.

With clubs from football’s top-table apparently circling the club’s 24-year-old goalkeeper André Onana, Ajax’s chief executive Edwin van der Sar has warned the likes of Manchester United, Chelsea and Barcelona that there will be no “50 percent discount” handed out by the Dutch side.

At the turn of the year, TransferMarket.com said Onana’s worth was apparently €45 million.

While it has fallen to €35 million as of April, that valuation would suggest that there are a great many young talents out there who elite European clubs will be unable to obtain on the cheap.

Similarly, Onana’s 23-year-old Ajax teammate Donny van de Beek has seen his value fall from €55 million to €44 million over the same time frame.

On the other hand, players older than 25 may see more drastic declines in value — in which case, Ajax’s directors might be quietly laughing to themselves at having offloaded 27-year-old star Hakim Ziyech to Chelsea, weeks before the lockdown could have wiped a portion off his €40 million value.

Emphasising this, according to KPMG, with France’s domestic league season cancelled, the value of 28-year-old Neymar will slump to €177 million — after he cost Paris Saint Germain €222 million, meaning the club face a colossal loss if they are still to offload the want-away Brazil star in the next transfer window.
— Consultancy.uk

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