Friday, November 24, 2017

Football Assets

Paris St-Germain  paid 222m euros ($260m; £200m) for the player, more than doubling the previous record set when Paul Pogba returned to Manchester United from Juventus for £89m in August 2016.
Latest data from Fifa, the sport's governing body, show there have been 15,291 international transfers so far in 2017, with total spending on players hitting a record $6bn (£4.58bn). That record figure is a 25% increase on the $4.8bn spent in 2016.
"There are two driving factors behind the soaring spending," says Harry Philp, a football finance expert at London-based Portland Advisers.The first is the emergence of China and the huge transfer fees that they are prepared to pay, and the second is the fees English Premier League clubs can spend thanks to their ever more lucrative TV deals. These factors are driving up the value of the global market."
Chinese clubs spent a whopping $451m on football players last year, an increase of 168%. That made them the fifth biggest spenders in the world after England - where clubs splashed out $1.37bn on global stars - Germany, Italy, and Spain. One of the key objectives fuelling China's transfer drive is to raise the overall standard of football in the country so as to assist the national team in reaching the World Cup for only the second time in their history, following their debut in 2002. Chinese clubs are investing almost exclusively on players coming from Europe, but not necessarily Europeans. Many of those making a playing name for themselves in East Asia are South Americans, and Fifa's data shows Brazilians and Argentines are the most transferred nationalities globally.
"Irrespective of how their national team is doing, Brazil continues with its production line of young players for sale around the world," observes Mr Philp. "It is a socio-economic phenomenon, with football still being a way out of the favelas and a means for a youngster to financially support his extended family." Not only does Brazil produce talented players for export, with their stars now plying their trade in 118 countries, but their total financial accumulated sales value came to $594m in 2016, the most for any playing nation.
There have been accusations that clubs such as Chelsea, and to a less extent Manchester City, are scouring the globe for top young talent to stockpile.
"They are then put out on loan to see how they develop," says Mr Philp. " A small proportion will make it into to the first team, and the rest of the pool of talent can be sold on, usually at profit. This provides revenues for the clubs to then buy one global top star player, and also to assist in compliance with financial fair play. These clubs are trading players, almost running what I would call 'asset-management businesses'."

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