Where does all this transfer money come from? I think we may have the answer…

By Tony Attwood

The revelation that the top spenders in last summer’s transfer window were all doing worse than they might have expected, has not impacted on the drive of blogs and bonkers journalists to get Arsenal to spend more, more and evermore, even though it was under a year ago that Arsenal Supporters Trust announced that Arsenal only had £40m to spend.

At the time of my writing that earlier piece, the positions of the top spending clubs (after a note about how much they spent on new players) was…

  • Manchester United £148m (currently 7th)
  • Aston Villa £144.5m (currently 17th)
  • Arsenal £138m (currently 6th)
  • Manchester City £134.8m (currently 4th)
  • Everton £118.5m (currently 15th)
  • Tottenham Hots £101.5m (currently 14th)

Every one of those clubs beyond doubt hoped to be doing better by that moment.  Indeed Tottenham Hots even went so far as to sack their manager and bring in the ex Man U manager who was renowned for his expenditure and who was himself sacked by Man U.

Obviously buying players is both expensive and risky, in that the players might not turn out as wished, and if their form fades away might not wish to move away onto a lower salary elsewhere.  Man U, can afford it because of its profits from worldwide marketing, and Man City are backed by a sovereign wealth fund, but one wonders about some other clubs.  Of course I make no assertions against any club – I am just talking about possibilities based on this rather curious twist…

For in the modern market for the players themselves, both failure and success are rewarded.

A player who comes in on a salary of £30,000 and performs brilliantly, might soon be offered a higher salary if he signs a new extended contract.   But a player who performs poorly can’t be offered a lower salary, and many players show a reluctance to move elsewhere where the player will get less money, even when they are not getting games.

Instead, it seems an increasing number of poorly performing players are showing an inclination to sit and see out their contract, knowing that at the end of the contract the player can move elsewhere on a free transfer, which in turn will induce the buying club to pay an even bigger salary.

It is indeed a crazy business in which successful players are rewarded with higher salaries, and unsuccessful players are also rewarded with higher salaries after walking away on a free transfer at the end of their contract.   It becomes virtually impossible for most clubs to make financial predictions or to make ends meet.

As a result of that, banks are getting increasingly worried about loaning clubs any money at all, except as a mortgage on the stadium, which means clubs, often up to their eyes in debt, are looking for a new source of money.

And they have indeed found a way of getting that money.

First there is one big source of money that is always available – the money laundering funds.  Money generated as a result of criminal activity needs to be passed through legitimate activities so it cannot be traced.  As long as the clubs don’t officially know what is going on, they might feel themselves safe.

Second there are clubs that need the money because they see the only ways of reaching the top levels of their league and thus receiving income from European competition is through a) finding brilliant youth players or b) buying players at whatever price is demanded.

But running youth projects is tough and expensive and certainly not a guarantee of finding the best players, and with the standard being raised all the time because of the unfettered access to finance of Manchester City, PSG, Barcelona, Real Madrid and the like, prices are rising and supply is shrinking.

So the question is, how does money move from the criminals to the clubs that want to use it to buy top players?  Enter the super agent.  Here’s how it goes.

1: United sells player X to Rovers for £100m

2: But Rovers will only pay over five years because it doesn’t have the money and the banks won’t lend it the money.  After two years it defaults on a payment and asks for an extension.   However United themselves owe money to other clubs on similar five year deals and say “no”.

3: So DodgyAgents Inc goes to United and says, “you are owed £100m, but you know you won’t get it for a long time – and maybe not at all.   We’ll give you £80m now all in one go, if you sell us the debt.”

4: This can get United out of a financial hole, so they accept.   But DodgyAgents now effectively controls what Rovers do, because Rovers now owe the Agent £100m which they can’t possibly pay.

5: The Agent says, “fine pay us over 10 years, but we want you to sell Upandcoming Kid to Hopeful City for £20m.”

6: Rovers complain that Upandcoming Kid is worth far more than this, but the agent has the club in its control because if there is no deal the club will default and be banned from any more transfer dealings unless it can find a new buyer.   So the deal goes through.

7: Hopeful City are delighted, and are quite happy also to buy another DogdyAgents player again on much-delayed terms.

8: Players elsewhere see what DodgyAgents can do: they can move good players to top clubs, and get better than expected deals for moderate players.   Every player wants to be on the books of Dodgy Agents.  Clubs with no money are approached by DodgyAgents who can arrange deals no other agent and no bank can handle.

Some clubs vow never to touch DodgyAgents again, but more and more players are lined up with DodgyAgents or one of their lookalikes.  Dodgy Agents do nothing wrong in football terms – they don’t own any players, they are merely bankers lending money to clubs who are willing to risk everything in order to rise up the league.  They are however criminal in that they knowingly deal in money laundering.

And if a club goes bust, well, it happens.  DodgyAgents quickly find the players new clubs.  And anyway DodgyAgents effectively own the players’ TV rights, advertising rights etc because these payments are made to the agent not the player.

Agencies can get rich on this sort of arrangement, and the question is what do they do with all that money?  Why, apart from having the sort of lifestyle that used to be reserved for Fifa executives, they start investing it in clubs that are worried about the size of their debt.

Where is it happening?   Look for any modest size club that suddenly has unexpected success.  Look for any modest size club that is spending a very large amount of money on players.  Look at any club that is spending more than it can afford.

Of course you can dismiss all of this and say that the money being spent year on year by modest size clubs comes from their profit, although you might want to check their profit and loss accounts first.  Or their owners (ditto just check the books).

You could perhaps argue that the agents who are acting as bankers are just very wealthy – and of course that might be the case.  But however it is argued the reality is that this opening of the door to the use of agents as bankers has led to all sorts of possibilities.

7 Replies to “Where does all this transfer money come from? I think we may have the answer…”

  1. From the understanding of money laundering, the money is dirty that is illegitimately sourced, illegally obtained, ills gotten, fraudulently gained, criminally gathered, falsely enriched and so on. But thank God! Arsenal have not been known to be involved in money laundering activities either directly or through proxy to fund the club.

  2. Congratulations to the U23 beating Villareal 3-0.

    Tormey, Smith Rowe and Coyle with the goals. I’ve no idea wht it means, as Arsenal.com always use an image for this, which to me is just a big white space (polar bear in a snowstorm).

  3. @ Gord – ” …, which to me is just a big white space (polar bear in a snowstorm).”
    Wasn’t this an alleged famous painting by some Canadian outdoorsman ?

  4. Fifty years ago, it was financial scandal. Ten years ago, it was creative accounting. Now, it is just another pay and play. It is financial revolution. Common sense and moral obligation has no place in football anymore. And this is after Blatter’s FIFA tyrannical empire was brought down. Something more sinister is at play here. Something which is not respected is bound to break and crash. That is why Arsene Wenger should have stayed and chaired Arsenal. The biggest losers will be football fans.

  5. Can you write more about these things!

    I liked the report and assume you have more such material!
    If so, please let us hve it because it is not something that is being written about much.

  6. Brickfields, I am almost hopeless at drawing. Polar bear in a snow storm and black bear at night during a full moon are close to my limit. But, I am not famous. So it must be someone else who did those first.

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