Why Pogba’s £89M Transfer Isn’t Worrying, but Musa’s £16.6M Transfer is.

Manchester United recently broke both their own club record transfer fee, as well as the world record fee when they re-signed Paul Pogba for £89 million from Juventus. For some time now, spending in football has been somewhat of a hot button issue and Pogba’s move is just the latest in a recent string of high-priced transfers that beg the question: are they worth it?

The simple answer is: it’s hard to tell. For starters, the football community can’t really agree on how to value players. Analytics in the sport in general is still in its infancy and has only recently started to emerge from what I call the “data aggregation stage” — which saw the creation of companies like Opta — to the one in which empirical methods are actually implemented and used for decision making. There is still a large amount of skepticism that surrounds using data-based methods for scouting and tactics, regardless of the inherent bias and subjectivity that exists when omitting them. This continued skepticism has resulted in the industry lacking the dedicated research and investment required for standard valuation methods to exist. Therefore, it’s hard to tell at this point whether Pogba or any of the other recent high-priced transfers will be worth the fees their respective clubs paid. While Pogba in particular had been touted as the “best player in Italy,” it’s hard to put that much weight behind such a title when so much subjectivity exists in the way we currently evaluate players. And, at the end of the day, when clubs sign young players they are paying for potential more than anything else, which adds a layer of uncertainty that makes it even more difficult to judge the worthiness of a transfer.

But, regardless of whether or not these players warrant the prices that clubs are willing to pay for them, the price tags alone are causing concern that money is ruining the game. Yet, as staggering as an £89 million price tag might seem (especially given United let Pogba leave the club for just £800,000 4 years ago) it actually isn’t all that staggering when taken in context.

First of all, transfer values can’t simply be looked at without the added context of who the purchasing club is and what their revenue is. While Pogba’s transfer was the most expensive in the last two seasons — given it represents 17.45% of United estimated 2016 revenue — it isn’t much of an outlier compared to the other top transfers. And interestingly, for as much press as Jon Stones’ £47.5 million transfer from Everton to Manchester City has got, it’s actually relatively cheap when City’s revenue is taken into consideration since it only accounts for 10.86% of their revenue. What’s also surprising, is the composition of the top 5 recent transfers outside of Pogba and Kevin De Bruyne.

Top 20 Transfers as a % of Purchasing Club’s Revenue, from 2015 — Present

Ahmed Musa’s £16.6 million transfer to Leicester, Borja Baston’s £15 million transfer to Swansea, and Gianelli Imbula’s £18.3 million transfer to Stoke might seem like bargains when compared to the likes of Pogba’s or Stones’ fees, but in actuality they aren’t. 13.98% - 15.14% of a club’s revenue is a lot to pay for a player when the club in question doesn’t have historically high or defensible revenues. Although Leicester did win the league last season and is now in the Champions League, which brings with it increased revenue, it’s still to be determined whether last season was simply a fluke. So, their increased revenues are hardly defensible nor reliable. And while many clubs will see their revenues rise substantially over the next few years due to the new British TV broadcast deal, that isn’t enough for clubs to bank on for financing relatively expensive transfers. Especially clubs like Leicester, Swansea, and Stoke whose revenues are largely tied to their league position. Thus, a few wrong, expensive transfers and some missteps in the season that see them drop a few places could have long term, detrimental effects to the financial viability of those clubs.

Now looking at historic Premier League transfer and revenue data going back to 2004, Pogba’s price tag when taken as a percentage of United estimated 2016 revenue isn’t even in the top 25 of most the expensive transfers.

Pogba’s transfer fee was actually on par with Mesut Ozil’s move to Arsenal in 2014 and just below the fees Tottenham paid for Roberto Soldado and Erik Lamela. However, instead of using this to turn the criticism away from United and towards Arsenal and/or Tottenham, I think the most import takeaway from this table is that: high priced transfers are nothing new and the more recent ones are nowhere near historic peaks. In fact, the most expensive transfer on the list occurred during the 2008/2009 season and there are more expensive transfers than Pogba’s that occurred as far back as 2005. The fact of the matter is, club revenues are rising, so naturally the prices clubs are able and willing to pay for players will increase. What’s important is that this natural inflation that is occurring in football isn’t so out of hand that it is surpassing previous peaks. In fact, recent transfer prices are in line with history. However, more attention should be given to transfers like Musa’s to Leicester or Romelu Lukaku’s to Everton (23.24% of revenue), because while the sticker prices the smaller clubs pay might not be as jaw dropping or exciting, they’re actually worth more scrutiny because of the size of the clubs paying those fees.


Notes: When 2016 revenue estimates weren’t available, I used 3 methods to estimate revenue: (i) if historic revenue data was available, I averaged the club’s revenue growth from the prior 5 years and applied that growth rate to 2015 revenue; (ii) if historic revenue data wasn’t available, I applied a 10% growth rate to the club’s 2015 revenue, except if that club was relegated, then I (iii) applied a 5% revenue growth rate to the club’s 2015 revenue.