Neymar transfer — of world records, numbers and value
Transfer fees make a quantum leap
Neymar recently became the most expensive football player — ever. Compared to what we’ve been used to, the numbers are so big that they’re incomprehensible.
I attempt to deconstruct the deal numerically and philosophically.
For a fee of €222 million, Paris St. Germain (PSG) purchased Neymar from Barcelona. This is the highest transfer fees in football, obliterating by 111% the mark set by Manchester United (€105m for Paul Pogba) just last year. In the year prior, Real Madrid had broken the ‘psychological ceiling’ by paying €100m for Gareth Bale.
And this is just the transfer fees component. Neymar’s salary will be a reported €30 million per year.
For a moment, let’s put Neymar aside. €30 million is a lot of money in anyone’s world.
But how big is it?
We can easily count 1–10 on our fingers. Up to 20 we can visualize vividly. Anything beyond that, we are into cursory imagination. Millions are beyond imagination, most of the time. If I could imagine millions, then I would be in a yacht somewhere in a sparkling blue sea!!
How big is €30 million? It roughly translates to:
- €576,000 per week or
- €82,000 per day or
- €3400 per hour or
- €57 per minute or
- €1 per second (approx. €0.95)
Not bad huh?
If we talk about transfer fees (€222 million), counting at €1 per second, it will take us 7 years of non-stop effort.
These are big numbers. Unfathomable for the layperson.
The big bang, the suddenness, the largess and the audacity of the deal is truly mind-blowing. Obliterating an existing world record, so casually, almost has taken the romance out of the transfer market. Previously, as the numbers inched ever closer to the psychological ceiling of €100m, there was anxiety, excitement and heart beats raced on the trivial details of how close the deal would come to €100m. When the Pogba deal reportedly eclipsed that, there was general acceptance that this would be a long standing record and perhaps an exception. But as transfer fees generally went up, people thought that it could be beaten, but then only by Real Madrid, Barcelona or the Manchester clubs, and maybe not by that much.
The scale of the obliteration is stunning.
As one would expect, in football, audacious moves have had polarized results. Our thoughts goes back to Berlusconi’s AC Milan of the late 80’s or Real Madrid’s series of world record Galactico purchases. In both cases, these coincided with disproportionate success on the field. Then there were world record transfers that did not fare so well — Denilson, Lentini and Ronaldo perhaps come to mind.
We don’t know how this deal will turn out. Personally, I hope it turns out well for Neymar. As a follower of football, if PSG can make this swoop work for them, then that will be the epitome of money well spent. Time will tell.
I personally feel this money could have been better spent than merely triggering buyout clauses, whose sole purpose is to make a player prohibitively expensive.
For many friends, especially ones who don’t have a big interest in football, the immediate question was — why is so much money being spent (i.e. wasted) on a 25 year old player? It could instead be used to build [x], support [y] or do [z].
But these arguments miss the wider point.
Football is business. Big business. And getting bigger.
Players are assets that are put into service to generate revenue and glory for the enterprise (club). How different is this ‘purchase’ to an airline buying an A380 for say €370m?
PS: I just realized that both PSG and Barcelona are sponsored by airlines — this example is merely a coincidence.
PSG would certainly have done their cost-benefit analysis. Neymar would have done his. Barcelona, supposedly would have done theirs.
The question is no longer about the ‘obscene’ amounts of money. It’s about using assets to generate future value — financial, non-financial, strategic or emotional.
Money will continue to play an increasingly important role. But the lens from which we view football has to change. It’s moved on from being a game I feel. Yes, there is the spectacle aspect but the driving force is the business of football. PSG and Barcelona are among the wealthiest clubs in their ecosystem. From a player transfer perspective, this fees seems outrageous. From a business and strategic perspective, it’s par for the course. If we see PSG and Barcelona as the Fortune 20 equivalents of the football world, then this ‘strategic acquisition’ from a rival, that strengthens one club at the expense of another, is simply a calculated risk.
The “Transfer of the Century” certainly has many strategic underpinnings. The value received by the buyers, albeit mostly intangible, is probably worth the price.
Paradoxically however, the more important money becomes, the more of a background role it will start to play.
After a while, money may cease to be a talking point at all. Indeed in 5 years time, maybe €222 million will not seem so staggering. Much like we are now accustomed to multi-billion dollar internet business valuations. Money will purely be a means to an end. Indeed, in the future, buyout clauses may even become obsolete as they can be a double edged sword — deter buyers but at the same time, also limit the seller to a valuation that may not reflect current value.
The conversation will shift to assets, value and strategy.
If anything, perhaps this transfer will best be remembered a first vivid signal of football clubs transitioning from a P/L focus to more strategic orientations.