How does the transfer system work? A Transfer window guide

This article is targeted specifically to those who have started to follow the game passionately from only recently, to those who get excited or fearful in equal measure when a transfer rumor is within earshot; and to those who are totally confused about how the transfer system in football works. In case the reader is one who knows the system, I only advice you to verify whether my understanding of the system is right or not.

The inspiration for writing this transfer guide came from a friend of mine, who believed that Radamel Falcao was heading to Chelsea all along, but was shocked to see the name of A S Monaco, having never even heard of the club’s name before! So, what took him by surprise? Wasn’t it Chelsea who were leading the race, with the lure of money and trophies in equal proportions? Where did A S Monaco come from?

(Henceforth, the usage of the word ‘transfer’ will mean a permanent move. I will not cover loan moves for now)

Initiating a transfer

So what initiates a transfer? Here, we see two paths of action – the player requests for a transfer for various reasons, or another club bids (we can assume a third path as well, if we consider the move of a player released out of contract as a transfer). The second option here can again branch into two paths – a bidder matching the player’s release clause, or lodging a suitable bid in normal circumstances.

The process of buying a player involves a series of actions. Initially, one needs to understand that when a player plays for a club, he is contracted to the club. In other words, he is paid to serve the club for a stipulated period (a fixed number of years, subject to renegotiation), following the expiry of which he is free to follow his own path. Depending on factors like age, skill etc., wages are fixed in a player’s contract.

Thus, as long as a player stays contracted to a particular club, he is owned by them. Sometimes third parties may be involved, staking their claim of ownership of the player. Again, the share of ownership may vary depending upon the agreement between the third party and the club. Classic examples of third party ownership include the likes of Carlos Tevez, Radamel Falcao, Javier Mascherano etc. (all in the past). As long as no third party is involved, the player is completely owned by the club.

Similar to real world circumstances, when somebody owns something and you want it, the obvious way to get it would be to pay them. Simple enough. Similarly, when a club wants a player of some other club to play for them, they naturally approach the club to negotiate a fee. The fee is usually paid to the player’s current club (called as ‘parent club’) to cancel his contract with them.

So, one can think of a transfer fee as money paid in order to free a player from his current parent club’s contractual clutches. The fee paid is dependent on various factors like the player’s form, age, the number of years left on his contract or his current role and stature in the team. All these factors come into play when a club decides the valuation of their player.

Agreement between bidding club and parent club

The next course of action lies with the bidder. The bidding club and the parent club need to reach an agreement on the player’s transfer fee. These negotiations may take anywhere between a few hours to many weeks! Sometimes a player is thrown into the mix as well. This is called as a ‘cash plus player’ deal. That is, the bidding club offers one of their players (or a couple more), and money in exchange for another.

The negotiations finish in either an agreement or non-agreement of conditions proposed by both sides. A non-agreement is usually referred to as a ‘failed bid’, an agreement is referred to as a ‘successful bid’. The payment may either be instantaneous, or in an agreed schedule, again subject to agreement.

Release clause

Now, this is not the only way to get a player from another club’s employment. A player’s contract has an optional ‘release clause’ or ‘buy-out clause’ amount mentioned in it. This means when a bidder matches or exceeds the release clause amount, his current club cannot stop him from moving to a new club. When the buyout clause is matched, the player is free to negotiate with the bidding club.

A bidder meeting the buyout clause of a player’s contract is equivalent to his current club accepting the offer, whether they like it or not. Hence, buy-out clause amounts for top players, though optional, are ridiculously high. Parent clubs insert clauses in the player’s contract in order to cash in on the player when he becomes hot property.

Messi’s buy-out clause is rumoured to be close to a billion euros

In case of third party ownership, the bidding club not only needs to satisfy the demands of the parent club, but also the third party for the move to happen. This may again involve the same saga of negotiations.

When all parties related to the player’s ownership consent by way of agreement, the player is free to talk to the bidding club. At this stage of negotiations, the player negotiates his wages, his future role in the team, the contract period, the bonuses, entitlements, jersey number, disciplinary rules, advertising assignments, leaves etc. By mutual consent, the player and the club can even choose to insert a buy-back clause in his contract with his new club, for other bidders in the future.

Agents

These days, most player have ‘agents’, middle-men who look after the player’s and their own interests. These agents, almost like brokers, are a very powerful tool in negotiations. They can have a crucial say in every stage, starting from the buyout clause value to the player’s wages. They make quite a handful in negotiations. An agent for a player is optional.

For example, here’s a quote by Jack Wilshere -

“I do not need an agent because I will never leave Arsenal”

. On the other hand, an agent can represent multiple players, or even managers, simultaneously.

Ratification of a transfer

When an agreement on personal terms is reached, the transfer is almost complete. Then, the move has to be ratified (or officially accepted) by the FA of the leagues to which both clubs belong. Now, the clubs are allowed to publicly announce the completion of the transfer. The player is now under contract with his new club completely. Third-parties may still be involved, and may still be paying the player his wages based on their own private deals.

We can make out here that upto five sides are involved in a player’s transfer – his current club, his new club, the player himself, an optional agent, and an optional third party. The finalization of a transfer and the player’s deal at his new club depends on satisfying all the five potential sides involved.

Buy-back clauses

Sometimes, even at his new club, the player may not be free from his new club. Some clubs, in the transfer agreement, insert buy-back clauses (Barcelona are a typical example here). With this powerful tool, they get first preference to buy back the player in the future when he needs to move. Thus, they steal a march on rival bids in any future transfer of a player.

Consider Oriol Romeu, a defensive midfielder for Chelsea, bought from Barcelona in 2011. If Chelsea want to sell him, Barcelona will have the first option to buy him, depending on whether they match Chelsea’ valuation of the player. But this valuation is decided by the initial transfer of Romeu to Chelsea in the first place, that is, the money Barcelona will have to pay in order to buy him from Chelsea will be mentioned on an yearly basis in the original transfer agreement.

Free agent

It may even be possible that a player is not at all contracted to a club. He remains a ‘free-agent’. In other words, he is released by his club following the expiry of his contract. Then, a club which wants him need not have to talk to his employers, because he is contractually free of them. So, the first stage of agreeing a transfer fee is avoided. The process starts and ends in the second stage itself, where the player and the club agree his contract.

Loan moves

The kind of transfer I tried to bore you about is called as a ‘permanent transfer’. Another type of transfer also exists, called as a ‘loan move’. It is a ‘temporary’ transfer. As the name suggests, the player moves to a new club only for a stipulated period of time, following the completion of which he returns to his current club. Players move on loan either to get more exposure when they are extremely young, or in case of older players, more playing time. In a loan move, the player’s new club and his parent club pay his wages and bear the costs of any injury he may unfortunately sustain. The period of a loan move may range from a few months to an entire season.

Chelsea loaned out Romelu Lukaku to West Brom in a bid to ensure more playing time for the Belgian striker

Another interesting term you may have heard is ‘deadline day’. This is the last day of the transfer window. You will hear all sorts of stories which make even FIFA Manager Mode transfers look realistic. The media goes into a frenzy, spinning out rumors left, right and center, making the deadline day a fun and equally irritating experience.

Most deals, stalled for weeks, suddenly accelerate to top gear. Fresh negotiations may start and finish within minutes. The clubs look to beat the strike of the transfer deadline and complete deals. It is surely entertaining for fans to follow on the internet.

To conclude, I hope I have been clear in my explanation, which is, to the best of my knowledge, correct. To summarize the system, you can take home the fact that the complexity of the entire system lies in the first stage of negotiations between the two clubs.

This is the more important stage because it includes the transfer fee, payment schedule, fee owed to the player’s former club which may have demanded a share of the player’s transfer fees from the club he is leaving, whether a permanent or temporary player exchange is on the cards, an optional buy-back agreement with future fees, and possibly some sweeteners like instant fees, agreement for future transfers of other players etc.

So, the next time you hear a rumor, lend a deaf ear to it. Though it may include phrases like ‘trusted insiders’, ‘various sources’, ‘…is reportedly set to move’, ‘..is unsettled’, ‘…are leading the race to sign’ etc., it may turn out to be as unlikely to happen as Ryan Giggs moving to Manchester City. Then you may please recall the lengthy procedure involved, and rate its probability yourself – decide whether to take it with a pinch of salt or seriously worry about it. Believing those rumors is all up to you in the end.

That’s all folks!