How Paul Pogba's £95 million transfer proved to be the catalyst for the current inflation in the transfer market

Chelsea v Crystal Palace - Premier League
Alvaro Morata cost so much money but has enjoyed a miserable first season so far

The current inflation in the transfer market is something which has never been seen before. So many players are being sold for a price which is far more than their market value.

A player like Alvaro Morata, who is on the verge of being considered a flop in his first season in the Premier Leauge cost Chelsea for a sum of £58 million plus add-ons, reaching to £70 million.

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Another example of an overpriced striker is Alexander Lacazzette - who cost Arsenal a club transfer record fee of £48 million then, but his performances have clearly not justified his price tag.

So why is it that clubs are paying so much money for such players?

The simple answer to this question is that the buying club has lots of money and the selling club knows it. The current inflation that the football market is facing can be categorized as 'demand pull inflation'.

It means that the there is an increase in the supply of money, but the supply of goods remains constant. The money which football clubs have been able to generate has not been matched by the supply of world-class talents.

Over the years, football clubs do not want success only on the pitch and commercial success has become a very crucial part of the game. The influx of cash has increased a lot in football these days.

The clubs are able to generate money with help of TV rights, as viewers are willing to pay money for TV subscriptions. Sponsorship deals also help the clubs earn a lot of money on the side.

Also couple this with the fact that football viewers in Asia has also increased, and a new market for footballing giants who want to increase their fan base is open. Last season, Manchester United recorded a revenue of €676.3 million.

So one of the conditions of 'demand pull inflation' has been satisfied - that there is an increase in the supply of the money as the clubs have various sources of generating revenues now.

No valid justification for Paul Pogba's transfer fee

Now the question comes up as to how Paul Pogba's transfer move proved to be the catalyst for this inflation.

It is not for the first time that a big money move happened in the transfer market. Real Madrid signed Cristiano Ronaldo for £85 million, Kaka for £59 million and Gareth Bale for £86 million; FC Barcelona signed Luis Suarez for £73 million; Chelsea signed Fernando Torres for £50 million in the past.

Eibar v Real Madrid - La Liga
Cristiano Ronaldo cost Real Madrid a then-record fee of £85 million

Despite all of these big transfers - some of which turned out to be masterstrokes and some waste of money, there was no mention of the term inflation in the football market. But when Juventus demanded €105 million for Pogba, United obliged and paid a then world transfer record fee for their former youth academy player.

There is no doubt that Pogba is a world-class player, only at the age of 25. But in 78 appearances for the Old Trafford side, he has 12 goals and 16 assists and they paid £95 million for that.

He is in his second season and yet no one knows his best position - he finds it hard to be at his best in a 2 man midfield. With constant media reports coming that he has fallen out with Jose Mourinho, it is doing no good for him.

With United having so much to spend, it is very much clear that they did not spend it judiciously. Though many will argue that he makes United tick and so his price is justified, it is clearly not a very valid argument - if that is the case, then what should have been the price of players like Kross and Pajnic?

Others have tried to justify his price tag by talking about his commercial value and the money he brings to the club. But, the Red Devils did not pay so much money for him to get that money back via his commercial value. They paid it so that he could perform on the pitch and win games for them and in the process, justify his price tag.

Manchester United v Sevilla FC  - UEFA Champions League Round of 16: Second Leg
Paul Pogba has not justified his price tag with his performances on the pitch.

Reference Point for other clubs

When Pogba's transfer was negotiated, several things must have been considered - such as he is a young player, skillful and very talented etc. and Juventus demanded £95 million - which the Red Devils paid.

Now, when another club like FC Barcelona came to negotiate with Liverpool for the transfer of Coutinho, things such as he is a young, skillful, talented player and that he is Liverpool's talisman must have been bought up.

Now Liverpool can take up the point that if Manchester United paid £95 million for Pogba who was young and talented, then Coutinho's price should be much more than him because he is Liverpool's talisman as well. No wonder Barca signed him for £110 million plus add-ons, leading up to £160 million.

The Paul Pogba transfer has become a reference point for clubs negotiating transfers, as the selling club looks to get way more than the player's market value and now the club which is buying the player has generated plenty of revenue. Most clubs are willing to pay that money as they are looking to strengthen their squad, and are left with no other choice.

Thus, the new streams of revenue coupled with Paul Pogba's transfer have proved to be the catalyst for the current inflation in the transfer market and days are not far off when we will see a player going for a billion euros.

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Edited by Shyam Kamal
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