Transfer sagas will dominate, but can clubs spend big?

The transfer market this summer is setting up to be unlike any other in recent memory, with a host of star players seemingly lined up for big moves and some of the world’s top clubs struggling to find a way to sign their targets while also keeping their best players. Lionel Messi, Erling Haaland, Paul Pogba, Mohamed Salah, Harry Kane and many others face a crucial summer, but time will tell how many will move.

With football still coming to terms with the financial impact of the coronavirus pandemic, some moves will grind to a halt, while others will only happen if clubs can source money from outside the game. As agents, directors of football and club owners begin to fine tune their transfer strategies, ESPN senior writers Mark Ogden and James Olley have assessed what, how and why some deals will happens and why others won’t even get off the ground.

– Stream ESPN FC Daily on ESPN+ (U.S. only)
– ESPN+ viewer’s guide: Bundesliga, Serie A, MLS, FA Cup and more

---

Will we see a busy summer for these big, rumoured moves? Why/why not?

Mark Ogden: Some big deals will get done this summer, but only when it’s the best option for the selling club. If Juventus miss out on Champions League qualification, they will almost certainly have to offload Cristiano Ronaldo, while Borussia Dortmund know they can sell Haaland for perhaps three times more this summer than if they wait a year and allow him to trigger a €75m escape clause in 2022.

Manchester United may decide that selling Pogba, rather than allowing him to leave as a free agent next year, is the most sensible option, but if a club has a player tied to a long-term contract — for example, Kane has three years to run on his deal at Tottenham — then the financial impact on football caused by the pandemic means that potential buyers will have to raise money that simply isn’t there.

James Olley: Without the pandemic, there is a natural rhythm — defined by factors including a player’s age, length of contract and time spent at their existing club — which would suggest transfers involving Haaland, Kane, Ronaldo, Pogba, Salah and Messi were all distinctly possible for varying reasons this summer. It will come down to a judgement call between fiscal responsibility and signing a match-winning talent who could redefine what level of success is possible.

Missing out on Haaland, for example, would save big money now only to have huge footballing repercussions for years. One big deal could trigger a chain reaction where two or three others follow as the market resets itself following the pandemic.

How much are big clubs really struggling for money?

Ogden: Even football’s biggest clubs are struggling. Sources have told ESPN that Manchester United are losing between £4m to 5m every time a game is played behind closed doors at Old Trafford. Recently published financial results revealed a 95.5 percent drop in United’s matchday revenue in the three months up to Dec. 31, 2020. Sources have said that Liverpool are anticipating an annual loss in the region of £40m this year, despite winning the Premier League last season, while Manchester City reported a loss of £126m in their annual report despite also recording the highest wage bill in English football history at £351m.

Every club is feeling the heat in a similar fashion, with commercial revenue also down because of rebates due to broadcasters. Real Madrid and Barcelona are both battling mounting debts linked to high wage bills and stadium rebuilding projects, things that predate the pandemic and been exacerbated by the problems of the last year.

State-owned clubs like Manchester City and Paris Saint-Germain may find ways to fund summer recruitment, but any excessive spending would likely trigger a UEFA Financial Fair Play investigation.

Olley: Mark’s right in that when Pep Guardiola says City “cannot afford” players, he’s really referencing the club’s difficulty in making a nine-figure deal compliant with FFP given reduced revenue streams. City have spent eye-watering sums during Sheikh Mansour’s reign, but the £64.3m paid to Benfica for defender Ruben Dias last summer remains their record outlay on a single player, which would at least make a move for Haaland or Kane a departure from their previous strategy.

It is in the interests of all top clubs to play up financial problems because that drives down transfer fees. It doesn’t mean the financial impact isn’t real: look at Arsenal recording a £47.8m loss for the year ending May 2020 (therefore not including another year of COVID-19 pain) and laying off 55 non-playing staff, while using the same government-backed loan facility as Tottenham to help with cashflow. Clubs will have to prioritise getting their own houses in order, streamlining wage bills and encouraging loans for fringe squad players.

There is also very much a sense that the struggle is real for Real Madrid and Barcelona. They are perhaps the best examples of big clubs over-leveraged on their reputations and future incomes, with the pandemic forcing difficult decisions to be confronted earlier than planned. That will manifest in different ways. For example, Real will likely struggle to fund a deal for Haaland without generating income through player sales.

However, although it is a unpalatably cynical view in the context of the worldwide loss of life, in purely squad-building terms, there are a handful of clubs who will view this year as an opportunity. Chelsea spent £220m last summer during a period in which it was already clear how serious the pandemic would be. Everton spent £113m on players in the year ending June 2020, followed by £70m more last summer.

If Dortmund accept Haaland is going to leave at some point, can they really justify losing half the mooted fee they could receive this summer just to retain him for an extra 12 months?

Are there ways for clubs to find the money in a pandemic situation?

Ogden: Manchester City raised £389m in Feb. 2020 by selling a 10 percent stake in the club to U.S.-based private equity firm Silver Lake, potentially freeing up funds for Pep Guardiola to substantially strengthen his squad. Such outside investment is likely to become a tempting option for other clubs who have seen their usual revenue streams dry up.

But share sales don’t always result in the money raised being pumped back into the club: Manchester United confirmed director Avram Glazer was selling £70m of his shares last month before announcing the club would not receive the proceeds.

Olley: Don’t underestimate how much private equity money there is sloshing around, lots of it only too willing to get into football. ESPN reported in April last year that a £1 billion fund comprising contributions from several investment banks was made available to the Premier League and English Football League as a working loan facility to aid cashflow. Ultimately, no collective agreement could be found, but that did not stop a variety of clubs seeking individual agreements with interested parties.

This money isn’t only on offer in return for shares, either. In some cases, it’s available as a straight loan at highly competitive rates of interest and repayable over extended periods. The Bank of England loans Arsenal and Tottenham took out (albeit at an unbeatable 0.5 percent) are due to be repaid in the next couple of months, although it is understood a redraw for a further year may be possible.

Clubs have also sought to grow their social media revenues during a year of fans stuck watching at home while wage bill reductions were inevitable. The Gunners agreed to terminate the contracts of Mesut Ozil, Shkodran Mustafi, Sokratis Papastathopoulos and Sead Kolasinac in January. Although payments to those players are staggered over the remainder of the season, considerable sums were saved, using the additional flexibility created by the BoE loan.

Let’s talk contracts. How do the years remaining on an existing deal complicate, or simplify, approaches for some of the top players?

Ogden: It’s a pretty simple equation. The shorter a player’s contract, the less control a club has over their future. Barcelona are powerless to stop Lionel Messi leaving as a free agent when his contract expires on June 30. They can offer him a new deal, but if he rejects it, Barca have absolutely no ability to raise a fee by selling him.

When a player has 12 months to go, he can sit it out and leave for nothing in a year’s time, or the club can opt to act. Alternatively, a new contract can be agreed, but with 12 months left on an existing deal, the player is usually the big winner. When a player has two or more years left on his contract, the club is in control and can set a sky-high price-tag to either deter buyers or guarantee a huge transfer fee.

Olley: The only point I can add here is that age is a significant factor. Kane has three years left on his Spurs contract, but he turns 28 in July and that only increases the urgency in feeling a player of his calibre should be winning trophies now. Pogba was 28 in March and would still command a significant fee with one year left, making the gamble on allowing him to leave for nothing in 2022 that much greater.

Which clubs are perhaps more motivated to make moves happen this summer, either as sellers (Liverpool/Salah) or buyers (Man City/Haaland or Messi)?

Ogden: Salah is 29 in June and will have two years remaining on his Liverpool contract, meaning he’s in the sweet spot of being a sensible sale for the club. Liverpool would generally consider two options in this instance: help facilitate a transfer, or negotiate a new contract. But a new deal would see them commit to big wages until Salah is 33 or 34, when he would have no resale value. The gamble is whether to back Salah to continue to score goals consistently for the next 4-5 years to justify that risk or if, at 29, it makes more financial sense to sell.

Liverpool’s problem is that the pandemic has ripped up the rulebook. Selling Salah this summer would be a good move in normal times, but few (if any) clubs would have the funds to spend big on a 29-year-old in these difficult times. So Liverpool may have to keep Salah without extending his contract, which makes them vulnerable to the player becoming unhappy and running his deal down.

Olley: Liverpool face a real conundrum with Salah, as reported in ESPN’s Notebook last week. Chelsea will spend again and City will surely look to replace Sergio Aguero despite Guardiola’s public suggestion to the contrary.

Tottenham are adamant Kane is going nowhere and although they occupy a strong negotiating position, the situation is more complicated. Kane has a genuine affection for Tottenham and ideally wants to win silverware with them. But if they end up trophy-less again, how much longer can he wait? The forward cannot instigate a move — he also isn’t the type of character to rock the boat — but he is also fiercely ambitious and has previously hinted at his frustration that there hasn’t been more of a tangible return for the progress Spurs have made.

A concrete, competitive bid of between £120m-£150m would have to be taken seriously by a team that invested £1bn in a stadium to maximise income from live events just before crowds were banned for a year.

What else could we look for this summer?

Ogden: Expect loan deals to become the biggest section of the transfer market this summer. Clubs will want, and need, to freshen up their squads, while players will be determined to move if they have fallen out of favour or grown frustrated with their current employers. Arsenal, Manchester United, Liverpool and Spurs have all used the loan market this season, either to bring players in or move them out, and they have all benefited to varying degrees from that system.

Two goalkeepers — United’s David de Gea and Chelsea’s Kepa Arrizabalaga — are prime candidates to be loaned out because they’ve both lost their first-team place, are tied to long contracts and earn big wages. Potential buyers for either player are likely to be thin on the ground, but if United and Chelsea can find a team willing to share some of the wage outlay and give two high-profile international keepers some much-needed game-time, everyone benefits.

Olley: Discussions over trying to finance one of these mega-deals will have a ripple effect lower down. For example, Real Madrid want to keep Martin Odegaard, but he could also be viewed as an asset whose exit could help fund a signing of Haaland’s level. The Gunners are keen to sign Odegaard on a permanent basis — at least two other Premier League clubs have also expressed an interest — and any encouragement they are given will be a sign something bigger is happening in Madrid.

There will be significant change in the strikers at Chelsea. Timo Werner has struggled badly in his first season and needs support given Olivier Giroud is set to depart as a free agent, while talks over a new deal for Tammy Abraham have stalled due to his lack of game-time. If they land Haaland, great, but Aguero is viewed as a possible alternative, heading a shortlist that also features Inter’s Lautaro Martinez.

The wider picture, though, is troubling. Many clubs are going to post huge losses as the full financial impact of the pandemic is laid bare over the remainder of 2021. The January window is never especially vibrant, but this year’s was noticeably quieter — only five Premier League clubs spent money on permanent signings — with sources telling ESPN that several teams were concerned about the pandemic to the extent they retained players in case an outbreak of the virus ripped through their squad.

As a result, agents were trying to generate interest rather than facilitating deals. A lingering sense of that caution may even partly explain the recent Mino Raiola roadshow with Haaland, travelling Europe to drum up excitement. Many clubs are used to kicking the can down the road, borrowing and spending against future income. COVID-19 has brought that risk-taking into sharper focus, though the temptation will always be there to gamble on another signing.