Free agents - It is a players' world

A week-long series of articles on this summer’s major transfers

The pandemic has seismically shifted European football's transfer landscape, with fee paying moves becoming more scarce while loan and free transfers are more prevalent. As a direct consequence of the financial difficulties brought about by the health crisis, clubs in the Big 5 leagues are increasingly turning to such transfer methods.

The chart above indicates that the number of transfers has significantly decreased by 15% in the Big 5 leagues since the last pre-pandemic summer transfer window in 2019. Breaking down the transfers by type, it is evident that the proportion of fee paying transfers has notably decreased by 6 percentage points to a record low proportion of 30%, while loan and free transfers moderately increased by 3 percentage points each, reaching 48% and 22% respectively.

Free transfers have usually been the most common type in the lower levels of the football pyramid where contracts tend to be short, and have occurred at the top level only for mature players usually past their peak. Most clubs in top divisions generally attempt to sell their assets before contract expiration. However, the most recent transfer window was characterised by an upturn in the volume of high profile free agent signings, as top players like Gianluigi Donnarumma and David Alaba decided to run down their contracts and sign for a new club on a free transfer, leaving their previous clubs without any transfer remuneration, but also often freeing them up from a major salary burden in case of contract renewal. The table below shows a selection of major players who left their clubs on free transfers this summer.

From a top player's perspective, getting transferred for free comes with many advantages. If the player's demands at his actual club are not met, rather than relying on the club to find a suitable potential buyer, players can take more agency by running down their contracts, choosing their new home from a selection of clubs capable of affording their generally high salary. In fact, completing a free transfer in such a way not only potentially increases the number of suitors, but also reallocates the benefits generated by the transfer from the selling club to the player: instead of paying a transfer fee, the buying club usually pays a higher salary, signing-on fee and/or agent commission. By way of example, according to media reports, Messi will earn EUR 25m just for signing his contract with PSG, in addition to a cut of his image rights and jersey sales.

However, the free agent path is not always without obstacles. Injuries or bad performance in the last year of a contract can derail the path players have envisioned for themselves, leaving them with few options and, most likely, lower salary. The multi-year guaranteed deals players sign provide a remedy against such unforeseeable events: financial stability. While elite players can follow a risk-seeking path and bet on themselves due to the financial cushion they have amassed throughout their careers, players a step below don't enjoy the same luxury. Signing a lengthy deal is insurance against an unforeseen event that could hinder their ability to secure a next big contract. For this reason, the prevalent practice is to sign multi-year deals and re-up for better terms whenever possible, leaving little possibility of a player running down his contract.

From the selling club's perspective, letting a player leave for free is not the ideal scenario, as the club misses out on potentially significant transfer fees. Clubs such as FC Barcelona and AC Milan, who lost arguably the best player in the world and the best player of EURO 2020 for free this summer, have missed the possibility to record significant profits on the player disposal, something that would have come in handy especially in such difficult market conditions, where clubs across the globe are facing financial struggles. However, while every transfer occurs under different conditions and reasons, such struggles have on the other hand also been a key reason for such free transfers happening: in some of the cases displayed in the table above, indeed, the actual club did not have the financial muscle to be able to meet the players’ requests. In order to avoid such unfavorable events, negotiations over contract renewals should start rather early.

The overall effect on the buying club is also quite ambiguous. While avoiding paying a transfer fee is certainly beneficial, as it bears little or no amortisation cost over the course of the player’s contract, these resources are most often reassigned to the player in the form of large salaries, much more lucrative than the ones the player would likely agree to if a transfer fee was involved, and also in high agent’s fees. This scenario could lead to breaks in clubs' wage structures, creating discord in the dressing room, or to subsequent increased difficulty in the players' re-sale. The recent notable example of, among others, FC Barcelona shows that moving on from players with large salaries is incredibly hard, as those players might not be willing to forego a significant portion of their compensation when moving to another club.

Unlike in the recent past, top players are now taking advantage of their increasing commercial power, and are grasping for more agency on their careers. It remains to be seen whether there will be a gradual reallocation of resources at the top of the pyramid, with transfer fees between clubs diminishing and salaries to players increasing, or whether such peculiarities are just a consequence of the unique environment in which football clubs have been operating since the breakout of the pandemic.