Winter transfers – where is the value?


“Quiet” and “slow” – these are some words used by the European press to describe the winter transfer window in the big five football leagues. Indeed, the whole period was relaxed, without big surprise signings or a flurry of transfers on the deadline day. Nevertheless, the actual fees of some transfers may have come as surprise. KPMG’s Football Benchmark team now takes a look at the major transfers and the context behind the numbers.  

Overall January spending on new signings in the big five leagues (USD 654 million) dropped by a third compared to a year before (USD 979 million). The decrease in overall winter spending is even more spectacular when compared to transfer deals worth of USD 4.21 billion that were conducted in the big five leagues in last summer's transfer window.

We often hear top managers questioning the value of the January transfer period. The maximum 12-week summer window, after a completed season, offers a time for strategic thinking and build-up. Managers focus on longer term planning and aim to strengthen their squads accordingly. In contrast, the 4-week winter period is more about filling the gaps: finding quick and short term solutions to injuries, lack of form, often amid tense competition mid-season to reach better positions or to avoid relegation. Consequently, the biggest deals are usually negotiated during the second part of the football season and made in the summer, when transfers are driven by vision, compared to many January deals motivated mainly by necessity,” explained Andrea Sartori, KPMG’s Global Head of Sports, and leader of the KPMG Football Benchmark team.

This year the frenzy of some previous January transfer windows was nowhere to be seen. English Premier League clubs invested less than half on new signings compared to a year before. Nonetheless, the Premier League was still the highest spender in European football, followed by Italy's Serie A. La Liga, Bundesliga, and Ligue 1 also experienced a low spending window with a quiet deadline day.

Yet, we saw a few high-profile, strategic transfers. The highest fee was paid for the 20-year old American, Christian Pulisic – Chelsea secured his signing from Borussia Dortmund for EUR 64 million, but immediately loaned him back to Germany for the remainder of the season. Although Dutchman Frenkie De Jong commanded an even higher fee (EUR 75 million), his transfer from Ajax to Barcelona will only go through in July, and thus technically belongs to the next summer transfer window. AC Milan was among the high spenders, signing Lucas Paquetá and Krzysztof Piatek for EUR 35 million each – these two transfers alone produced almost half of the total spending in Serie A.

The fees for these players were significantly higher than their market value indicated by the KPMG Player Valuation tool. In our chart below, we listed the Top 10 January transfers, based on the transfer fees from public sources and media reports, and excluding loans. The list includes only those who played in the 11 leagues tracked by the KPMG Player Valuation tool in the 18/19 season. (We did not include the transfer of Emiliano Sala, acknowledging the dispute around the transfer fee of the player involved in the recent tragic accident.)

According to Andrea Sartori, several aspects can lead to a discrepancy in the estimated market value and the actual transfer fee paid for the signing of players.
“One factor to highlight is age, especially as the average age of the 10 players included in our analysis is below 24 years. As our valuation is largely driven by on-pitch performance, the sample size of professional matches played by very young talents is often quite small, resulting in modest value estimates. On the other hand, when there is a contingency, for example when a club is in urgent need to secure a good player for a position, because of the injury of one of his players, the same club is willing to pay a premium. In addition, a spell of exceptional form in the short term, like in the case of Piatek for example, can make prices surge. The financial status of the buyer club, a release clause built in the contract of a player, or the player’s willingness to leave his club are further factors that can lead to a sizeable gap between market value and transfer fee,” Sartori explained.

As always, some big-name loanees made the news as well, including Higuain’s move on loan to Chelsea from Juventus until the end of the current season. Chelsea can extend the loan until June 2020, for a consideration of EUR 18 million to be paid in 2019-20 financial year, or can sign the 31-year old Argentine striker on a permanent basis for EUR 36 million to be paid in two financial years. Higuain’s arrival also meant Álvaro Morata to move from Chelsea to Atletico Madrid on an 18-month loan. A further major loan deal made Denis Suárez join Arsenal from Barcelona for the remainder of the season, with Arsenal having the option to buy the 25-year-old Spaniard in the summer. 
Loaning out young talents is also quite common at bigger clubs. Chelsea alone loaned out 11 young players this time. The strategy may pay off – with more playing time, these players can develop faster and their value may grow significantly. Later on, the owner club can decide whether to build the more experienced player in the squad or to sell him at a premium. 

Selling talents can be a bigger dilemma. In retrospect, Manchester City may have regrets that they sold Jadon Sancho to Dortmund for a fee of EUR 7.84 million in August 2017 – the striker, now 18 years old, has a market value of EUR 46 million, according to the KPMG Player Valuation tool. A likely example for Chelsea, too, who did not let Callum Hudson-Odoi join Bayern Munich in January, despite a reported EUR 35 million offer for the 18-year old English striker. The defending German champions are likely to line up for Hudson-Odoi in the summer transfer window again – how much the club will offer, and how much his value will grow, we will see in a couple of months’ time.