How will new loan rules financially affect football transfers?

In the spring of 2020, the global football governing body FIFA announced new measures meant to recognise the value of player development. Some of these news rules were the affirmations of previous rules for example under FIFA regulations some percentage of the transfer fee to the club where a player started his career. FIFA also takes 1% of transfer fees, which goes to grassroots development programmes that will bring financial aid for young players. Let us dive into these measures and see how it impact finances in sport and the development of young players.

What are the main talking points?

Under previous football transfer guidelines, transfers of players aged 22 or over are limited to eight IN and eight OUT of each top five clubs each season. The new guidelines will reduce these numbers to six IN and six OUT from the 2022-33 season. For now, the rules only cover international loans it is expected that the domestic league will bring in similar changes in the next few years reducing the loan market.

In an effort to guarantee more players meaningful playtime and decrease the number of young prospects wasting their time on the bench, the u-21 players can make temporary switches outside the Summer and the Winter transfer windows, potentially creating another transfer window for the age group.

Impact of these changes 

Football like any other sport is a business and each club is always looking to make things cheaper. In 2010, a top striker was easily available on the transfer market for around €30 million, but inflation has seen prices at least increase two times. The clubs have adopted a new strategy through their diverse scouting network they identify young talents and sign these young stars at a very young age and develop them. They loan the players out keep the ones that developed and sell the others to make a profit before investing in other young talent and repeat the process.

However, over time the attitude towards this approach has changed. Chelsea has loaned out an average of 20 players per season over the past three years. On the other hand,  Manchester City has offloaded 39 players per season. In order to bring a cap on the loan system, FIFA has introduced new changes ignoring the good aspects of the system.

Rich clubs offload these players to reduce the wage bill and give their young talents game time. These loans also help the smaller clubs to get hold of talents that they can’t afford. A loan is basically an inexpensive short-term commitment this helps the small clubs especially in times of a global pandemic. They can send the player back to the parent club without having to pay expensive wage bills.

Under the new system, the big sides will be able to continue with their current practices unchecked. FIFA’s stated aim is to “Ensure that loans have a valid sporting purpose for youth development” and by limiting the loan transfers of players over the age of 22. FIFA is presuming that the player development occurs under the age of 22 which is an underlying problem. This will force the teams to make decisions even before the players hit their prime weakening FIFA’s argument. It may also lead to avoidable inefficiencies without loans players like Jesse Lingard and Martin Odegaard couldn’t have flourished as they did for West Ham and Arsenal, respectively. The new guidelines will help younger players to focus more on their development and smaller clubs will get financial aid.

Related Articles

Latest Articles