Coronavirus could cause soccer's transfer market to collapse
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Whatever happens over the next few months, one thing seems certain: Soccer's $7 billion global transfer market may collapse amid the coronavirus pandemic.
Why it matters: This will have huge ramifications on the intertwined soccer world, inflicting serious financial harm on clubs that rely on transfer market returns for survival, while potentially helping the rich get richer ... at a bargain.
How it works: The summer "transfer window" (i.e. designated times on the calendar when transfers can take place) essentially removes trading as we know it and replaces it with cash-swap deals.
- Instead of Club A trading assets to acquire a player from Club B, Club A pays Club B a sum of money equal to that player's value (in Club B's eyes). Once that fee is agreed upon, Club A can negotiate a contract with the player.
Sellers: Clubs like Germany's Borussia Dortmund invest heavily in the development of young talent — often through youth academies — in hopes that those players blossom and fetch huge sums on the open market, thereby generating a return on their investment.
- Bad news: It will likely be difficult to find buyers this offseason, and clubs could be forced to accept lower fees for the players they do manage to sell, losing out on critical revenues (the sale of one major prospect can fund a youth academy for years).
Buyers: Other clubs like England's Manchester City typically spend big on the transfer market, whether that's adding a much-needed role player or shelling out nine-figures for the next global superstar.
- Good news: Market conditions could present the opportunity to snag a bargain or two.
The big picture: While nobody is rooting for a slow transfer market, clubs behaving in a more frugal manner may not be such a bad thing, according to those who think player values have gotten out of hand and need to be reset.
- Transfer fees regularly eclipse $100 million these days, and three years ago, PSG paid Barcelona a record $263 million for Neymar (who they will pay $265 million in wages, putting the eventual cost at $528 million).
