Flashback a year ago and you will see this is now becoming a trend. The highest transfer last mid-season window was 10 million pounds for Chris Smailing, a prospect for the future who went from Fulham to Manchester United. January 2009 was littered with high priced deals, including the transfer of Kolo Toure, Gareth Barry and Roque Santa Cruz to Manchester City.

So the question begs to be asked- Why the dip in spending?

Firstly, the Premier League has introduced rules involving the size of a team’s first team squad and the minimum amount of local players. Therefore, if a team is picking up a player, it has to make room by kicking a player out.

Secondly, as wage demands increase, clubs are finding it a lot more economic to loan a player for 6 months instead of purchasing. They may pay a portion or all of a players wages, and in cases not involving development players it acts as a ‘try before you buy’ deal.

So what is it that people should expect from this window?

Manchester United, Chelsea and Arsenal look to appear to pass this time round, choosing to stick with their current squad to push for the title.

Manchester City will continue their exuberant spending in order to push forward, with rumors circulating of acquiring Edin Dezko, Gareth Bale and Alexandre Pato. With what appears to be an open checkbook, they may get their wishes, though they may want to clear some of their wage bill before doing so.

Tottenham Hotspur is looking to move Robbie Keane and David Bentley, with the former attracting possible interest from the recent MLS expansion team the Vancouver Whitecaps. Manager Harry Redknapp is also trying to get David Beckham on a loan deal, and has stated he will only buy if a ‘special’ player comes along.

As most football contracts end mid year, it also gives clubs an opportunity to ‘cash in’ on a player who has 6 months left on his contract, instead of losing him for free.

So as per usual, fans will watch in anticipation, hoping that transfer they heard along the grapevine is true, only to have their hopes dashed. Barring a spending spree from Manchester City, look for this January to remain pretty silent.

Looks Like A Quiet Transfer Window… from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Ronaldo – £80 million

Kaka – £56 million

Benzema – £30 million

Albiol – £12 million

Manchester City Summer Purchases

Santa-Cruz – £18 million

Tevez- £25 million

Adebayor – £25 million

Barry – £12 million

These are the transfers that have knocked the wind out of the summer transfer window in European soccer. In an economic climate where the world is saving and not spending, Real Madrid and Manchester City have continued to fulfill their reputations as big spenders, and have accordingly purchased the best available talent on the market. No other clubs could compete – the likes of Chelsea and Manchester United (normally high fliers in the market themselves) have had eerily quiet summers with limited transfer activity and it must be partly due to the acquisitions made by City and Madrid.

Manchester City have sourced their funds from Billionaire owners Abu Dhabi United Group. Real Madrid are a different kettle of fish. Madrid should have been made insolvent countless times over the years due to the fact that they tend to spend money that they do not actually have. However, with the King of Spain as a huge supporter (‘Real’ means ‘Royal’), they have had their debts written off by banks who do not dare bankrupt the King’s club.

In either case, these are teams who seemingly have unlimited spending power, without consequence. This is becoming a major concern to the football fan in Europe. How can their team compete or make big signings when the big-guns of Madrid and City continue to dominate a market that was anticipating a deflation of transfer fees, as opposed to the inflation that has actually materialised?

Has the time finally come for the governing bodies to impose transfer expenditure caps? The concept of salary caps has been a much discussed topic in the media and online blogs, and the general conclusion is that they are illegal and very difficult to incorporate – EU law protects individuals against mechanisms that impose restrictions preventing a worker from realising his earning potential. Would a restriction on a club’s ability to spend be capable of circumventing the grasp of EU law however?

Perhaps the governing bodies could come up with a reasonable limit (£20 million?) that a club may spend in a given summer. Maybe it could be £20 million plus whatever revenue that comes from the sale of any pre-existing players of the squad. The restriction could be as simple as one that forbids any club spending money that is not disposable income – my previous post on Southampton FC highlights quite clearly how disastrous the consequences can be for clubs that do not spend within their means. Any measure brought forward that is in the interest of sport might be capable of successful implementation.

In any case, the expenditure of City and Madrid has distorted the market and does not reflect the current state of economic affairs. Is it an overreaction to suggest that something need be done in response to this? Some might be of the view that there is nothing that can realistically be done to stop or regulate the way clubs spend money on transfers. The solution could be simple – clubs should rename themselves ‘Real’….

The Real World Of Soccer from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Drawing on the recent post by Darren in regards to the levels of US state taxes and the effect on player income [ "A Taxing Discussion"], I thought I would look at the tax rates and how they factor into soccer contracts on a worldwide scale.

The talk started with the recent Arsenal singing of Andrei Arshavin and him being upset about having the bulk of his wages taken by the current 40% upper level tax rate in England, after coming from paying only 13% in Russia. He even fired his agent as he was unimpressed with what he was able to deliver [ Arsenal Star Andrey Arshavin Sacks Agent Dennis Lachter]. News gets worse for those making over £150,000 a year as they will soon be paying 50% on their income.

Look at this in comparison to Spain. In an attempt to lure top CEOs to the nation, Spain passed a bill allowing the first five years of your higher tax rate to be cut to an attractive 24%, significantly lower than that charged by their English counterparts. Now look at where Kaka and Ronaldo have recently transferred to. That’s right, Spain. Ronaldo would have lost about £15 million over the life of his contract if he stayed in England. [ Premier League can't compete with low taxes in Spain]

English club Manchester United was linked with player Karim Benzema, who ended up signing with Real Madrid.  Could taxes have played a factor in that deal also?

Another great example is that of player Jermaine Pennant, who recently signed with Spanish team Real Zaragoza. Whilst still earning a fair amount, Jermaine is on the equivalent of £80,000 a week before tax, as his after tax wage is £40,000. His club is happy to foot the tax bill of £9,200 a week as it’s minimal [ Jermaine Pennant's switch to Real Zaragoza earns him '£80,000 a week']. Now picture him still playing in England. Assuming the close to £50,000 wage he is on, he would receive only £25,000 after tax, losing £15,000 a week on what he currently earns.

As previously mentioned, Russia has a low tax rate of 13%, so if you were a decent player who might be able to play at Championship level in England, would you consider a move to Russia for a better pay deal?

Spain is really the only threat to English football, as other major markets (France, Germany, Netherlands, Portugal) are all hovering around the 40-50% upper level tax bracket. [Source]

However it’s the minor leagues that could entice the lesser known players to countries such as the aforementioned Russia, Switzerland (13.2%) and Turkey (35%). Alread,y high profile players such as Harry Kewell and Milan Baros have made the switch to the Turkish League.  Alternatively, players could play in the U.A.E. which doesn’t have any tax at all!

So how can English football stop the exodus and prevent Spain from taking all the quality players?

The most obvious way is to simply equal the net pay as to which is offered elsewhere. Players and Agents alike have caught on about the tax rates and are now using it to their advantage. Players are already asking for their contracts to include the amount they receive after taxes are taken into account.

As it is now easier (and common) for a player to transfer across the world, the inevitability will be that clubs will have to fork out more money.

Why the Premier League can’t keep up from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

Fifteen months on, and it would seem my conclusion has been heavily questioned. Despite not wanting to admit it, could I have been wrong? According to an independent report undertaken on behalf of FIFA, a proposed ’6+5′ rule would not breach EU rules.

What is the ’6+5′ rule? The rule establishes that at the beginning of a game, each team must field at least six players who would be eligible to play for the country in which that team plays. So for example, in each English Premier League game that Manchester United competes in, at least six of their starting eleven must be eligible to play for the England national team.

Under the EU rules on freedom of movement for workers, this would, on the face of it, represent an illegal restriction on the ability of EU citizens to move freely within the relevant industry/market. In essence, a soccer player who is an EU national might be restricted from plying his trade at a team because he is ineligible to play for the country in which that team is located. His place in the team might have to go to somebody who is eligible to play for that country. Thus, his right to freely move across the European Union might be restricted because of this rule. The EU rules on free movement were created to abolish and prevent such restrictions.

However, free movement rules can be circumvented where there is a legitimate justification behind the implementation of a restrictive provision such as the 6+5 rule. The Institute for European Affairs (INEA), which was the body responsible for FIFA’s independent report, has found that the rule does not conflict with EU law because it supports the creation and assurance of sporting competition:

“The 6+5 rule does not impinge on the core area of the right to freedom of movement. The rule is merely a rule of the game declared in the general interest of sport in order to improve the sporting balance between clubs and associations” said INEA.

The rule provides that there would be no limit on substitutions and no limit on the number of non-national players that teams can employ. However the team would be prohibited from fielding more than five non-nationals at the start of each game. So, whilst the rule may be indirectly discriminative, the report from INEA states that the rule “merely considers entitlement to play for the national team concerned, and any possible indirect discrimination can be defended on the basis of compelling reasons of general interest”.

INEA argues that, due to the completely open nature of the market at present, young talented players are discouraged from pursuing their dreams of playing soccer for their local teams because these teams are opting to recruit foreign players. These players normally come ready-trained and often represent a sound financial investment for the clubs.

There can be no doubt that an independent report such as this will assist FIFA in its quest to implement rules such as the 6+5 rule, however it must also be said that the report holds no legal standing. The ultimate decision makers are the European Commission and the European Government.

As determined, FIFA may be to bring these rules into operation, the EU commission is equally unwavering in its position to veto any such action. It is for this reason that I maintain my original conclusion that rules of this sort will not be sanctioned by the EU authorities; they remain illegal restrictions on the free movement of workers within the EU.

Blatter’s ‘6+5’ rule is not illegal…? from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules

From January 1st to January 31st, Soccer Agents and Managers work ferociously around the clock to complete deals which may see players sign that lucrative multi-year contract with a massive club or go searching the lower leagues for some first team action. Either way, the window (as a hopeful future soccer agent) is an exciting time.

In the past years, it has been Chelsea who has been spending big, but this year a new player has emerged- Manchester City. Recently bought out by the Abu Dahbi United group, City are flush, and are looking to add the best players in the world to their lineup to ensure they bring a title to the other team in Manchester. Having already brought in superstar Brazilian Robinho from Real Madrid for over 30 million pounds, they have targeted an assortment of players, even offering to buy Spanish keeper Iker Casillas for 150 million euros, which is the buyout clause in his contract. Casillas himself would have earned 13 million euros a year.

So the question is, who will be at City come the start of Feb? Players such as English based Jermaine Defoe and Craig Bellamy have reportedly been on the shopping list, not to mention the idea of bringing in more superstars from overseas.

If like me, you hope to one day be representing soccer athletes, then I suggest you check out the FIFA website. It has all the information needed in regards to getting certified.

A great read is How to Succeed as a Sports Agent – Mel Stein, which I have reviewed previously on this site. Having been successful in this area, Mel does a great job breaking down the areas in which you would encounter when representing athletes.

I also suggest reading the articles of this site’s regular contributor Max Eppel, who operates his own agency out of California. Whilst all of his articles are a great read, in this particular instance, I suggest ‘The Life Of A Soccer Agent During The Transfer Window‘. A search for his name will find all the articles he has written.

Finally, if you want to keep up all the happenings, I suggest the following sites for all the news: Soccernet and Football365.

It’s the most wonderful time of the year! from Sports Agent Blog - Sports Business, Sports Law, Sports Negotiations, NCAA Rules