All Euros (or Dollars) Are Worth the Same: A Memo to Soccer Club Owners

James Kwak
4 min readJul 14, 2023


Photo by Ibrahim Boran on Unsplash

It’s that time of summer when the soccer news is really news about player transfers. Lionel Messi to Inter Miami! Jude Bellingham to Real Madrid! Half of Chelsea to various teams owned by the Saudi government (which, by pure coincidence, is also an investor in Chelsea)! You know, that sort of thing.

To understand what follows, you’ll need a brief primer on the soccer transfer market. Unlike in most American sports, players are bought and sold for cash. Trades are a rarity, and players are notionally converted to monetary values anyway. Also unlike in most American sports, players effectively have no-trade clauses. If you want to buy a player from another club, you have to negotiate a transfer fee with that player’s current club, and you have to negotiate a new contract with the player. (To me, this seems vastly preferable to the system in baseball, where most players can be sent anywhere without their consent.)

So in some ways, the soccer transfer market seems quite rational. In other ways, most of its actors behave completely irrationally.

Take my favorite team and defending Italian champions, Napoli, for example. The team has two players, Piotr Zielinski and Hirving Lozano, who have one year left on their contracts. The club’s owner, Aurelio De Laurentiis, announced that both players must accept contract extensions at a lower salary or agree to be sold this summer. Otherwise they may not play at all this coming year. This is happening all over Europe. Juventus told their captain, Leonardo Bonucci, who also has one year left on his contract, that he will never play for or even train with the team again. In Paris, my former favorite team’s president told Kylian Mbappe — perhaps the best player in the world — that he must renew his contract or find another team by the end of the month.

This is not just posturing. In 2018–19, PSG refused to let Adrien Rabiot play for several months after he refused to sign a contract extension, even though he was one of their best midfielders and even though they were still competing in the Champions League.

Note that this is the exact opposite of how things work in Major League Baseball. In baseball, teams routinely trade valuable prospects for experienced players with just two months left on their contracts, hoping those players will help get them into the playoffs and knowing that they will become free agents that winter. In soccer, no one wants a player in the last year of his contract.

In the immediate term, this kind of negotiating position makes a little sense. The idea is that players want to play, especially if there is a major international tournament to qualify for coming up. Threatening to put them in what in France is called the “loft” is supposed to convince them that they should accept an offer from another team, which will then have to pay a transfer fee to the current team. Still, though, the tactic often fails because the player can choose not to play and still get paid. PSG in particular has had to pay large salaries to unwanted players many times in recent years.

In the long term, this insistence that players cannot run down their contracts is completely silly and betrays a bizarre confusion about the nature of money. Let’s say you buy a player for a $20 million transfer fee and sign him to a four-year contract at a pretax salary of $4 million per year. (Those are plausible numbers for a good but not exceptional player in one of Europe’s major leagues.) You have just guaranteed $36 million to get someone for four years. The most logical inference is that you think that player is worth $9 million per year. Three years go by and he is about as good as he used to be. You have a contract saying that you can keep him for one more year for only $4 million. Last I checked, $4 million was less than $9 million. You should be happy about this! Why would you possibly freeze the player out from your squad — especially when a comparable replacement would cost you another $36 million over four years?

Instead, club owners seem to operate under the impression that they are somehow entitled to recoup their transfer fees by selling players. The idea that a player might leave for free is regarded as blasphemous. Soccer journalists perpetuate this conventional wisdom, routinely describing a free transfer as an embarrassment to the former club or proof of a flawed transfer strategy. Yes, it’s true that transfer fees in aggregate represent a zero-sum game. But that doesn’t mean you have a right to sell every player for whatever you paid for him.

The minimum transfer fee a club will accept should go down as a player gets closer to the end of his contract: At the margin, the transfer fee plus the player’s remaining salary is the amount the selling club is willing to pay to keep that player for the remainder of his contract. (Not accepting a transfer fee is economically the same as paying that amount to keep the player.) That willingness to pay obviously goes down as the years go by. The fact that it declines from $10 million with two years left to $5 million with one year left is no more or less scandalous than the fact that it declines to $0 with no years left. Yet the soccer transfer industry behaves as if money spent on transfer fees, money received from transfer fees, and money paid out in salaries were three completely different species that had different values on a club’s balance sheet.

Analytics has taken the soccer industry by storm over the past decade. There should be an equally big opportunity for soccer clubs who can figure out how to take advantage of other clubs’ irrational behavior in the transfer market.



James Kwak

Books: The Fear of Too Much Justice, Take Back Our Party, Economism, White House Burning, 13 Bankers. Former professor. Co-founder, Guidewire Software. Cellist.