Why Transfers Don't Really Matter.

Gareth Bale: worth an obscene amount of money, has nice thighs (from mirror.co.uk )

The proposed transfer of Gareth Bale to Real Madrid is insane. (If you haven't been following this 'saga'¹ in the off-season and don't know about it yet, good for you, you aren't missing out on much, mostly rumours and guesswork, a desperate mire of awful journalism and crushing fan expectation.)

Madrid have reportedly made an offer of something like £93 million. £93 million, for a single player. Over a presumed five year contract, and assuming a competitive salary of around £150,000 a week (and this seems low!), that makes a deal for Bale worth around £26.4 million a year (fee + wages, excluding any bonuses, signing on fees, image rights etc.). The risk is phenomenal. What if Bale breaks a leg? What if he never recovers the same form he's shown this season? What if he becomes, like so many players before him (Michael Owen, Kaká, Fernando Torres), a shadow of his former self as he ages and loses some of his pace? The risk seems even greater when you recall that Madrid really don't need another goal scoring attacker. In addition to the excellent Ángel Di María and the sublime Mesut Özil, both, I think, somewhat under-rated, Madrid boast 120-goals-in-109-games-under-Mourinho Cristiano Ronaldo. They have for rotation Kaká, the wonderkid Isco and Luka Modrić, as well as the two highly-rated young academy players Jesé Rodriguez and Álvaro Morata. This is an area of the team that doesn't need strengthening.

The deal makes even less sense from Tottenham's point of view. Daniel Levy, the chairman, has reportedly turned down Madrid's initial £86 million bid, holding out for something worth either £96 million or €115 million. To put this in context: Tottenham are currently valued by Forbes at $520 million (roughly £339.8 million or €391.5 million). That means that Levy currently values Bale at slightly less than one third of the value of the entire club. The entire club. (It should be stated that the Forbes valuation is probably not just an assessment of current asset worth but rather a guesstimate at the price the club could raise if sold, which would take into account not just the worth of current assets but also the value of current revenue streams and the potential for growth of said streams, as well as the perceived value of the brand internationally and the potential for growth. To be fair to Levy, he might think that Gareth Bale – and keeping him – were of such importance to the value of the brand that selling him would always be uneconomical.) Or, to use a different context, Tottenham's turnover for 2012 was £144.2million, meaning that Bale's transfer would increase turnover for 2013 by almost two thirds.

Despite the absurdly high price, many fans and commentators seem to think that Bale leaving would be disastrous for Tottenham (opinion is less certain about whether it would be good for Madrid or not): that, with Bale, they are within reach of a challenge for the league title, but without him they will probably miss out, again, on Champions League football. The perceived wisdom seems to be that Bale, alone, will somehow account for 15 or so points to bridge the gap between 5^th and 1^st in the league, and that any players purchased to replace him will be incapable of having the same impact. I would say that this argue is completely spurious. Bale apparently 'earned' 24 points for Tottenham last season, presumably meaning that, if all of his goals were subtracted, and every 1-0 win dependent on a Bale wonder-strike stricken from the records, Tottenham would have been 24 points worse off. The argument that, in his absence Tottenham would genuinely have lost 24 points, however, seems absurd: obviously the loss would be mitigated substantially by all of the other players. It's not like Tottenham would have to play with ten men. Hell, Rooney apparently 'earned' United 15 points last season, but does anyone seriously believe United would finished 15 points worse off this season if they sold him?

I would argue that whether Bale stays or goes will have very little impact on their league position. With or without him, I think Tottenham are likely to finish 4^th - 6^th in the league, with a points total somewhere around (+/-3) their previous season's total of 72.

The reason is that football is a squad game. As Simon Kuper and Stefan Szymanski argue in Soccernomics,² transfer expenditure correlates very poorly with league performance. What correlates well is wage bill. And the reason why wage bill correlates so well with performance is that it reflects the quality of the squad overall. It does this far better than total transfer cost of the squad because the wage market is far more efficient than the transfer market i.e. there are fewer insane deals like the previously discussed Bale one where clubs stubbornly value players at two or three times their worth for reasons beyond the financial. Jonathan Wilson makes a compelling argument that, for the biggest teams, expensive transfers have become necessary for their own sake, to show financial might and 'ambition'. Bale is essentially the gigayacht or Versailles Palace of modern football. Even two or three Gareth-Bale-quality signings are unlikely to significantly improve the overall quality of the squad, no matter how romantic and exciting they may seem. By the same reasoning, losing one player of the highest quality is not going to be a disaster.

Historically this fact is fairly apparent. Manchester United sold Cristiano Ronaldo, indisputably one of the world's very best players, for £80 million in 2009. They re-invested the money fairly unexcitingly, bringing in Antonio Valencia in that same window (along with Mame Diouf and Gabriel Obertan!), and Bebé, Chris Smalling, Chicharito and Anders Lindegaard the next year. Yet despite the loss of Ronaldo, their squad retained roughly the same quality, winning the League Cup in the 2009-10 season, and the Premier League in 2010-11 and 2012-13 (as well as achieving excellent European performance in those seasons, including one final).

Other recent examples are numerous: Dortmund's continued success despite selling their most important players (Şahin then Kagawa); Inter Milan's treble after the sale of Zlatan Ibrahimović;³ Porto and Benfica's continued excellence despite perpetually selling their best players;⁴ Atletico Madrid's success despite selling first Torres, then Sergio Agüero, and now Falcao; Arsenal's ability to cling near the Champions League spots, and remain the third or fourth best team in the Premier League, despite notoriously becoming a 'selling club'.

There is some truth to this last barbed jibe: that 'selling clubs', in Europe's best leagues, cannot remain competitive. They are running to stand still; glory will not be theirs. I think this is generally true: because transfers are so inherently risky, no club can continue to be excellent if they consistently lose their most excellent players over an extended period of time. But the reasons they lose them are the reasons they are selling clubs in the first place: cold economics. Clubs that cannot hold onto their players, in most cases, can't because they lack the money and status of their richer rivals. Small clubs stay small, midsize teams stay midsize and giants remain giants. Very few clubs have the potential to grow from one level to the next,⁵ and even fewer the sufficient financial shortfall (i.e. billionaire money) to realise that potential.

The transfer market isn't miraculous. No one window is going to shift the quality of a squad significantly up or down, even one as active as Monaco's. Sustained investment over several years can raise quality, as teams like Chelsea and Manchester City have shown. One-off sales of star players aren't going to destroy a team's chances; continued sales over five or ten years might hinder their ability to rise above their current level. Indeed, one-off sales at market or above-market prices may even be beneficial in the long term: the sale of one unusually talented player could fund the purchase of five or more new players, who will provide a greater increase in overall squad quality (as well as, potentially, being able to develop into saleably good players themselves). Which brings us back to Bale: buying him probably won't change how well Madrid do next season, but selling him could allow Tottenham, in the mid- to long- term, to get a lot better.⁶

1 One of the many bad things about the transfer season is the flaccidly overblown language used to describe it: a three way negotiation between two employers and an employee is hardly a full-on Icelandic saga. At best you might argue that some transfer 'sagas' come close to the feud element of actual sagas, but this is stretching it a bit. Other words that should never be used to describe player trading but are, constantly: 'battle', 'swoop', 'race', 'capture', 'hunt', 'on the radar'. It seems to me that metaphors based on hunting or combat are inappropriate for any activity mostly conducted by high-paid lawyers in Savile Row suits.

2 See esp. Chapter 3. (N.B. The book is entitled Why England Lose in the UK.)

3 I Am Zlatan (N.B. this is the best thing in this article): http://www.youtube.com/watch?v=g9m7m8_2t4Y

4 SL Benfica have sold, amongst others Axel Witsel, Javi García, Fabio Coentrão, Ángel Di María, David Luiz and Ramires in the last three years; FC Porto Hulk, Freddy Guarín, Falcao, Raul Meireles, and João Moutinho. How they manage it is sort of astounding, but dependent on dubious third party ownerships and Portugal's immigration laws.

5 Arsène Wenger remarked that Paris Saint-Germain are uniquely well placed in terms of their potential fanbase, because Paris is Europe's only major city with just one top-level football team – so PSG benefit from a larger (and pretty rich) potential local fanbase to prop up their matchday revenues, and can boast a captive market for advertising to commercial partners. (Incidentally, 'commercial partners' is one of those corporate phrases that really sucks the joy out of anything, even football.)

6 I actually suspect that Tottenham have already started doing this with the anticipated Bale-revenue, given that they've spent roughly £62 million already this summer, and it's not entirely clear where this money is all expected to come from, given that last year they made a £4.3 million loss despite making a £9.2 million profit on player sales.