Liverpool Rumours Archive August 11 2020

11 Aug 2020 12:46:21
Ed’s 1 and 2,I know you’ve answered this before I think, so apologies if you have and I couldn’t find it but if you’ve time could you explain how transfer fees are worked out and where the money goes and additional monies paid after the transfer fee is agreed if there is any ie fees, taxes, agents etc
Many thanks Eds.

{Ed002's Note - It might be an apt time to explain again about the cost of transfers (excluding wages). What is paid by the buying club would typically include:

(a) Transfer fee - the big number.
(b) Any levy applied by the local FA – 5% for the Premier League.
(c) Tax due on the transfer fee – typically this will be VAT (at varying rates across Europe) some or all of which should be reclaimable.
(d) Agent fees – this may be to one or more agents (as an example, Liverpool have spent more than £100M plus VAT on agent fees over the past three years (nearly double the next highest) including £28M last season alone when only spending a tiny amount on transfers).
(e) Tax due on the agent fees – typically this is VAT at the local rate where the agent bills from – it is not reclaimable.
(f) Intermediary fees – this may be to one or more sponging leeches (what do you mean you have a super agent?) .
(g) Tax due on the Intermediary fees – typically this is VAT at the local rate where the Intermediary bills from – it is not reclaimable.
(h) Signing on fee to the player (possibly including non-reclaimable VAT if the player is VAT registered).
(i) Legal fees.
(j) VAT on legal fees which is reclaimable.
(k) Moving/relocation costs for the player.
(l) VAT on moving/relocation costs which is reclaimable.
(m) Solidarity and Training Contribututions (see below).
(n) Paying up insurance costs to the selling club (usually waived).

What is paid by the selling club would typically include:

(a) If the player is under 24 and moving between different football associations, a Solidarity contribution paid to his previous clubs responsible for his training - this is 5% of the transfer fee received (apportioned 5% of the contribution for each year from the season of his 12th birthday to the season of his 15th birthday and 10% of the contribution for each season from his 16th to 23rd birthdays). This is generally (there are exceptions) recoverable from the buying club but responsibility (that is meant to be with the buying club) can be assigned to the selling club.
(b) If the player moves to a higher category club (all clubs being categorised 1 to 4) then Training Compensation is due for the period of age 12 to 21. Compensation is due to all clubs when the player turns from amateur to professional and thereafter only when he moves from his final training club to another club. The initial training compensation is levied at the training costs associated with Category 4 clubs. The subsequent figure is agreed between the sides or tribuneral if necessary. This is generally (there are exceptions) recoverable from the buying club but responsibility (that is meant to be with the buying club) can be assigned to the selling club.
(c) Any monies owed to the player if he did not request a transfer – again this is 5% of the transfer fee received.
(d) Any monies owed to the player in terms of his contract (typically outstanding owed wages (not future wages) and bonuses).
(e) Any money contractually due to a previous club as the result of a sell-on clause.}

11 Aug 2020 13:12:13
What happens to the levy collected by the local FA? That 5% presumably adds up to a huge amount for all the transfers in the Premier league.

{Ed002's Note - The FA is a not-for-profit organisation so after taking the operating costs out the rest goes back in to the game.}

11 Aug 2020 14:47:21
ed002 how did we spend £28m on agent fees last season we only signed the young lads and Minamino. I get it when we are signing the likes of VVD and Alisson but what has that gone on.
cheers ed.

{Ed002's Note - Advisors, the slush fund, payments hanging over etc..}

11 Aug 2020 15:53:54
wow, so many variables involved. So, if we see in the news that the player is £30m, it is only the Transfer fee (the big number) and the rest of the amount can amount to a bigger figure (on top of the 30m) right?

{Ed002's Note - Of course.}

11 Aug 2020 17:57:40
This is exactly why the "net spend" nonsense Sly Sports would keep pushing during transfer windows should be ignored.

11 Aug 2020 20:13:12
Ed2 thanks so much for that in-depth answer, I appreciate it mate, oh and when supporters say “well we got him on a free transfer so he didn’t cost nothing” looks like it isn’t exactly true, as they say I suppose nothing is free.

12 Aug 2020 00:14:00
thanks for explaining so clearly Ed2. Football is big business and obviously there are many financial aspects that the general public is unaware when it comes to transactions, operating costs, etc. I just don't like how the media puts talks about it so naively in an uninformed fashion that misinforms the fans.

If running a football club was that easy, (e. g., I sell for 30 mil, ah, now i have this extra money to buy a 30 mil player), there's no need for a board, CFOs, and the like.

I do hope Liverpool gets its act together to spend less during transactions due to our poor dealings with agents, tapping up and whatever not.

12 Aug 2020 12:06:56
Ed,

I see you saying the FA is no profitable, what about the premier league and the brand does it work off the same model or is it a franchise?

{Ed002's Note - The FA is a not for profit organisation. The Premier League do make a small profit after costs (wages, prize money) are deducted and some goes to football related charities.}