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  Star Signs: Transfer Trends of World-Class Soccer Players 

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Star signings are fundamental to the management of professional soccer teams. An average of 80 percent of a club's resources is allocated to this activity.

A successful player acquisition is key to kicking off a virtuous circle: the greater the interest, the more fans will identify with a particular team and buy its products.

Soccer has long since gone from mere entertainment to a fully fledged business. In that respect, the players are an investment that the club must cash in on, both on the field (by scoring goals) and off (by creating a positive image that adds media impact and can become another advertising tool).

In the report "Análisis del mercado mundial de jugadores de fútbol de alto nivel: periodo 2000-2007" ("Analysis of the World Market for Top-Level Soccer Players, 2000-2007"), IESE professors Ignacio Urrutia and Ángel Barajas, along with Fernando Martín, evaluate the key aspects that help explain the prices being paid for "top-flight" soccer players. This highly subjective label is defined in the report as players whose transfers have garnered at least 10 million euros.

Who's Worth the Most?
Over the seven years covered in the report, a total of 278 transfers exceeded this threshold. This period started out with a flurry of signings and price inflation, due largely to the policy of Florentino Pérez, the then-president of Real Madrid, to acquire a team of luminaries the likes of Zidane and Pavón.

Players were signed in the prime of their careers, while at the same time promoting homegrown talent. The most expensive to date were the acquisitions of Luís Figo from F.C. Barcelona (60 million euros) in 2001, and Zinédine Zidane from Juventus of Turín in the Italian League (73.3 million euros) in 2002. In subsequent years, the market slowed, only to regain momentum in 2007, the year that saw a new high-water mark.

Figo and Zidane, in addition to serving the same team, have something else in common: both were offensive-minded midfielders. Theirs happens to be the highest-paid position when it comes to paying for a top-flight soccer player.

Exceptions aside, defenders and goalies are on the bottom of that scale. Some of these include the signings of Buffon (goalie) by Juventus in 2001 (54.1 million euros) and Pepe (defender) in 2007 by Real Madrid (30 million euros).

The case of Pepe was particularly significant insofar as breaking with the dominant trend, which is to pay higher amounts for international players or world-renowned stars - those nominated for the FIFA World Player of the Year award. There is a preeminence of international players on the list of high-level transfers, with the average age being 25.

Who's Buying?
The economics of soccer teams is extremely fragile. Very few can afford to make bids for players whose price tags top 10 million euros.

During this period, a total of 42 signed at least one high-level soccer player, despite many ending up being little more than footnotes.

The club that spent the most money on signings from 2000 to 2007 was Chelsea (581.5 million euros). The arrival of Russian magnate Roman Abramovich as club owner, who was obsessed with winning the UEFA Champions League, translated into millionaire investments in players such as Carvalho (30 million in 2004) and Shevchenko (51 million in 2006).

Interestingly, such investments do not always match the results on the field. Chelsea, for example, the club having spent the most during the period in question, placed only seventh in the coefficient ranking for UEFA clubs. Conversely, A.C. Milan, which was seventh overall in investment (253.9 million), was No. 1 in terms of sports results.

The English Premier League and Spain's first division, la Liga, are the two that have spent the most money on transfers, a trend that was accentuated in 2007.

This past season, nine English clubs and six Spanish clubs shelled out 10 million euros or more to sign a player.

The five major European leagues - England, Spain, Italy, Germany and France - made 95.5 percent of their high-profile player transfers during the period studied.

It is interesting to see a fringe league like that of Saudi Arabia make the list. This shows the interest of the Arab world in promoting soccer in countries with little or no tradition of the sport.

There is a wider range when it comes to the sale of players, with 113 clubs having dealt their star players. While there are many reasons for this, the big sales tend to come in the middle of a financial crisis with the parent company - think of Cirio in the case of Lazio, or Parmalat in the case of Parma.

Other reasons include: a disappointing performance (e.g., Owen and Woodgate with Real Madrid); demotion to a lower division (Juventus); or a policy based on selling fast on the heels of sporting success, as happened with Sevilla or F.C. Porto, to generate a more profitable sale.

The highest capital gains generally come from locally raised talent. From 2000 to 2007, Argentina's River Plate was the team that sold the most players from its development team - five - at star prices.

The idea of explaining how signing prices are set is a rather old one. There is no infallible rule for predicting what the final price for a player's contract will be. But talent scouts, whose performance determines the success of sports organizations, can standardize a number of criteria prior to making a decision.

This would allow for an a priori study to be done on the return and risk profile. And if it is a common practice in the business world, why shouldn't the same be so for the world's most media-present companies?

This article is based on:  Análisis del mercado mundial de jugadores de fútbol de alto nivel: periodo 2000-2007
Year:  2008
Language:  English