What business lessons can you take from football’s Transfer Deadline Day?
PUBLISHED: 11:15 31 January 2018 | UPDATED: 15:08 31 January 2018
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With billions of pounds tied up in TV deals and £200m transfer fees football is accused of becoming more and more commercial each year.
The January transfer window has often been considered an exemplar of this change with agents and players able to cash on in clubs’ desperation to reignite their season.
But sport is a unique industry with its own business models. So what lessons can leaders in other sectors learn from it?
Football finance expert Kieran Maguire, senior teacher in accountancy at University of Liverpool, gave us three things to take away from transfer deadline day.
Be prepared to say no
Whether it’s property, commodities, racehorses, equities or footballers, if you believe in the quality of your assets, you don’t have to accept the first offer for them.
Norwich showed this in relation to the sale of Alex Pritchard. Huddersfield were desperate to sign him, and being firm and rejecting the first couple of offers boosted the sale price by about £3m.
Don’t put your eggs in one basket
In 2016/17 a few clubs gambled on trying to ‘buy’ promotion by spending large sums, leaving themselves exposed to Financial Fair Play (FFP) constraints if the gamble failed to materialise. FFP is based on financial performance over three years.
Aston Villa are such an example. They spent an estimated £85m in 2016/17 on new players such as Ross McCormack, Jonathan Kodija and Scott Hogan, and assumed this would ensure they bounced back to the Premier League at the first attempt. They finished a forgettable 13th. This meant that manager Steve Bruce has had to balance the books this season by selling players, and relying on loan signings to achieve a decent position in the table.
Cash is king.
Those clubs who have lived within their means, and have built up a cash reserve, are in a position to pick up bargains.
This is because selling clubs become desperate to offload unwanted players.
If the buyer can offer a cash deal, instead of paying by instalments, then deals can be struck at bargain prices.