Transfer Fee bubble

[redhorizon2]

I was just thinking how large transfer fee's are nowadays. You here more than a few players who are banded about being worth more than £50m. For many of the larger clubs, that fee is 1/6 to 1/5 of the clubs gross turnover. and thats just on one player.
Have clubs revenues grown as fast as the growing fee's requested by clubs for players? I think this is a bubble and it will burst, what impact then it will have is the big question?

 

[binomial]

Basically, championship players go for 10-15m now.

& yes club revenues are growing fast annually.

 

[dantes]

Transfer fees are not like prices, they are more like a currency. The government and central bank withdraws or injects currency in or out of an economy. Agents withdraw and tv companies/sugar daddies inject transfer fees into football. As long as injections outweigh withdrawals the fees will rise. The worst case is the withdrawals get bigger and fees reduce. But they won't burst or collapse.

Houses are valued by supply demand or else by their intrinsic worth. There is a bubble because the two things diverge. Transfers have no such intrinsic worth, so nobody will ever say that a fee's are now too expensive and need a correction. It's not that sort of asset.

Another way to see this is just track the flow of fee money. One clubs spending is another clubs income. Its a closed loop, and can only inflate or deflate the way currencies do. Unless there is a sudden exodus of money out of football, everyone can afford the fees simply by using the fees they earned themselves through player sales.

 

[redhorizon2]

Transfer fees are not like prices, they are more like a currency. The government and central bank withdraws or injects currency in or out of an economy. Agents withdraw and tv companies/sugar daddies inject transfer fees into football. As long as injections outweigh withdrawals the fees will rise. The worst case is the withdrawals get bigger and fees reduce. But they won't burst or collapse.

Houses are valued by supply demand or else by their intrinsic worth. There is a bubble because the two things diverge. Transfers have no such intrinsic worth, so nobody will ever say that a fee's are now too expensive and need a correction. It's not that sort of asset.

Another way to see this is just track the flow of fee money. One clubs spending is another clubs income. Its a closed loop, and can only inflate or deflate the way currencies do. Unless there is a sudden exodus of money out of football, everyone can afford the fees simply by using the fees they earned themselves through player sales.

If currency is over valued it could have devastating effect on an economy.

 

[Oliver Twist]

Dantes is right. Transfer fees are not a bubble unto themselves.

Although, like houses, if the factors that prop up the fees suffer a correction, those transfer fees will follow.

 

[dantes]

If currency is over valued it could have devastating effect on an economy.

That's because the currency is used to buy other assets or currencies. They get de-valued in respect of other things. Transfer fees are just used to pay for other transfer fees. Their rise is more like an act of inflation. Nobody says that the pound needs a correction after a century of inflation, because it has appreciated in line with the economy. Transfer fees have appreciated in line with the football micro-economy which is pretty closed and isolated from the rest of the economy.