Tuesday 1 December 2009

Premier League Agents - Are LFC Effective at Negotiating?

Unless you have had your head in a cloud over the last couple of days you won't have missed the story about agent's fees in the Premier League. This remains a subject which will continually be revisited over the coming years and will no doubt come under closer scrutiny with each review. A staggering £70.5m has been spent on agent's fees over the past year, which is more turnover than some of the clubs operating in the Premiership.

Now we all have to 'earn our corn' and I doubt anyone will argue that a fair day's work deserves a fair day's pay but at first sight these figures seem high. Especially when you consider that the fees account for a few hundred transactions. Now I'm not going to argue any further over the rights or wrongs of agents as I'm sure they will be dealt with over time.

What did interest me is whether or not the figures can show us anything else. Now before I get to the crux of this entry let me give you the problems with the data I am about to present:

- The figures I have picked up are from Page 56 of the sport section in the Telegraph. While all of the agents' fees are provided, together with total transfer amounts, they do not include figures for player contract renewals. So in our case this would include hefty contracts (and presumably agent fees) for both Gerrard and Torres.

- The data presented also includes some transactions from previous years, presumably because of accounting complexities.

- The data provided doesn't give you the number of transactions involved.

However, as a (very rough) indicator I wondered whether the figures would show how the 'business' performed when negotiating with agents. As a percentage of the transfer fees we should be able to assess how effective the 'haggling' was.

I first of all assessed against player purchases only. This is because I believe the lion's share of the fees will be generated from player purchases rather than the odd occasion of trying to move a player on. While we appear third in the list of fees in the papers (for total fees paid) the picture does change when assessed like this.

Transfer fee as % against player sales only - other notable clubs in bold

1. Chelsea 48.4%
2. Bolton 32.7%
3. West Ham United 27.7%
4. Fulham 24.5%
5. Portsmouth 20.6%
6. Arsenal 16.8%
7. Liverpool 16.5%
8. Wigan 14.3%
9. Blackburn 11.5%
10. Everton 9.1%
11.Tottenham 8.0%
12. Man City 7.4%
13. Burnley 7.0%
14. Hull 6.8%
15. Wolverhampton 6.2%
16. Sunderland 6.1%
17. Birmingham 4.9%
18. Aston Villa 2.8%
19. Man United 3.8%
20. Stoke 2.2%

Chelsea's fees are the interesting ones to me and the reason why I started looking into this. How can they have nearly half of their incoming transfer fees as additional agents fees?

I then went on to look at the fees as a percentage of the entire transfer activity.

Transfer fee as % against all transfer activity - other notable clubs in bold

1. Chelsea 29.2%
2. Bolton 19.8%
3. Fulham 12.5%
4. West Ham United 12.0%
5. Liverpool 7.4%
6. Burnley 7.0%
7. Arsenal 6.9%
8. Man City 6.6%
9.Tottenham 5.9%
10. Wolverhampton 5.8%
11. Wigan 5.3%
12. Birmingham 4.9%
13. Hull 4.8%
14. Everton 4.4%
15. Portsmouth 3.7%
16. Blackburn 3.7%
17. Sunderland 3.3%
18. Aston Villa 2.8%
19. Stoke 2.0%
20. Man United 1.0%

Again Chelsea top the table and we are spot on the average fees as a percentage at 7.4%.

Now of course it can be argued that if agent's fees are capped the greater the amount of transfer activity the greater the 'dilution effect' of those capped fees. But then when you look at clubs with similar spending to our £40.4m, say MUFC (£40.3m) and AVFC (£45.3m) their agent's fees are considerably lower than ours. Are they better at negotiating these fees, or is it the renewals of Gerrard and Torres, or the previous year's transactions maybe distorting the figures?

Without any more data I'm afraid I can't go any further, on what I am sure would be a good indicator / analysis of the cost management of transfer fees for agents. The data indicates (and nothing more) that in relation to player purchases we operate within the industry average. I suspect given the Gerrard and Torres renewals we actually operate better than the average.

If I get chance I may dig around for more data, if anyone has any please mail me or comment below.