Are Football’s Huge Transfer Prices Worth It? (Part 2)

Basic supply and demand can’t possibly explain today’s crazy prices of football transfer market. Huge money invested in the Premier League have caused quite a stir since – Paul Pogba’s 89 million poundsmove from Juventus to Manchester United, Virgil Van Dijk and Romelu Lukaku’s 75 million pounds transfers. It’s critical to take inflation into account when assessing these prices, though. In 2001, Zinedine Zidane agreed to transfer to Real Madrid for a world-record fee of 46 million pounds by that time. Accounting for inflation, that amount today would be worth around 70 million pounds. Of course, Zidane in his prime period was better than all three of these players combined, and there’s no way Neymar was even close as good a player as Zidane, although his transfer sum seems to suggest otherwise. This is were inflation in football market comes into the equation.

In 2001, the year of Zidane’s transfer, Real Madrid reported a total revenue of 121 million pounds, meaning Zidane’s 46 million pounds transfer fee was worth a massive 38% of the club income in that year. The 76 million pounds he would be worth today taken into account the general economic inflation would only worth around 11% of the 700 million pounds revenue reported in 2017. A more accurate estimate accounted for 38% of that £700 million, which makes him worth at a crazy 266 million pounds – considerably higher than the Neymar fee. Similarly, Pogba’s 89 million pounds transfer price only accounted for 17% of the 514 million pounds Manchester United revenue in 2016. Neymar’s bonkers 200 million pounds fee equates to around 39% of Paris Saint-Germain’s 507 million pounds annual revenue, which is almost equal to Zidane’s relative cost. In this sense, Neymar’s transfer sum could be considered as the market correcting over time which in line with 2001 rates, rather than an ever-rising expense out of control.