Do shirt sales ever cover transfer fees?
A brief topic of discussion on the latest Goonersphere podcast was Manchester United’s signing of Paul Pogba and the astronomical fee involved in making that deal happen. There has been much justification for this level of expenditure as is often the case when a high profile player moves for big money.
My good friend and podcast accomplice James Stokes made a fantastic point that if Pogba achieves his potential over the next 5 years it will be money well spent. Player performance and potential for improving your chances of success is always the best justification for any transfer fee; the worst is claiming eye-watering amounts are irrelevant because said player will pay for themselves in shirt sales.
This is wrong.
How any rational person capable of the basest critical thinking would not only believe but repeat this economic fallacy is beyond me. When we start getting into 8 figure transfer fees the mathematics just do not add up.
Firstly, shirt sales are not huge revenue generators for clubs — at least not directly. Best case scenario, football clubs will receive 15% of the retail price of any given shirt (and that is being incredibly liberal.) Which probably equates to roughly £8. Let’s be extremely generous and call it £15 per shirt.
Actual profit figures from shirt sales are hard to come by as they’re grouped in with other things and as the shirts are made by outside companies they are only seeing a percentage at the tail end. Total shirts sold is a different matter and we can use these for the basis of a few estimates.
Shirts from the 2015/16 season sold as follows: Barcelona 3.6m shirts, Bayern 3.3m, Chelsea 3.1m, United 2.9m, PSG 2.2m, Arsenal 2m.
Using our £15 figure we can work out that Barcelona received £54m, Bayern £49.5m, Chelsea £46.5m, United £43.5m, PSG £33m and Arsenal £30m. Sums that would pay for quite a few decent players but lacking in a little nuance and context.
Firstly, let us consider that clubs usually only begin to receive royalties once shirt sales have surpassed a certain threshold. This is how the manufacturers make their money once sponsorship, textiles, facilities, wages, shipping, logistics, marketing and taxes are factored in.
Secondly, we must also consider that clubs will have to pay taxes on the royalties they receive.
The most important consideration for calculating how much shirt sales offset a transfer fee by is the impact that signing has made on overall sales — which by and large is not so easy to do without internal sales and marketing data.
What this means is how many extra shirts did you sell because of your new signing or how shirts were sold with their name on it over expected sales for shirts and personalised shirts. If the data tells you that you’ll sell 2.3m shirts and 1m customers will buy named shirts this season but you sell a total of 2.5m shirts and 1.2m named shirts with 400k of them being Xhaka shirts then you can say that Xhaka has increased your net sales by 200k. Which is £3m — less than 10% of his fee.
Once you factor in wages etc you quickly see how difficult it is for any player to really pay for themselves in shirt sales. And the more a player costs the less likely it is they will pay for themselves.
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