Rationale Behind Crazy Transfer Fee of English Soccer Players

Rationale behind crazy Transfer fee of English Soccer Players England had a disastrous Football world cup in South Africa. English players are deemed as over-rated and perennial under achievers. But when it comes to the transfer fees, English players are able to command a premium. Liverpool paid ? 35 million for Andy Carroll, ? 16 million for Jordan Henderson and ? 20 million for Stewart Downing. Manchester City paid ? 26 million for James Milner and Manchester United paid ? 17 million for Ashley Young and ? 16. million for Phil Jones, who is just 19 and played only 28 times in English premier league. The important point to consider here is all the above mentioned players come from mediocre clubs and none have premier league winners medal under their belt. What is the mystery behind their astronomical transfer fees? The answer lies elsewhere. UEFA (Union of European Football Associations) has introduced a new ‘home-grown’ rule which states that each participating club in European competitions should have at least at least 8 homegrown players in their squad of 25. A player who is registered for at least three seasons at an English or Welsh club and is between the ages of 16 and 21 is termed as an home-grown player. The FIFA (International Federation of Association Football), the supreme body of the football is working on introducing a whole new system – nine players on every 18-man match day  squad must be home-grown. These developments have caught the English clubs off guard as most of the clubs don’t have the required number of English players in their squad sheet. The home-grown rule has forced the English clubs to go for head hunting of the English talent. The Demand –Supply curve of the transfer market for the English players is given below. D1 = Demand of English players before the implementation of ‘home-grown’ rule D2 = Demand of English players before the implementation of ‘home-grown’ S = Supply of English players p1 = Transfer Amount before FIFA implemented the ‘home-grown’ rule p2 = Transfer Amount after the implementation of ‘home-grown’ rule q1 = Number of English players in demand before the implementation of ‘home-grown’ rule q2 = Number of English players in demand before the implementation of ‘home-grown’ rule The home-grown rule has moved the demand curve to the right and with supply of the English players remaining almost the same; two changes have happened to the equilibrium 1. The equilibrium number of players has increased as there is more demand from English clubs 2. The equilibrium transfer amount has increased and this explains why even the mediocre English players are able to command a premium in the transfer market. Recently many problems have arisen due to the high price tags. Most of these players are either young or mediocre that they don’t find place in the starting lineup of the clubs. Players get frustrated by the lack of playing time and some of them put in transfer request. Also, the high price tags put immense pressure on these players to live up to the expectations. The danger with paying such a high price for a young player is that he might crumble under the pressure of expectations. James Milner is a perfect anecdote for this as he struggled to hold a place in Manchester City’s starting lineup during last season. ———————– Transfer fee A English Players A p2 p1 q1 q2 S D1 D2