How do Deals Work: A short-Ish guide to transfers & loans

A (not very short) somewhat step-by-step guide to making a deal happen

One of the most common questions I do get asked is how do transfers work and the long answer is it’s complicated. The short answer is… also, it’s complicated. Every single deal is unique and although some certainly do move easier or more quickly than others, you can’t simply define a transfer by a single nebulous definition.

To start, I’ll explain how a ‘typical’ deal would go.

1. Scouting

2. Declared Interest

3. Club-to-Player Negotations/Club-to-Club Negotiations

4. Club-to-Club Negotiations/Club-to-Player Negotations

5. Medicals and Legal Documentation

6. Registration, Media and Unveilings

1. Scouting

The scouting phase can literally take anywhere from a couple of weeks to multiple months and even years. I know of a current Chelsea signing who was signed off two weeks worth of scouting; I know a current CFCW player where the Blues spent over a year and a half scouting her to assess how best to get a deal. The initial scouting report will usually be done by a more junior scout who will be tasked with watching and evaluating multiple players. They will then whittle down this list to a smaller list of c. 10-20 players who they will go and watch in person and evaluate in detail in a one or two page summary report.

Once these reports have been submitted, the senior scouting team will review these reports and compile a final shortlist (circa 3 to 5 players) for the position. This team will compile a much more detailed scouting document on playing style, strengths and weaknesses, potential role within the side and also details on current contract, club and federation. They also might make calls to establish player character and behaviour, as well as establishing if what other potential costs might be involved with the transfer.

At this point, the Head Scout will collaborate with the Sporting Directors, a Director of Football (if present) and usually the Manager. By the end of this discussion, they will have identified a preferred target and usually a back-up, though sometimes they can have further contingency plans.

2. Declared Interest

Declared interest falls into one of four categories:

1. Formal conversation with the club about the availability of a player

2. Informal conversation with a player’s representation over the availability of a player

3. A formal enquiry into the availability of a player without opening discussions

4. A ‘Notice of Approach’ with a 7-day notice period within which the player and their representation must be informed.

Dealing with each of these in more detail:

1. A formal conversation with the club about the availability of a player. This will involve a senior member of either the board or transfer negotiation team arranging a meeting to specifically declare interest in a target with their equivalent from another team.

   This approach is usually taken when either a) the teams have friendly relations with one another, b) it is believed that the player is available or has been formally made available (either through a public announcement from a manager or by the player being formally declared available for transfer within the Transfer Matching System) or c) if it is felt the club will not stand in the way of a player looking to leave.

2. An informal conversation with the player’s representation gives the club an idea of whether a player is a) interested in a transfer or loan deal and b) whether they believe the club will grant the deal.

   Although these conversations are sometimes frowned upon, the majority of deals these days do involve at least some informal contact between parties. It is very easy for clubs to get in touch with agents, either through 3rd parties or through formal transfer discussion boards. However, these informal meetings can often be problematic as it can lead to accusations of tapping up or illegal approaches.

3. A formal enquiry without opening discussions is a bit like the first option, but it is more tentative. You are effectively asking whether a player is available this window, but you are not making any commitment to negotiate or to indeed engage any further. This is usually done for more speculative deals, or alternatively if clubs want to keep deals more quiet.

4. A ‘Notice of Approach’. This is a protected 7-day window during which a team cannot negotiate with a player for a prospective transfer UNLESS given explicit permission by the selling club who can choose at any time to waive the 7-day period.

   There are some rules though. Clubs can only approach 1 player at a time, and can only approach the same player from a club once every season. In addition, if a club has sent a notice of approach for one player at a club, they cannot approach another player at the same club until 28 days after the first notice.

These next two steps can be done in either order, but for the purpose of this article, I’ll use the more common approach in modern transfers, which is club-to-player negotiations.

3. Club-to-Player Negotiations

Assuming that the club have given permission to a side to talk to a new prospective signing, it’s time to sit down between the two parties and formulate an agreement in principle for personal terms.

This stage usually is a mixture of politics and finance. The prospective new signing will speak to the manager who will outline their role in the side and what they will expect from their new signing. They will outline the vision to the player and if they do not adequately persuade the player at this point, the player can choose to end the negotiations and the transfer falls through.

Assuming the player is happy with their suggested role and their position in the club’s vision, then the financial element comes into play. At this point, the club will also negotiate with the agent to establish whatever agent fee or cut of the deal they want to help smooth the deal along. More notably, they have to agree personal terms with the player. Personal terms include annual salaries, additional bonuses, any further perks to be provided by the club but also information about how to settle the player in the country if required, what schools they can submit their children into, what local support is available etc.

For most players at Chelsea, they will be appointed a Player Liaison Officer who will help support them during this initial period, but if the player in question does know a new teammate already (either through a mutual connection at a former club or on an international basis) then they may also be asked to help with this process. If the player doesn’t speak fluent English, they will also set a timetable for them learning the language.

Once this agreement in principle is reached, some basic paperwork is signed that effectively states that as long as the clubs can reach an agreement, the transfer will take place pending legal and medical checks. It’s important to note, however, that this agreement is optional and can sometimes be delayed until after either club-to-club negotiations, or indeed in some cases after the medical.

Onto the next step…

4. Club-to-Club Negotiations

Probably the stage that fans are now most familiar with, club-to-club negotiations for a transfer or loan deal usually fall into one of three categories:

1. Club A informs Club B that they would like to trigger either a release clause, an exit clause or a termination clause for their player.

2. Club A makes a written offer (‘or bid’) to Club B for their player and awaits either the bid to be accepted, rejected or negotiated. Club B can also invite clubs to match or better this offer, or make Club C aware if they have the matching rights/a buyback option.

3. Club A directly engages Club B in talks for a player in more formal negotiations to decide on an offer structure that will be considered suitable.

In the case of the first option, depending on the nature of the clause, Club B have a few different outcomes.

• A release clause means they have to allow a player to talk to the other club and agree terms (if not already agreed) but can also make a counter-contract offer. Alternatively, they can formally inform Club A if they believe ‘tapping up’ has taken place and threaten to report them to the FA or Transfer Commission.

• An exit clause means that the player has the option to talk to another club and ‘exit’ their contract, but equally they can choose to not talk to the buying club if they have no interest in leaving.

• A termination or ‘buy-out’ clause means the player ‘buys out’ their own contract directly to the club, and effectively becomes a ‘free agent’ who is able to fully negotiate their contract and terms with the new club. The new club will usually have already engaged with the player and agreed how to finance the termination clause, particularly as these can be the tens of millions of pounds or euros.

In terms of the second option, this is the more common approach and relies on the bid being accepted, rejected or negotiated. If accepted, the club is then free to discuss terms with the player (if not already done) and once agreed, they can proceed with the legal requirements and medical examinations before the final registration of the transfer and exchange of funds. At this point, Club B might contact Club D if they have a sell-on clause on the player to negotiate the value of this, or they might contact Club C if they have the right to match any deal or have their own buyback option. If a club does not intend to take up this option, it requires a formal notice, usually sent by email or sometimes by fax.

If the bid is rejected, the club has a choice to either make an additional bid, or move onto another target. They could also wait to see if the player chooses to take matters into their own hands and submit a formal transfer request - meaning they waive the 5% ‘loyalty bonus’ of a transfer fee which they would usually have the right to claim.

If Club B thinks the offer is not quite there but it is close, or feels it is an acceptable value but wants to discuss the format of payment structures or bonus clauses, they instead can open a formal negotiation channel at this point.

In the final case, the clubs can instead meet for formal negotiations to discuss offer structure and bonuses in a more constructive manner to avoid the back-and-forth nature of making bids and offers. Usually, this is done if the clubs have good relations when it comes to negotiating, or when a club has accepted that they will be losing a player without them needing to submit a formal transfer request.

5. Medicals and Legal Documentation

With the transfer now agreed in principle, both parties will work on the necessary paperwork to facilitate the future transfer of funds according to the payment timetable and also formally confirm in writing the structure of bonus payments. Meanwhile, the buying club will co-ordinate with the player for them to attend either their training ground or chosen facility in order to undergo a medical. This is to ensure the player is fully fit and ready to play for the new club. It also allows a buying club to examine a player’s medical history in more detail and explore any further concerns they may have, which may result in additional medical tests to investigate specific issues.

If the player fails a medical, then the club can either choose to complete an extended medical if they want to continue exploring the deal, or can choose to end negotiations. If the latter happens, then the agreed paperwork is declared null-and-void as the agreement in principle will be bound around accurate information about the player’s fitness and right to play being provided. This also means that if a player does not qualify for a work permit or has a work permit application rejected, they also have the chance to cancel the transfer.

Assuming the player passes the medical, they can now sign the legal documentation comprising of the player contract and other necessary documentation, including insurance and image rights to complete the transfer.

6. Registration, Media and Unveilings

The last step! By this point, the chance of a transfer falling through is extremely low, but it is possible that a deal can still fail at this point if the player is sanctioned by either the FA or alternatively by law enforcement. However, these cases are extremely rare.

More commonly, the completed transfer documents are scanned and uploaded to the Transfer Matching System. This is a FIFA-run database that lists the exact details of every single transfer within the professional FIFA ecosystem, including contract details, contract length (or loan terms), weekly and annual wages, bonus payments, total transfer value, agent fees and any other additional details about the transfer.

Once this has been uploaded, clubs have to wait a nominal period of time for the data to be checked and confirmed as accurate. As long as it is accurate, then the transfer can take place. If it isn’t accurate, the transfer will be rejected and the club will have re-submit the paperwork again, assuming they still have the time for the deal.

Assuming that it is approved, the deal is now done. At this point, the club can work with the new signing to finalise any media and introductory interviews. Following this, the club can then formally unveil their new signing and the selling club can formally announce the sale or loan deal.

So there you go. Over 2,000 words later, and you now have a decent understanding of how a transfer or loan deal works.

Another article on another topic soon.

Rob Pratley