Original post found here.
By Dr Alex Bond, Dr Paul Widdop and Dr Dan Parnell
Talent identification and development is not too dissimilar in many ways to the mining of precious metals and jewels. Both clubs and mining corps are hunting for precious materials to trade on international markets. But there are significant differences which exposes itself when football clubs utilise the loan system.
To take a mining analogy when thinking about the loan system, it is akin to a mining corporation plucking a diamond from the earth, supplying the rough stone to a lapidarist, at a cost to the lapidarist, who would then polish and cut the stone ready for the market place, but rather than trade themselves they give it back to the diamond mining corporation who then can trade again on the market at a profit. Of course this is nonsensical, but in reality this is what the loan market is.
“The loan system operating across Europe is a unique cross-subsidisation mechanism, which has developed from an emergency system used in times of necessity to a strategic operation. Of course, the strategy lends itself to larger clubs who can stock pile assets, which many would say exploit the smaller clubs. Regardless of its morality, it is clear Juventus is the king of Europe, setting the standard in strategising and operationalising the loan system”
Juventus are the experts at identifying and developing club to club partnerships. They are particularly able to find European partners to collaborate on the development of talent through shared access to Juventus facilities and backroom intelligence in coaching and medicine to achieve reciprocal wins for both partner clubs on and off the pitch.
The polishing of the stars and halves that gives the stone its brilliance
From the start of 2010 until the end of 2017, Juventus loaned out 142 different players – in 316 deals – to 132 clubs, spanning 21 different countries. In the calendar year 2016, Juventus loaned out 51 players – more than twice as many as teams are allowed to register in their first team squads each year – in 58 separate deals.
See this recent article by Tim Wigmore on inews.
The below ego network shows the clubs that Juventus have sent players to between 2010 up until the end of 2017.
2016 witnessed their record of 51 different players loaned out (across 58 different loan transactions) according to our data.
We didn’t collect age data for this initial analysis – that will follow, however, it seems they currently have 20 players out on loan currently aged 21 and over.
Considerations for FIFA
1) Uncompetitive Market place
2) Stockpiling of resources and favoured relationships are creating conditions of uncompetitiveness
3) Player welfare, it is uncomfortable to think of players as being commodified and a thing to trade
4) Disrupts the power of agents
Given that FIFA are currently contemplating new proposals related to the loan system, which includes reforming regulation. In a pure economic sense, any attempt to regulate the market for loan players is a restriction of trade which will ultimately lead to poor performance. This is the classic neo-classical economic position laid down by Adam Smith. However, football has never been a perfect market and attempts to deregulate certain aspects of the game has had huge consequences to the operation of the club and the flow of money, often out of the game.
The regulations placed on the loan system have to date been rather suspicious by there absence, and as in most capitalist industries resources have flowed to the top and increased the growing inequalities in the game, with smaller clubs now somewhat reliant on handouts or gifts from the bigger clubs (such as loans). Furthermore, this is not benevolence on the part of the larger clubs, it is an altruistic act on behalf of the larger clubs exploiting the system and increasing inequality in the game.
In terms of competitive balance the impact of regulation or restrictions on talent/labour markets has very little impact, if we look at American sports all the evidence follows Rottenbergs invariance principle (or Coarse Theorem) that regardless of FIFA’s regulation the the large revenue generating clubs will still attract the best talent, regulation may prolong the inevitable, but in doing so it may be counterproductive as the loan system has become intrinsically strategic to both large and small revenue generating clubs – or something to that effect
Despite this, each year there can only ever be a certain number of players that can progress from academy to U23s (or B-Teams), and then onto 1st team environments. An effective loan programme is a natural response to clubs seeking to capitalise on their investment in playing talent. At the same this, the loans programme is a key aspect of players talent development pathways. To remove or restrict this pathway will have consequences for the number of players released from top club, often without the game time or experience to ‘drop down’ to play in lower or foreign leagues. In short, we will no doubt see more players fall straight out of the game from top clubs.
For further information, comment or to discuss – contact Dr Alex Bond @AlBondSportBiz Dr Paul Widdop @Fire_and_Skill Dr Dan Parnell @parnell_daniel