In previous articles for the site, I have highlighted the success that both Porto and Udinese have enjoyed as a result of their respective transfer policies. In short, both clubs use player transfers as a mechanism to grow their clubs and provide them far higher levels of capital to spend on players than their standard turnover could otherwise provide.


Sometimes when we see foreign clubs spending vast amounts on players we can mistakenly assume that they are far wealthier than Celtic; Porto and Udinese are certainly not. Looking at the respective accounts of the three clubs from 2005-2011, Celtic had an average turnover (excluding transfers) of £67m compared to Porto’s £41.5m and Udinese with just £29.6m.


With such limited resources how then were they able to vastly outspend Celtic? Simple; they earned far more in transfer income. Porto and Udinese both made transfer profits of more than £100m* each from 2005-2011. This system provides them with the finance to obtain a level of footballer that would not otherwise be affordable.


As we know, in the last few years Celtic have adopted a fairly similar recruitment policy; Neil Lennon, his coaching staff, John Park and the scouting network have excelled in identifying young, talented footballers from peripheral leagues and undervalued markets.


In the recent past, many Celtic fans were pessimistic about Celtic’s chances of being able to recreate a Porto/Udinese model as many of the undervalued markets are outwith the EU. However, the cases of Ambrose, Wanyama, Kayal, Izaguirre, Rogic et al demonstrate that it is possible to consistently obtain work permits for non-EU targets.


Under the coaching of Lennon and his staff, the young players that Celtic have acquired have developed and improved as footballers, and have consequently increased their value to the football club. Quite possibly Celtic have never had a squad with such a high monetary worth.


This is old news, I know, but it is pertinent because, as many concluded post-Turin, it now seems inevitable that a number of key players will be leaving the club over the next two years. In my view, this won’t represent ‘the end of an era’ as such but instead it will confirm the success of our new transfer policy-assuming of course, that the players are sold at a considerable profit, as we expect.


The income generated should provide the club with greater funds with which to reinvest, allowing Celtic to move onto phase two of their system, and a new wave of reinvestment in the playing squad. It might be prudent for the decision-makers at Celtic to take heed of the example of Lyon.


French Lessons


In their book ‘Soccernomics’, Simon Kuper (the author of my favourite football-related book, ‘Football Against The Enemy’) and Stefan Szymanski analyse the much lauded transfer record of Olympique Lyonnais, writing that, ‘Better than any other club in Europe today, Lyon worked out how to play the market.’ Perhaps they worked it out but unfortunately they didn’t adhere to their own findings.


Kuper and Szymanski outline ’12 main secrets of the transfer market’ and I broadly agree with them. Some of these ‘secrets’ include; not signing star players from recent international tournaments, that older players can be overvalued and that clubs should prioritise signing footballers in their early twenties.


In practice, however, Lyon consistently broke these rules from 2008 onwards and the results are startling. Jean-Michel Aulas, the French club’s president, is quoted in Soccernomics saying, ‘We buy young players with potential who are considered the best in their country, between 20 and 22 years old.’ Unfortunately the book does not mention the numerous examples of signings that do not fit Aulas’ or their own criteria. An example is the signing of Fabio Grosso for more than £7.5m; then 29 and a year after winning the World Cup. It’s unfortunate that they omitted mentioning this, as the failure of this signing (Lyon lost almost £6m on Grosso’s resale in just two years) would further strengthen Kuper and Szymanski’s own ‘secrets of the transfer market’ list. Furthermore, it would provide a more accurate depiction of Lyon’s transfer record, of which I feel Kuper and Szymanski are a touch sycophantic.


Part of Lyon’s problem in the last few years has been a repositioning of the club by Aulas. An increase in TV revenue for Ligue 1 in 2008 seemed to be a catalyst for Lyon to move from being a ‘gateway club’ (such as Porto or Udinese) to a club competing for high value signings with Europe’s wealthiest clubs. This can be seen in the transfer of Grosso from Inter Milan but also in many other examples such as the spending of £35m on Porto’s Aly Cissokho and Lisandro López in 2009 and buying Yoann Gourcuff for just under £20m, a year later.


In the two years leading up to the new TV deal in 2008, Lyon posted transfer profits of more than £13m for both seasons. In the three seasons since, we can observe the financial effects of Aulas’ change of policy, as they recorded huge transfer losses of £21m (2008/09), £25m (2009/10) and £15.5m (2010/11).


Notably after winning 7 leagues in a row, Lyon haven’t won the title since 2007/08.


Porto and Udinese on the other hand have adhered to this philosophy and continue to reap the rewards.



One more example: Down in Sicily, little Catania have adopted a similar transfer system to that of Porto and Udinese. In their case, due to economic constraints, Catania have adapted it and focussed their search for undervalued players in just Argentina and Uruguay. Yet still, the system has been phenomenally successful.


The catalyst for the recent growth of the club were the sales of Juan Vargas, Matías Silvestre and Jorge Martínez for a combined total of more than £27m. Catania signed Vargas on a free, Silvestre cost less than £1.5m and, for the life of me, I can’t seem to find any reliable information for Martínez’s transfer.


As with Porto and Udinese, Catania have been able to reinvest at an unprecedented level. Unsurprisingly, they have gone back to Argentina to find more gems: The squad currently contains 10 Argentinians and one Uruguayan. Conveniently, due to fairly recent European emigration (especially Italian) to these two countries, many of these players don’t require work permits as they already have EU passports.


The most satisfying aspect is that the implementation of this transfer policy has coincided with (and enabled) the most successful era in the club’s history – as also occurred at Porto and Udinese. For the past 4 consecutive years Catania have improved upon their previous season each time. This looks set to be the case again as with five games still to play this season, they have already equalled last season’s points tally.


In addition, they have achieved this on a comparatively small budget; Gazzetta dello Sport claim that Catania have the 17th highest budget in Serie A (out of 20) with annual wages for the 2012/13 season of just £15.25m. Yet despite this, they currently lie 9th in Serie A. It shows that Argentina has an undervalued market for both transfer fees and also wages – indicated by the fact that Catania’s top earner gets less than £10,000 a week and is a current Argentinian international.


Final Thoughts


In the second phase of it’s transfer system, it is imperative that Celtic don’t eschew the policies that have provided themselves, Porto, Udinese and Catania with success on the pitch and large transfer profits off it.


  • Monsieur Aulas forgot that an intelligent transfer policy is continually planning for the future. Changing tact and spending exorbitant amounts on players already playing in the Champions League was always unlikely to provide Lyon with future profits to grow the club. Perhaps football clubs funded by the gas reserves of Siberia or the oil fields of the Arabian Gulf can comfortably absorb these losses, but Lyon (and Celtic) certainly cannot. Scouting undervalued markets that consistently produce high quality footballers should be prioritised. When reinvesting, it would be benficial if Celtic avoid the temptation to return to overpriced markets that will be unlikely to provide them with future profits. 


  • Kuper and Szymanski were right; older players are overvalued. My article last year noted that since 2004, every Porto purchase over the age of 25 has lost money, only once have Udinese made a profit on an outfield player over the age of 25, and likewise, Celtic have not made a profit on an outfield player purchased over the age of 25 over the same period. Buying players who are 24 or younger provides greater opportunity for a profitable resale and therefore these players should be prioritised.


  • Maximise transfer revenue by selling players before they reach the age of 28 and when they have more than a year remaining on their contracts. If not, their sale value is normally reduced, in turn reducing the funds available to reinvest. Since 2004, Porto and Udinese have sold 29 players for more than £5m. On only one occasion was the player over the age of 27 (and he was 28).


More detrimental than selling players for a reduced value is not selling them at all. Allowing players to run out their contracts, deprives the club of money to replace the player and can lead to a reduction in quality or ‘life in the slow lane’ as Martin O’Neill predicted. All but one of the starting eleven in Seville left the club on free transfers (Stilian Petrov being the one exception). This trend continued in the cases of Liam Miller, Jan Vennegoor of Hesselink and Shunsuke Nakamura among many others.


All this, though, shouldn’t be interpreted as rushing to sell footballers. In cases where the value of a player is unlikely to reduce in the medium term (due to age and length of contract) there seems to be no benefit in selling a player prematurely – unless, of course, an offer is received that vastly exceeds the club’s valuation of the player.


There are numerous factors that influence a footballer’s valuation, but the length of contract is one that clubs can tangibly influence. Contract extensions can provide both an instant increase to a player’s value and also extend the duration of that higher value; for example, if Gary Hooper (for argument’s sake) were to sign a new 4 year contract, his value would instantly increase and he would be a highly valuable asset to the club for a much greater length of time than is currently the case.


Also, it’s important to acknowledge that these are more guidelines than definite rules. There is always a problem with being too dogmatic or intransigent. A degree of flexibility should be applied and occasionally exceptions made when it’s viewed in the club’s best interest to do so. For instance, it may be thought that a few mature players are required within the squad to help the development of individuals and the team, to engender a club ethos that new signings will adopt and to provide continuity at the club. Udinese, for example, have recognised that Antonio Di Natale has far more value to the club than purely his monetary worth. This aside, in the vast majority of cases, clubs should seek maximum value for their players.


We are at a crucial stage in the progression of the club. As with Ki last summer, there will be a number of players approaching their maximum value (while at Celtic) in the next two years. The club need to be confident in a sales policy that, if implemented well, will provide Celtic with significant transfer profits and provide the club with increasingly large funds for wave after wave of reinvestment. This isn’t the end, this is just the beginning.


Feel free to contact me on twitter @markocooper



*It should be noted that, as is common in Europe and South America, Porto and Udinese sometimes acquire a percentage of a player’s rights. This can make it very difficult to ascertain the exact transfer income received. For ease and consistency, I have used the purchase and sale fees provided by Transfermarkt.

An example of this form of transfer, was when Porto signed James Rodriguez; they initially acquired 65% of his rights, then subsequently obtained the remaining 35% earlier this year. They’ll sell him this summer receiving the full 100% of the transfer fee.

I guess obtaining a percentage of player right isn’t too dissimilar to Scunthorpe having a clause to earn them a sizeable percentage of Gary Hooper’s sell-on fee.