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By Paul Tomkins.
On Saturday, Channel 4’s Economics Editor Faisal Islam tweeted:
“No one ever inflation-adjusts “record” transfer fees, do they? Sigh. #mata”.
Except, of course, we do.
In 2010 I joined forces with über-accountant and statistician Graeme Riley to create the Transfer Price Index (TPI), which converts football prices to ‘modern money’ (or what we call the Current Transfer Purchase Price) with its own inflation index. After all, standard inflation relates to the price of a loaf of bread, amongst other everyday things placed into a shopping basket. Football transfers occur outside of that economic bubble, existing within their own much bigger bubble (one that gets heartily blown, I might add, but rarely by West Ham).
Now, as we note in our 2010 book, Pay As You Play, it’s not a perfect model; any given transfer fee can be obscured by the parties involved, but we do the best we can, using reputable sources, to give a pretty good idea.
And obviously, wages are another factor which have to be taken into account; a lot of good work has been done on this in numerous studies, but ours was the first to find a connection between transfer fees and success. (Remember, if Liverpool sign no-one this winter they have still committed an additional £25m-30m to Luis Suarez over the remaining four-and-a-half years of his contract. There aren’t many clubs out of the Champion League for four consecutive seasons who can agree to pay a player £200k a week. Every club has to balance its transfer spending with its wage bill.)
http://tomkinstimes.com/2014/01/tran...why-they-mata/
http://tomkinstimes.com/2014/01/tran...why-they-mata/
On Saturday, Channel 4’s Economics Editor Faisal Islam tweeted:
“No one ever inflation-adjusts “record” transfer fees, do they? Sigh. #mata”.
Except, of course, we do.
In 2010 I joined forces with über-accountant and statistician Graeme Riley to create the Transfer Price Index (TPI), which converts football prices to ‘modern money’ (or what we call the Current Transfer Purchase Price) with its own inflation index. After all, standard inflation relates to the price of a loaf of bread, amongst other everyday things placed into a shopping basket. Football transfers occur outside of that economic bubble, existing within their own much bigger bubble (one that gets heartily blown, I might add, but rarely by West Ham).
Now, as we note in our 2010 book, Pay As You Play, it’s not a perfect model; any given transfer fee can be obscured by the parties involved, but we do the best we can, using reputable sources, to give a pretty good idea.
And obviously, wages are another factor which have to be taken into account; a lot of good work has been done on this in numerous studies, but ours was the first to find a connection between transfer fees and success. (Remember, if Liverpool sign no-one this winter they have still committed an additional £25m-30m to Luis Suarez over the remaining four-and-a-half years of his contract. There aren’t many clubs out of the Champion League for four consecutive seasons who can agree to pay a player £200k a week. Every club has to balance its transfer spending with its wage bill.)
http://tomkinstimes.com/2014/01/tran...why-they-mata/
http://tomkinstimes.com/2014/01/tran...why-they-mata/
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