I have to say that the fact that Ozil and Sanchez, in particular, have been allowed to enter the last 18 months of their contract without signing an extension has led to the media to whip up all sorts of speculation about their future. It seems that every day someone else is in for the pair. They have reportedly asked for between £200,000 - £300,000 per week (comparing themselves to the likes of Pogba), Pep is in for them, Conte and Mourinho are interested, the Chinese are ready to offer Sanchez £400,000 a week etc. And to add to this perfect storm, Sanchez and Ozil are playing out of their skins plus previously we we have allowed essential players to be poached away before.
My opinion on the matter is that we obviously should do our best to negotiate new contracts for the pair. However the implications of completely breaking the wage structure that we have at Arsenal could be catastrophic i.e. soon everyone will feel justified in asking for a raise or will threaten to leave. Bearing in mind Jamie Vardy and Ryhad Mahrez and how their form has dipped significantly since they have had improved contracts signed, I heard an interesting phrase that I has a lot of wisdom to it; "Never sign anyone who thinks they are doing you a favour by signing for you." Lots of food for thought.
PS. Here's a tip, If Sanchez refuses £200k per week when he's around the negotiating table, Wenger should try slyly sliding him a baby Labrador to sweeten the deal
The Media Loves A Contract Saga
posted on 8/12/16
That net asset price is still going to be highly subjective depending on the assessing parties. No player has a hard and fast value. This is compounded by the fact that there are so few purchasers in the market for elite level players; the equalising factor that allows Nestle (or whoever it is) to set an RRP for Twixes does not apply to top level footballers.
If Arsenal could replace Sanchez with a like for like player costing them £20m on the same contract, would that give Sanchez a value to Arsenal of £20m? Of course not.
Your argument I expect would be that such players are unobtainable for that amount of money, and if they were, Sanchez wouldn't be considered relatively speaking such a highly valued player by Arsenal and their fans, but it's a simplistic view.
In this case often only three clubs' subjective assessments of the values of the two players really impact the transfer fees.
The patterns of a luxury good market (very low supply, very limited demand) apply: there is no overarching economic model of price determination, no concept of price elasticity, etc.
posted on 8/12/16
*equalising factors
posted on 8/12/16
This is how you explain the transfer fees that very frequently shock and surprise us: Carroll to Liverpool, Kante vs Pogba, Ashley Williams' recent move, Stones to City, Bebe to United, Nani to Fenerbahce, some of Anelka's moves...
We often look at these and think, "So-and-so club has been rinsed," or "So-and-so club has a steal," but these decisions are nearly always made very carefully and will suit at point of exchange both clubs.
The idea of a market value for any given elite level footballer is a myth I'm afraid.
posted on 8/12/16
rossobianchi
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There are valuation models for players. It might not be as comprehensive as Modigliani–Miller but every club is heavily leveraged on its asset pricing that includes player values. Numerous clubs are floated. That is why the acquisition of Pogba was announced to the stock market before the fans. And of course demand and supply of players affects their pricing. Not sure why you assume football exists outside the norms of all business.
posted on 8/12/16
comment by Jenius99 (U4918)
posted 4 minutes ago
rossobianchi
---------------------
There are valuation models for players. It might not be as comprehensive as Modigliani–Miller but every club is heavily leveraged on its asset pricing that includes player values. Numerous clubs are floated. That is why the acquisition of Pogba was announced to the stock market before the fans. And of course demand and supply of players affects their pricing. Not sure why you assume football exists outside the norms of all business.
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It doesn't exist outside the norms of all business. It exists perfectly inside the norms of a tiny supply, tiny demand luxury good marketplace, with super high volatility and next to zero price elasticity.
This is why the best valuation models cannot nearly predict transfer fees. In fact, they are often wildly wrong, by factors of three or more.
posted on 8/12/16
comment by rossobianchi says WUBBA LUBBA DUB DUB! (U17054)
posted 16 minutes ago
This is how you explain the transfer fees that very frequently shock and surprise us: Carroll to Liverpool, Kante vs Pogba, Ashley Williams' recent move, Stones to City, Bebe to United, Nani to Fenerbahce, some of Anelka's moves...
We often look at these and think, "So-and-so club has been rinsed," or "So-and-so club has a steal," but these decisions are nearly always made very carefully and will suit at point of exchange both clubs.
The idea of a market value for any given elite level footballer is a myth I'm afraid.
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Couldn't have expressed it better myself, though it's a point I have frequently tried to make on here when people attach arbitrary transfer values to players.
posted on 8/12/16
*Sorry, that should have said "next to zero applicability of price elasticity"
posted on 8/12/16
comment by rossobianchi says WUBBA LUBBA DUB DUB! (U17054)
posted 7 minutes ago
comment by Jenius99 (U4918)
posted 4 minutes ago
rossobianchi
---------------------
There are valuation models for players. It might not be as comprehensive as Modigliani–Miller but every club is heavily leveraged on its asset pricing that includes player values. Numerous clubs are floated. That is why the acquisition of Pogba was announced to the stock market before the fans. And of course demand and supply of players affects their pricing. Not sure why you assume football exists outside the norms of all business.
----------------------------------------------------------------------
It doesn't exist outside the norms of all business. It exists perfectly inside the norms of a tiny supply, tiny demand luxury good marketplace, with super high volatility and next to zero price elasticity.
This is why the best valuation models cannot nearly predict transfer fees. In fact, they are often wildly wrong, by factors of three or more.
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Fair enough. Don't disagree. I think to an extent any valuations based on predicting future earnings is very difficult and football player valuations is highly subjective when estimating potential buys. I do believe however it is easier when you already own the player and so have marketing, branding incomes to hand as well some idea on potential sale value. And I accept any potential valuation will never take into account how much a player might be worth to club's psyche or fan reaction that might affect their spending patterns. For example did Arsenal's lack of ambition over the last 15 years affect their earning potential? Might be worth someone doing a paper for a doctoral thesis at a uni.
posted on 8/12/16
That'd be interesting stuff, although I imagine pretty frustrating for an Arsenal fan.
posted on 8/12/16
comment by Don Draper's dandruff (U20155)
posted 3 hours, 25 minutes ago
Jenius makes some good points...the key one is probably who do you replace him with? Who can you bring in who can play on the wing or as a no.9, and give you 15 goals + from either position?
Sell him for £60m and who do you get? Reus? Aubalamadingdong? Morata? Are any of them guaranteed successes? did spurs replace bale? or liverpool suarez?
The PL now has 5-7 top teams all chasing top 4, if you take Alexis out of this current Arsenal team and his replacement flops, do Arsenal make top 4? Miss top 4 and that's £40m down the drain.
So he is the one player at the club you can break your wage structure for, and you then just have to tell ramsey/walcott/even ozil etc to f@ck off when they come asking for a pay rise just because that's what alexis is getting.
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or just sell Ramsey and pay Alexis his wage demands. simples