Alphonso Davies | Verbally agreed to join Real Madrid

[giorno]

When you only look at clubs with similar budgets, player license depreciations directly correlate with the wage bill (albeit in a negative way).

Sure. So why use incomplete information? Because the opposite isn't necessarily true

And player license depreciations correlate with the net spend of a club so you can't look at one of them in isolation.

Repeat after me: net spend is the difference between total cost of the playing squad. Anything else is either incomplete, wrong, or meaningless

Moreover, the whole thing isn't linear. There is probably a sweet spot which share of your budget you should allocate to player depreciations as investing 0 in transfer fees will definitely affect the club in a negative matter.

It might in the long run, because players are humans and time passes for everyone. Between summer 2015 to winter 2018 Real Madrid spend 170M total in transfer fees. Won 3 CL in a row, and a league title. If you average across the 3 seasons, that's less than 60M a season. And in 16/17, the most successful one, the total outgoing transfer fees paid were 30M for Morata.

At the same time Real Madrid also had one of the 2 highest wage bills in the sport, and was one of the top 3-5 biggest spenders in the sport in terms of squad cost

 

[Zehner]

Repeat after me: net spend is the difference between total cost of the playing squad.

That is technically wrong. Net spend is the the difference between paid transfer fees and received transfer fees over a certain period. That is something very different from costs or revenues. When you sign a player, you don't lose money immediately, you tie up cash in an intangible asset. Costs are only due when you depreciate said asset (the player license) either over the contract duration or because you sold a player below his book value. Which means you can actually lose money by selling a player. People who know finances know the difference

It might in the long run, because players are humans and time passes for everyone. Between summer 2015 to winter 2018 Real Madrid spend 170M total in transfer fees. Won 3 CL in a row, and a league title. If you average across the 3 seasons, that's less than 60M a season. And in 16/17, the most successful one, the total outgoing transfer fees paid were 30M for Morata.

At the same time Real Madrid also had one of the 2 highest wage bills in the sport, and was one of the top 3-5 biggest spenders in the sport in terms of squad cost

Don't get me wrong, I agree that allocating most of your budget to the wage bill is generally the best strategy (though there may be exceptions to the rule). As said, I believe there's a sweet spot, though, because of the law of diminishing returns. But you claimed net spend is a "bullshit concept". Yet, player license depreciations are probably the most important cost factor for professional football clubs after player wages and net spend is a quick and easy way to consider that without having to look into every transfer individually. Moreover, there will definitely be a positive correlation (and causation) between net spend and competitive success of a football club. You are very focused on the absolute top teams but I'm sure you'll find that the more you spend on transfer fees, the higher you finish in your league. As said, this is rather about budget optimization.

 

[slyadams]

Its annoying how at one time Real looked like an absolute basket case of a club and now they're building what looks like an era-defining side with relatively modest investment. True that being the club that most South American and continental players seem to want to sign for means you can get great deals, but this is something else. Meanwhile we've spent tonnes more and continue to be a basket case.

 

[redcucumber]

Its annoying how at one time Real looked like an absolute basket case of a club and now they're building what looks like an era-defining side with relatively modest investment. True that being the club that most South American and continental players seem to want to sign for means you can get great deals, but this is something else. Meanwhile we've spent tonnes more and continue to be a basket case.

It's quite easy for a club that can pick any player they want and sign them. Tchouameni, Camavinga, Davies, Endrick, Bellingham etc are all players that people on here wanted us to sign. In reality, no one has a chance as soon as Madrid are interested.

 

[Iker Quesadillas]

There is no great correlation between transfer spend/net spend and league position. There is almost exact correlation between wage bill and league position.

Gonna need the actual source for this.
It doesn't sound right.

 

[JogaBonitoRooney]

He's not that good. Real screwed up by losing Theo Hernandez who Bayern could replace him with. He's much better than Davies.

 

[giorno]

That is technically wrong. Net spend is the the difference between paid transfer fees and received transfer fees over a certain period. That is something very different from costs or revenues. When you sign a player, you don't lose money immediately, you tie up cash in an intangible asset. Costs are only due when you depreciate said asset (the player license) either over the contract duration or because you sold a player below his book value. Which means you can actually lose money by selling a player. People who know finances know the difference

Indeed we do. Stick around and you might learn something

But you claimed net spend is a "bullshit concept". Yet, player license depreciations are probably the most important cost factor for professional football clubs after player wages and net spend is a quick and easy way to consider that without having to look into every transfer individually

Are you seriously this unaware??? PLAYER LICENSE DEPRECIATION HAS ZERO BEARING IN THE "NET SPEND" YOU'RE TALKING ABOUT. ZERO!

 

[RedDevilCanuck]

He's Canadian and wants to be a social media star. He really should choose United.

Shaw can cover CB and LB.

 

[giorno]

Gonna need the actual source for this.
It doesn't sound right.

5 minute google search:
https://www.sportseconomics.org/sports-economics/-determinants-of-premier-league-points

Think there's an actual book written on this. Wage bill is the single greatest predictor of final league position before a season starts

 

[Iker Quesadillas]

5 minute google search:
https://www.sportseconomics.org/sports-economics/-determinants-of-premier-league-points

This link doesn't quite back your point. You said there was "no great correlation" between transfer spend / net spend and league position, but the table shows correlation coefficients of 0.71 and 0.57. That's pretty good. Wages are better, but 0.87 is not 'almost exact.'

It wouldn't make sense for transfers to have no correlation and wages to have near-perfect correlation because the mechanism of action is the same. They are both supposed to be proxies for player quality in an open market.

 

[stefan92]

This link doesn't quite back your point. You said there was "no great correlation" between transfer spend / net spend and league position, but the table shows correlation coefficients of 0.71 and 0.57. That's pretty good. Wages are better, but 0.87 is not 'almost exact.'

Which in fact is no great correlation. 0.71 is still a bit significant, but at 0.57 you could throw a coin to predict if increasing your net spend increases your points. It might, or might not. 0.87 still could be better to be called "almost exact", but it is by far the best predictive metric.

 

[giorno]

This link doesn't quite back your point. You said there was "no great correlation" between transfer spend / net spend and league position, but the table shows correlation coefficients of 0.71 and 0.57. That's pretty good. Wages are better, but 0.87 is not 'almost exact.'

Uh, yeah, my bad. There is no great correlation between "net spend" and results. Transfer spend yeah, obviously

 

[JediSith]

They are actually quite frugal for a club of their size. Here are their net spents according to transfermarket.de:

2023: -122m
2022: +12m
2021: +47m
2020: +108m
2019: -220m
2018: -28m
2017: +92m
2016: +7m
2015: -75m
2014: -14m
2013: -62m

Over the last 10 years, they had an average net spent of €25.5m.





I was curious and researched a bit but the sources weren't really helpful. I asked ChatGPT instead and it said that expenditures for infrastructure are indeed relevant to FFP but the UEFA will be more lenient there since such investments have a long term horizon unlike most transfer businesses.

That’s actually good management on their part and something we can relearn. They have no doubt been able to do this by selling world class players just as they have started the decline or are about to and also selling young players who while good are not quite good enough for the standards required to be a CL winning team.

Would United have sold Ronaldo for £100m at the time RM did or extended his contract? Same with Casemiro, Varane , Odegaard, Hakimi , Regulon, Kovacic, etc etc.

When you look at the list of players they’ve sold especially in the younger category many are still at top level clubs.

 

[Zehner]

Are you seriously this unaware??? PLAYER LICENSE DEPRECIATION HAS ZERO BEARING IN THE "NET SPEND" YOU'RE TALKING ABOUT. ZERO!

That's quite the claim. A high net spend indicates that you paid a lot for transfer fees. Those are activated and then depreciated over the contract durations respectively when you sell for below book value. Which, as a consequence, means that a high net spend predicts high depreciations on player licenses in the following years. So when we're talking about a period of 10 years (see the image that initiated this whole discussion) net spend and player license depreciations will strongly correlate.

Let's put it this way: The UEFA publishes two lists. One enlists the 20 clubs with the highest net spends over the last decade, one the 20 clubs with the highest player license depreciations. How similar would they be?

Which in fact is no great correlation. 0.71 is still a bit significant, but at 0.57 you could throw a coin to predict if increasing your net spend increases your points. It might, or might not. 0.87 still could be better to be called "almost exact", but it is by far the best predictive metric.

A coefficient of 0.5 indicates a moderate correlation. Anything above 0.75 is strong.

 

[stefan92]

That's quite the claim. A high net spend indicates that you paid a lot for transfer fees. Those are activated and then depreciated over the contract durations respectively when you sell for below book value. Which, as a consequence, means that a high net spend predicts high depreciations on player licenses in the following years. So when we're talking about a period of 10 years (see the image that initiated this whole discussion) net spend and player license depreciations will strongly correlate.

Let's put it this way: The UEFA publishes two lists. One enlists the 20 clubs with the highest net spends over the last decade, one the 20 clubs with the highest player license depreciations. How similar would they be?

A high net spend indicates that you paid much more for players than you got for selling them. I feel like you are confusing net spend and total spend at the moment. For example you could have two clubs who both spend a billion on new players, but one sold players for a billion with zero net spend and the other only got 200 million for their sales, resulting in 800m net spend. Still they would have the same value depreciations and total (!) transfer spend, but wildly different net spend.

 

[Zehner]

A high net spend indicates that you paid much more for players than you got for selling them. I feel like you are confusing net spend and total spend at the moment. For example you could have two clubs who both spend a billion on new players, but one sold players for a billion with zero net spend and the other only got 200 million for their sales, resulting in 800m net spend. Still they would have the same value depreciations and total (!) transfer spend, but wildly different net spend.

I think this is getting a bit chaotic right now

See, the starting point of the discussion was that Real Madrid can spend seemingly endlessly despite FFP. Then some of us (including me) brought up the net spend statistics to prove that Madrid didn't even spend that much after all to which giorno replied that net spend is a bullshit concept.

So of course total spend is a much better indicator of player license depreciations than net spend but that wasn't even what I tried to argue. I was just arguing that net spend is a quick and easily available albeit superficial statistic that gives you an idea how much money a club has paid for transfer businesses. If you wanted to have a detailed look, you would have to calculate depreciations based on book values and contract durations and calculate if a received fee was actually above or below the remaining book value of the player license. That is pretty complicated and time consuming so just checking the net spend is much easier and still adequate for a discussion on an online forum. It is obviously not perfectly accurate but at the very least it correlates with the actual costs of depreciations as well as possible losses/profits on player sales.

 

[ThierryHenry14]

I think this is getting a bit chaotic right now

See, the starting point of the discussion was that Real Madrid can spend seemingly endlessly despite FFP. Then some of us (including me) brought up the net spend statistics to prove that Madrid didn't even spend that much after all to which giorno replied that net spend is a bullshit concept.

So of course total spend is a much better indicator of player license depreciations than net spend but that wasn't even what I tried to argue. I was just arguing that net spend is a quick and easily available albeit superficial statistic that gives you an idea how much money a club has paid for transfer businesses. If you wanted to have a detailed look, you would have to calculate depreciations based on book values and contract durations and calculate if a received fee was actually above or below the remaining book value of the player license. That is pretty complicated and time consuming so just checking the net spend is much easier and still adequate for a discussion on an online forum. It is obviously not perfectly accurate but at the very least it correlates with the actual costs of depreciations as well as possible losses/profits on player sales.

It is a lot easier for general public to get a picture of how much money a club spend on player recruitment using transfer "net spend". The detail calculation I will leave it to the accountants to do the work.

 

[kaiser1]

Obviously, the net spend is a superficial statistic from an accounting perspective but it still correlates strongly with a very relevant position which is player license depreciations and player license depreciations do indeed limit how much you can spend on your wage bill. So if you identify the wage bill as a decisive factor and the budget you can allocate to the wage bill is limited by player license depreciations and player license depreciations correlate with the net spend, the net spend of course holds informational value. Suggesting that it is a "a bullshit construct for people who don't understand finances" is just an intentionally polarizing statement.

Moreover, I would even put forward the hypothesis that net spend definitely does correlate with squad quality as well as team success. If not at the very top of pyramid, then at the very least the further you move down the table.

I agree with @giorno
Wage bill is far more accurate to measure the squad strenght than transfer fees and net spends. I can technically build a first 11 of world class players with 0 transfer fees if you wait for them to leave on free transfers which are becoming more frequent nowadays
What you cannot do is not pay your world class player competitive salaries. Players like Mbappe, Alaba, Pirlo, Messi Lewandowski Ballack McManaman while being some of the best in their positions left on free transfers

City got Haaland on paper for about 50M which makes him maybe 20th most expensive player in EPL while his salary shows his real worth
Davies is probably one of the best LB in the world but due to his contract situation, there is a limit on what can be demanded for his signature, his wages will show the real worth

 

[kaiser1]

I don't agree about the comparison with City because of two main reasons. The first is that in Madrid's case a big part of the renewal has been based on youngsters and players waiting until the last year of their contracts and as a consequence the net spending has been surprisingly low for a top European club in the last years. I was very critical of Florentino for this lack of investment in the past but I have to admit that, at least on paper, time seems to have proved him right, at least for now.

The second reason is that City is at the peak of its maturity at the moment and we are yet to see if Madrid can actually build a successful team as we have numerous precedents of squads that count on great names but fail to transfer expectations towards titles in a sustained way.

Looks like City are over halfway through a rebuild, They have moved from Gundogan Laporte Mahrez D.Silva Aguero Fernandinho to new set of players. The old guards left as key starters are Walker KdB Bernardo

 

[Kaizane]

FFS cue the pizza-faced pace merchants of Fifa just itching to spam the sprint button with Real Madrid next season.

 

[giorno]

I think this is getting a bit chaotic right now

See, the starting point of the discussion was that Real Madrid can spend seemingly endlessly despite FFP. Then some of us (including me) brought up the net spend statistics to prove that Madrid didn't even spend that much after all to which giorno replied that net spend is a bullshit concept.

what? No. Somebody pointed out how laliga clubs have it easier to pivot from one winning cycle to another because they have less competition, I pointed out City also have little problem with that because they have money and the same is true of Madrid. Someone else than mentioned Madrid's low net spend as a rebuttal to my point to which I finally replied that net spend is a meaningless term and Madrid have *always* been among the very highest spenders around

How you got to Madrid can ignore FFP is baffling

 

[GhastlyHun]

Hey, has anyone heard of this Alphonso Davies guy? I think he deserves his own thread.

 

[Acheron]

There is no great correlation between transfer spend/net spend and league position. There is almost exact correlation between wage bill and league position. Teams spend *significantly* more money on wages than they do on transfer fees.

Sales are dictated by your quality of players. If you have great players you can sell, you are going to make more money off sales, and thus can keep your "net spend" lower. The implication is that, since you already had great players you could sell for a lot of money, you were already a great team. If I start with a Ferrari, sell it for 1M and buy a bugatti for 1.5M, my "net spend" would only be 500K and I now have a Bugatti. The guy starting with an Audi, who sells it for 100K and then buys a Porsche for 1M has a "net spend" of 900K. Much higher than mine right? Yet I have a Bugatti, and he has Porsche. Clear enough?

It's clearly a lot easier to rebuild from a position of success and it also helps we tend to move on from players rather quickly if they don't work for one reason or another. It keeps the squad competitive and players don't lose their value as much.

 

[Iker Quesadillas]

The Real Madrid rebuild looks good because the track record of recent signings is very solid.

But it is the 2nd rebuild. The previous one was mostly flops.

Real Madrid got lucky that some players have made it into their mid 30s and kept their quality.

 

[RG77]

The Real Madrid rebuild looks good because the track record of recent signings is very solid.

But it is the 2nd rebuild. The previous one was mostly flops.

Real Madrid got lucky that some players have made it into their mid 30s and kept their quality.

You mean the 2019 season? Not all flops to be fair.

Rodrygo
Militao
Lunin
Mendy

All of them worked out to some degree.

Hazard
Jovic
Reinier

Were the flops. Cruised on those signings and existing squad for a couple of seasons whilst adding Cama/Tchou in 21/22. This time around we slowy but surely replaced the old squad instead of bunch of signings in one summer.

Think this will be a potential big summer with Mbappe, Davies and maybe that Yoro kid. And a new RB next season will leave us in good space to not need signings for a couple of years.

Granted no injuries or something like that, hard to predict of course. But on paper we should have ‘calm’ transfer windows like we did previously.

 

[giorno]

The Real Madrid rebuild looks good because the track record of recent signings is very solid.

But it is the 2nd rebuild. The previous one was mostly flops.

Real Madrid got lucky that some players have made it into their mid 30s and kept their quality.

It looks good because we hit on most signings. Vinicius, Rodrygo, Mendy, Militao, Courtois, Alaba, Rudiger, Valverde, Bellingham and Camavinga have all been hits so far, this season we're getting big contributions by Brahim as well. Conversely, the misses are Odriozola, Hazard, Jovic, Reinier and Tchouameni. It should have been better too: with more patience with Theo Hernandez and better appraisal of Llorente we'd have the LWB and RWB sorted, and if we didn't feck up the Odegaard situation we'd now have the long term Kroos/Modric replacement already done too.

 

[kaiser1]

It looks good because we hit on most signings. Vinicius, Rodrygo, Mendy, Militao, Courtois, Alaba, Rudiger, Valverde, Bellingham and Camavinga have all been hits so far, this season we're getting big contributions by Brahim as well. Conversely, the misses are Odriozola, Hazard, Jovic, Reinier and Tchouameni. It should have been better too: with more patience with Theo Hernandez and better appraisal of Llorente we'd have the LWB and RWB sorted, and if we didn't feck up the Odegaard situation we'd now have the long term Kroos/Modric replacement already done too.

I am sure that is an error. Tchoumeni has been good. No?

 

[giorno]

I am sure that is an error. Tchoumeni has been good. No?

No. Or at least not good enough

 

[kaiser1]

No. Or at least not good enough

Would do anything to have a DM like him

So a Tchouameni - Davies swap? I will bite your hands off

 

[ForeverRed1]

He's not that good. Real screwed up by losing a Theo Hernandez who Bayern could replace with him. He's much better than Davies.

We should go all out for this guy. Him and shaw would be

 

[Iker Quesadillas]

I am sure that is an error. Tchoumeni has been good. No?

He's not been 80m good and probably the worse of the younger midfielders, but not really a miss.

As far as perceptions I think they have to do with role in the team. Valverde and Camavinga had to break through in various ways, play various positions, etc. Bellingham didn't, but he took his new role with gusto and has had an amazing first season.

Tchouameni on the other hand has been essentially handed the starting role due to the sale of Casemiro. And he hasn't been as good as Casemiro. So there's more skepticism.

 

[Iker Quesadillas]

It looks good because we hit on most signings. Vinicius, Rodrygo, Mendy, Militao, Courtois, Alaba, Rudiger, Valverde, Bellingham and Camavinga have all been hits so far, this season we're getting big contributions by Brahim as well. Conversely, the misses are Odriozola, Hazard, Jovic, Reinier and Tchouameni. It should have been better too: with more patience with Theo Hernandez and better appraisal of Llorente we'd have the LWB and RWB sorted, and if we didn't feck up the Odegaard situation we'd now have the long term Kroos/Modric replacement already done too.

I would put Odriozola in the previous rebuild.
Odriozola, Ceballos, Vallejo, Mariano, Theo Hernandez, were all busts. Danilo slightly less so but left ages ago, Kovacic never became a starter, neither did Asensio.
Technically there are signings like Vinicius Jr. and Brahim who overlap with those, but they only started to contribute/"kick on" around the time of the 2nd rebuild. Brahim was on loan for the vast majority of that time.