Tuesday, 29 May 2012

Dead Money Walking

Dead Money is a phrase used to describe money put into a poker tournament by players who because of their ineptitude have little or no chance of seeing their money ever again. In recent days it has struck me that there is a huge amount of  Dead Money in football. 

Consider the reported transfer of the 22 year old Gylfi Sigurdsson  recently purchased by Swansea City for £6.8m. To make the example work I need to make a few assumptions but I feel they are realistic let us assume that he has a 4 year contract and the cost of employing him is £1.5m p.a. At the end of the contract Sigurdsson at the age of 26 is a free agent and has zero residual value. Therefore over the lifetime of the contract the cost to Swansea is £12.8m or over £3.25m a year which is no small matter to a club whose income even in the Premier League will be no more than £60m p.a. 

Obviously Swansea hope that he continues to be a success and that his value grows rather than diminishes. However this only happens if Swansea can extend the contract or sell when it still has 2 years or more to run. Either the cost to Swansea grows (players only ever sign new & improved contracts) or they sell a key player and thereby diminish their chances of survival in the Premier League. The alternative is a lot worse of course, the form of last year was a flash in the pan and in 2 years time they have an expensive white elephant that they are trying to hawk round world football in a desperate attempt to get him off the wage bill and recoup even a small fraction of the transfer fee (whatever did happen to David Bentley?).

Due to the possibility of a resale the Sigurdsson transfer is not strictly dead money it is just a little bit poorly compared with the pushing up the daises money that changed hands for Peter Crouch. At the tender age of 31 he has been given a 4 year contract and had a fee of £10m. Total cost of lets say £22m and there is virtually no chance that Stoke will be seeing any of it  any time soon.

However for the true Norwegian Blue of dead football money look no further than the compensation paid to clubs for the services of Head coaches. The daddy of them all has to be Andres Villa Boas at Chelsea or better still the ill fated appointment of Alex McLeish at Villa. Both clubs sacked their managers within 12 months of appointing them  so neither could be argued to be a success. Could either club done worse than appointing a manager from the pool of unattached managers last summer? 

In a culture where head coaches have a life expectancy of less than 18 months with virtually no chance of recouping the money the compensation paid for a coach is the stiffest of stiffs in the graveyard. For those of you wondering why the Albion will not be paying £2m for Chris Hughton's services there is your answer Dead Money walking      

No comments:

Post a Comment