Issue #9 Michael Wood on On the value of footballers

When Nahki Wells left Bradford City there was a suggestion that the fee the club got for the player was too little. Counter to that was the idea that the amount was correct and the reason it was correct was because in economic terms a thing is worth what someone will pay for it.

This is Economics 101. You learn it on the same day that you learn the supply and demand rules which lead to City who have a large supply of seats increasing demand by lowering price. All that something is worth is what someone will pay for it and so Wells was worth £1.3m. Post hoc ergo propter hoc.

At the time of Wells’ exit I discussed Arsenal’s attempt to buy Yohan Cabaye from Newcastle United. Cabaye has been subject of another bid – £14/£15m from Paris SG – but still Newcastle United hold out for a price they have concluded Cabaye is worth.

Why? If a thing is worth what someone will pay for it then they have arrived at his value. Paris will pay £14m ergo that is what he is worth.

Of course not.

If that were true the would be worth both the original bid and the new one. One might conclude that must be something more to Economics than “its worth what someone will pay for it” and there is, and it is the ability of the seller to resist factoring into the equation.

If the seller is not motivated then the price of anything can – and in practice does – increase. In the case of Cabaye unless Newcastle United get what they feel is the price they want then they are not motivated to sell.

“The thing is worth what someone will accept that someone will pay for it” which raises question about the first part of the statement: “the thing” and what it is.

What is Yohan Cabaye? Or what is Juan Mata? What is Marouane Fellaini? What is Mesut Özil? Are they discreet economic entities? When one talks about footballer value in economic terms one must have a field of comparison otherwise one is simply saying Juan Mata is worth one Juan Mata.

Are these four footballers the same thing in economic terms then? All are top Premier League midfielders with degrees of international experience. The spread on bids on them this season ranges £8m to £40m. If we accept the fairly simple premise that these four players represent broadly the same “thing” then perhaps we have an answer as to why Newcastle United can turn down Paris’ bid for Cabaye.

If Cabaye is a Premier League midfielder, and if a Premier League midfielder costs between £28m and £40m then they are right to value their player within that spread with – one might suggest – how close they can get to the top end of those valuations being a reflection of their negotiation abilities and position.

The better Joe Kinnear does the closer Cabaye’s price is to £40m.

So we revise our statement to “a thing which is the member of a group is worth what someone will accept that someone else will pay for members of that group.”

Which is a workable definition we can apply to other transfer fees.

Let’s take – by way of example – the centre forwards of the early Premier League era who create a group.

Chris Sutton joined Blackburn Rovers for £5m. Les Ferdinand cost both Newcastle United (again, they make a lot of transfers) and Spurs £6m. Andy Cole cost Manchester United £7m. Alan Shearer left Blackburn Rovers turning down Manchester United for £15m and Dwight Yorke when he exited Aston Villa to join Manchester United for £16.1m.

If we pick our way through these moves they fit into that definition. Some were good deals and some were not. Most would accept that Blackburn Rovers got a lot of money for Shearer, Newcastle ended up letting two England centre forwards leave and replacing them with one who was arguably better but not so on the granularity we are applying. Manchester United paid over twice as much for Yorke as they did for Cole who could not be said to be significantly better and so perhaps one was a good deal or the other a bad one.

All these transfers in the space of a few years (in which we saw market inflation) and give us a spread of £5m – £16.1m. What was the value of a centre forward in the early Premier League era? If you did business well and sold to motivated buyers it was around £15m. If you ended up in a position where you needed to sell it was less than half that £15m. If you had Les Ferdinand it was £6m.

Which – returning to the question in hand – leads us to ask if the fee Bradford City got for Wells was correct and the reason it was correct was because what someone will pay for him. I would suggest that it was not correct for that reason, although that it was not incorrect.

A look at a list of players transferred from League One shows us a spread of values for players sold from League One clubs to teams in the divisions above.

The list goes from Fabian Delph costing £8.4m down. It includes Andy Gray being sold for £1.6m in 2010 which one might say is an example of a club paying far too much and Rickie Lambert’s £1.1m move from Bristol Rovers which does not look like great business now.

Change the same list to strikers only and one gets a spread from Dwight Gayle at £4.7m down. Wells is equal on this list of Andy Gray’s move five years ago. We extend the spread to £1.1m (Lambert) which is the first internal League One move rather than a move up. That point is arbitrary but appropriate and gives us a spread of values for League One strikers moving up the leagues of £1.1m to £4.7m.

That is the marketplace that City were selling into. That is the value of what Bradford City were selling. Of those 22 players in that marketplace Wells nestles right in the middle being worth an median average.

That is if one accepts that grouping of the market. One might say that one could exclude players who went to the Premier League and point to Nick Maynard’s £3m move to Bristol City as the high figure. I believe that most of the groupings one could make tell the same story.

And that story is that City did averagely with the value of Wells in the marketplace. Whomever was negotiating the deal with Huddersfield Town (and I could not say who was involved on either side) could be said to have performed adequately.

We might long for the negotiation skills that they have at Peterborough United or Crewe Alexandra who are able to sell players who have objectively achieved less than Wells for much, much more money but we do not.

And it is at this point where the club and supporters find a way to learn and move on from the sale of Nahki Wells. Wells and his City team mates over-performed last season and the club benefited more than could have been expected from that. It was an example of what can happen when a high performance culture is fostered.

The sale of Wells represents a return to adequate performance.