Sports Big Business No. 2895, welcome to pay attention to the leading sports industry information platform
Literature | a summary of shengyi
"Common "Body" is a sports business theme dialogue program launched by the Voice of China Decisive Moment and sports big business, with the slogan of "Seeking Common Ground while reserving Differences, Talking About The Hot Topics of Sports that Everyone Cares About", which is broadcast once a week and at 10:00 pm on Friday evenings during the "Decisive Moment" column of the Voice of China.
On May 6, episode 77 focused on the late well-known football agent Raiola, surrounding its controversy to discuss the changing status of football agents and the concept of the football club's operations. The participating "gossipers" are Zhang Wen, a reporter from the Voice of China, a well-known sports broadcaster "Orange Cat Watching Ball", and Luo Ranfeng, vice president of sports big business marketing and general manager of Shengyi Interactive.
This article is an excerpt from the text of this issue. The full program can be listened to by clicking on the link below.
Why does Laiola evaluate polarization?
Orange Cat Watch: Raiola is known as "the angel of the players, the devil of the team". He was a Neapolitan-born Italian with a mafia-style godfather aura and majesty. In the process of dealing with the club, he made the club suffer a lot, and even teased people before he died, which is really a legendary person. Compared to other famous football agents such as Barnett and Mendes, his negotiating style is more relentless, in other words, a person who does things "absolutely". But because a lot of clubs want players in his hands and clubs have to deal with him, the club is really a headache. But for the players, Laiola always gets them the best treatment, really like an angel.
Raiola was deeply trusted by Ibrahimovic
Luo Ranfeng: Laiola is very professional, and the most important criterion for measuring his success is whether the customer gets the most benefit, so he will do his best to do it, and he is not afraid of being stigmatized. Whether it's in terms of player contracts or player trades, Rayola often delivers beautiful answers. Either the contract is high enough, or the transfer fee is staggering enough to help amplify the commercial value of the player. Raiola reflects the changes in the game relationship between clubs and excellent players, in the past the club was more dominant, and now the players' voice has increased. When the club found that negotiations with Laiola were always unpleasant, they naturally thought that Laiola was a "demon".
Zhang Wen: If we classify it roughly, there seem to be two kinds of football agents. One is Mendes and the like, always going out in a straight suit, a business elite style, a supporting team, full of modern enterprise professional atmosphere. Laiola often appears as untrimmed, and his business routine is mainly single-handed, at most with an external lawyer to negotiate with clubs around the world. He presents himself as a "family business", and the core asset of the enterprise is himself.
What is Raiola's superior means?
Zhang Wen: Laiola packages himself with the style of a professional team, but he has famous customers such as Ibrahimovic, Pogba, haaland and so on. Traditionally, players who do not choose professional agency services will generally ask their relatives to represent their own brokerage business. How did Laiola gain the trust of so many good players?
Orange Cat Watching: Laiola is very smart, when he first started as an agent, he found that the people in the Dutch football circle are more rectal, so he used the discovery of players from the Netherlands as a breakthrough. Many Dutch players were transported to Serie A, which was also known as the "Little World Cup" at the time, so that Laiola gradually accumulated contacts.
The key to his success is to negotiate completely from the player's point of view. Basically, when his good players join a new team, they can match a head-level salary.
Raiola had planned to pack a super transfer to Haaland
Luo Ranfeng: In order to win the interests of the players, Raiola's means are very extreme. For example, the news that Pogba is unhappy and wants to leave Manchester United will appear every three to five minutes, which is Raiola's game with Manchester United. He also offered to make Haaland the first player to earn €1 million a week, a price that would certainly be a no-brainer, and Messi only had a weekly salary of €500,000. But Haaland is one of the most watched young players, and Rayola has exaggerated his value in order to give him a staggering salary increase after his future transfer, even if he does not win a weekly salary of 1 million euros.
Zhang Wen: Unfortunately, Raiola passed away, and the variables of Haaland's transfer increased. It's hard to say whether the person who succeeded Raiola had the same bargaining power.
How profitable are football agents?
Zhang Wen: FIFA released a report in August 2021 that pointed out that the total commission of football agents worldwide over the past decade has reached 3.5 billion US dollars. How do football agents make money?
Luo Ranfeng: FIFA allows football agents to take a 10% commission from the transaction. The four major sports leagues in North America do not reach such levels, MLB is 5%, NBA and NHL is 4%, and NFL is 3%. The difference in commission ratio is more obvious. In addition, football agents involve salary contracts and transfer contracts, and football agents will have a little more channels to make money than other sports leagues without transfer fees. Foreign media rated the sports agents who earned the most commissions in 2020, with Laiola ranking fourth ($84.7 million), Barnett ($140 million) and Mendes ($100 million) ranking 2-3. Barnett was ranked first earlier, only to be overtaken by baseball agent Boras ($160 million) in 2020. But football agents occupy 2-4 places in the money-making list, and the energy of top football agents can still be seen.
Top 5 sports agents in 2020
Zhang Wen: There is also an interesting data. According to FIFA's International Transfer Agents Report 2021 in December 2021, the total global transfer market in 2021 fell from $5.18 billion to $4.31 billion in 2020, but broker commissions rose from $497.5 million to $500.8 million. Why is the football industry chain in a slump, but agents are living better?
Orange Cat Watching: In recent years, good players have been scarce, especially young players with appeal such as Mbappe and Haaland. The proportion of talent will decrease, and the cost of recruiting talent by clubs will increase accordingly. In addition, starting from the Bosman Act, the protection of the interests of players by laws and regulations has been continuously strengthened, which has improved the players' ability to play.
The influx of capital is also an important factor. Many teams that are not traditional giants have invested heavily in buying players, and the number of competitors for good players has increased significantly. The broker gets more room to operate from it. Overall, as long as the treatment of players is improved, the income of agents has the opportunity to increase.
Why are clubs willing to be "sucked"?
Zhang Wen: UEFA has always had a fiscal fairness bill, and FIFA also hopes to establish a transfer system through which all transfer registration processes, including the issuance of broker commissions, will be passed in the future. Will the rising momentum of the broker's income be intercepted?
Orange Cat Watch: UEFA is now launching a new measure to limit club investment – the Rules of Fiscal Sustainability. The word "fair" has been removed, which can be said to reflect that UEFA found itself unable to maintain the so-called "fairness". The new rules ease restrictions on club losses, but set a rule similar to a "salary cap" — a team's competitive-related costs can't exceed 70 percent of their revenue, with agent fees included.
These regulations help control the inflated costs of brokers – or rather, overinvest in clubs – but their specific role should not be overestimated. Agents hold players, the core asset of football competition, and on the surface agents are restricted, in fact, in order to get good players, clubs may work with agents with hands and eyes to figure out how to break through the restrictions.
UEFA plans to recalibrate club budget constraints
Luo Ranfeng: Football business scholars use "soft budget constraints" to explain the investment ideas of football clubs. Clubs take competitive efficiency rather than commercial efficiency as the starting point, so they tend to invest more budget to recruit good players. When the budget exceeds the revenue, the club often gets the bottom line from other sources, such as the city's taxation, debt relief, shareholder capital increase, fan donations, etc. So clubs don't control their inputs according to the budget they set based on revenue expectations, but often exceed their budgets. This is the "soft budget". When clubs adopt soft budget constraints and their goal is primarily athletics, they stick to it even when they need to pay high agent commissions.
Orange Cat Watching: Therefore, there is a bubble in the transfer market, and the responsibility cannot all fall on the so-called "greed" of the broker. The team actively invests in results and lineups to bring room for benefit to agents. Without Mendes and Laiola, there will be other agents who will become "predators" in such an environment.
Unlike closed professional leagues in North America, European football is an open pyramid. There are always new players who are willing to climb up, willing to throw money at players and agents.
Zhang Wen: Clubs or fans believe that agents carry "original sin" and constantly make clubs "suffer losses". In fact, the broker is only a participant in the industry chain, not the crux of the problem. Hopefully, this episode will give you a better understanding of the business logic of the football world, thanks to the two of you for participating in the show. See you next time!