Show Me the Money
As ever it feels like little or no time has elapsed between the end of one season and the beginning of another. The World Cup serves to heighten those feelings, but here we are on the eve of new season, that blissful period where our hopes, dreams and aspirations are as yet undashed.
The glorious “Transfer Window” (unless of course you are Southampton) enables teams to offload a dodgy left back or temperamental winger (should that be whinger) and land a top quality striker ‘Who is going to give us 30 goals a season’.
The problem is that it all comes down to money. “Show me the money” as Cuba Gooding Jnr memorably demands of Tom Cruise in the movie Jerry Maguire. How complicated can it be? The transfer window is a simple auction with the highest bidder winning the spoils. This is a refrain I hear all too often in the commercial world; it’s a commodity product/service and price is the only issue. But is it true?
There’s no doubt that the money side is critical but is it the only thing? Even in such a binary environment football has been amazingly inventive (not something often said) in generating trading variables and identifying differential value, whether that is by using the time variable creatively, sell-on clauses, buy-out clauses, appearance bonuses, performance bonuses, image rights - and so the list goes on. Some variables are more bizarre than others. Here are a few of my favourites
So the next time you feel blinkered by price take a leaf out of football managers, chairman & agents book; get creative and remember that the more variables a negotiator has the happier they are.
On a similar subject I was fascinated to read some of the details of Manchester United’s new shirt sponsorship deal with Adidas. Again a pretty uncomplicated deal on the face of it – Adidas paid a huge sum of money for their name to appear on the player’s shirts. However it seems that roomfuls of lawyers have spent months without sleep thrashing out the deal. Why is this? Because when the numbers get so big it is even more critical to get value for money and in particular de-risk the deal. If Manchester United doesn’t qualify for the Champion’s League for two successive seasons they will see their annual payments drop from £75m to £52.5m. However, this clause won’t apply until the beginning of the 2015-16 season, which is a nice use of the time variable. Manchester United has rather cutely balanced this clause with one that gets them a bonus of £4m if they win the Champions League, FA Cup or Premier League. This technique is known as Over and Under and has enabled both parties to balance out risk of under performance against the reward of over performance. Mind you I’m not sure it was necessary for Adidas to mitigate against United being relegated during the term of the contract.
Or have I just spent too long in Manchester.