South American football clubs are missing out on European riches
The continent is receiving fewer eye-catching transfer fees, despite producing as many stars as ever
By F.C.
MOST FOOTBALL fans have never heard of Rodrygo Silva de Goes. But they would not be shocked to learn that Real Madrid have signed the 18-year-old striker from Santos in São Paulo for €45m ($50m). He joins a long list of South American youngsters who have made lucrative moves to Europe. His new employers will hope he can emulate Diego Maradona, Ronaldo, Sergio Agüero and Neymar (pictured), who easily justified their hefty fees.
Although European spectators do not bat an eyelid when their team splurges on a South American import, they might be surprised to discover that expensive transatlantic transfers are becoming less common. In the 2006-07 season, when Atlético Madrid signed a teenaged Mr Agüero from Independiente in Argentina, 13 of the world’s 100 most expensive transfers came from South American clubs, according to Transfermarkt.com, a football statistics website. Mr Agüero’s €21.7m fee was sixth on the list. Below him were other future greats, including Carlos Tevez, Javier Mascherano, Gonzalo Higuain and Marcelo. That vintage was typical: between 2000 and 2009, on average 11% of the top 100 transfers each year came from South American teams.
In the last five seasons, however, that number has plummeted to 3% (see chart above). When this summer’s transfer window closed on September 2nd, Rodrygo was the only direct import from South America in the top 80. European teams have used their soaring revenues from global broadcasting and sponsorship deals to break transfer records: sides in the “big five” divisions (in England, Spain, Italy, Germany and France) spent €5.3bn this summer, four times their outlay in 2006. But South American income has barely risen. In the season of Mr Agüero’s move, Brazilian and Argentine teams received €161m. This year the figure was €250m. Why has a continent with such a rich football tradition seen so little growth in transfer earnings?
The answer is not a sudden dearth of talent. Although no South American team has lifted the World Cup since 2002, the continent’s national sides win as frequently against those from other regions as they did 20 years ago. Moreover, South Americans still feature heavily in the top 100 transfers—19% of them in the last five seasons, compared to 23% in 2000-04. It is just that these eye-catching deals now generally involve one European club selling to another. Transatlantic transfers cost a pittance.
The real explanation for South America’s increasingly cheap exports is that European teams are poaching them at an earlier stage. Younger footballers cost less, because they are riskier assets: predicting an 18-year-old’s future ability is tricky. Prosperous European sides have become more willing to make these affordable gambles. When looking at the top 250 transfers each season—which include anyone who could turn into a star—the share of South American exports who are under 21 has risen from 24% in 2000-04 to 37% in 2015-19 (see chart below). The figure for all other transfers has hovered around 10%.
Hold or sell?
Sometimes a South American team tries to hang on to a wunderkind, to drive up his value and attract several bidders. When Neymar was 17, Santos offered him 40% of his future transfer fee if he signed a lengthy contract. He did so. But his agent and Barcelona, who eventually won the bidding for him, turned the tables on the selling club. When a 21-year-old Neymar departed in 2013, Santos only received €10m of Barcelona’s estimated €80m expenditure. About €7m went to DIS, a Brazilian firm that owned some of Neymar’s sporting rights. The rest went to the player and his entourage in additional fees, some outside the transfer deal. (DIS claims that these clandestine payments prevented it from getting a fair share; prosecutors are still investigating whether Neymar, Barcelona or Santos defrauded the company, which each denies. In 2016 Barcelona paid a €5.5m fine to Spanish authorities to settle a tax fraud case, but denied any wrongdoing.)
The other option for South American clubs is to take the transfer money as soon as possible. FIFA, the global governing body, banned teams from giving contracts to foreigners younger than 18 in 2001—a year after Barcelona handed one to a 13-year-old Lionel Messi. But football agents are creative. In 2008 Inter Milan paid Vasco da Gama, a Brazilian club, €4m for Philippe Coutinho, a 16-year-old attacker. The teenager stayed on loan at Vasco until he was 18.
Mr Coutinho later moved from Liverpool to Barcelona for €142m. Only Neymar, with his €222m transfer to Paris, has cost more. Both Vasco and Santos received a small windfall from those deals, thanks to FIFA’s “solidarity clause”, which redirects 5% of transfer fees to teams that trained a player before the age of 23. (Vasco earned about €3m and Santos €9m.) Yet neither club banked much of the value that it created.
Stuck between two bad options—the Neymar approach or the Coutinho one—the selling teams usually pick immediate compensation. Most players now have release clauses in their contracts, fixing a price at which a buying club can trigger a transfer. Even these can be haggled down, however. Real Madrid signed Rodrygo for €5m less than Santos had specified.
South American clubs have almost no bargaining power in these negotiations. They need the money: in 2017 nine of Brazil’s 20 top-flight teams made a loss. The league’s overall debt is $1.7bn. “Several clubs are desperate to sell young players,” says Pedro Henrique Mendonça, a sports lawyer. Rich suitors are now arriving from the United States and China too.
The avenues by which far-flung clubs can source youngsters have also multiplied beyond traditional talent-spotters. Services such as WyScout and Opta Pro help clubs to identify targets earlier than ever by providing clips of thousands of players in an instant. “There has been almost an industrialisation of talent development and exploitation, triggered by European wealth,” says Michael Calvin, author of “The Nowhere Men”, a book about scouting. It is unlikely that any future player as talented as Neymar will stay in South America past his 20th birthday.
For now, the continent’s leagues remain competitive. 21st Club, a football consultancy, estimates that Brazil’s Série A is the world’s sixth-strongest division, below Europe’s “big five”. The gap is widening, however, as the drain of young talent has diminished the domestic game. The continent that produced Pelé, Mr Maradona and Mr Messi has learned to live with financial inequality between the likes of Santos and Barcelona. But for it to become a backwater of club football would be a cruel fate.
