An insight by Moussa Ezzeddine – a leading football finance and data analytics consultant who has undertaken extensive research analysing more than 200,000 transfers from the past two decades, focusing on pricing, positions and salaries delves into importance of algorithms in football.
FIFA President Gianni Infantino’s declaration that a sophisticated transfer fee algorithm could replace random transfer market values for contracted players came as no surprise.
The international transfer market is now worth more than $10 billion annually and has been getting out of control since Neymar’s €220m move from FC Barcelona to Paris Saint-Germain in 2017.
No wonder that decision makers have become increasingly concerned with rising transfer fees.
Football is an industry of uncertainty, with the biennial transfer windows seeing vast expenditure with panic buys that can affect the entire market.
Regulations such as Financial Fair Play have not been enough to produce healthier financial statements and balance sheets.
New algorithms and data analysts can now identify future talent without the need to fly to every corner of the planet in search of the next young talent.
While agents have often been blamed for inflating fees and wages, FIFA has put a cap on their commission of 3% up to 6%.
This leaves many unanswered questions about how to determine market prices.
The factors determining transfer fees are evolving from performance indicators to future values and projected image rights.
New algorithms, from traditional academic models to AI-tools, are now being used in the race to achieve an automated pricing formula.
While the transfer market creates a lot of excitement and speculation, it’s not just fans who are interested in the latest deals. Risk-taking investors who utilise the latest technologies to anticipate the market are now speculating on the market in order to make money.
FIFA’s newly established Clearing House in Paris (FCH) aims at playing crucial role in the developing the current financial football transfer system, potentially becoming the main global bank for footballing transactions.
With higher transparency, the FCH could help to more fairly redistribute training fees that can ensure more balanced financial stability and reduce gaps between the haves and the have-nots.
Federations and clubs could benefit from data-driven valuation systems which could help to boost profitability without compromising on performance.
While it’s possible for national or international governing bodies to devise their own methodologies, there’s one striking fact that most of the stakeholders are missing – the quality of available data used.
So there’s an urgent need to look at the data requirements in order to plan well for any upcoming algorithms generating robust results for transfer fees.
Melon Coin has analysed transfer values going back more than a decade and uses a complex algorithm which analyses transfer fees, performance indicators, media visibility and personal characteristics from a range of football analytics sources to give a more accurate assessment of transfer values..
Only when these initiatives are fully embraced could we be looking at a more equitable future for the beautiful game.
