Team Performance Bonuses in Transfer Agreements: An Integrity Risk?
Most fans who tuned in to the final round of EPL matches will have witnessed a thrilling finale to the season in which two west-midlands clubs, Aston Villa and Wolves, ultimately played a decisive role in the title race.
However, in the lead-up to the final weekend of fixtures, rumours were circulating on social media that both Liverpool and City may benefit from so-called ‘team-performance’ bonuses contained within the Diogo Jota and Jack Grealish transfer agreements; the implication being that both Villa and Wolves may have been financially incentivised to lose their final EPL matches.
With the summer transfer window now in full flow, Daniel Geey and I take a closer look at ‘team-performance’ bonuses in player transfer agreements and consider whether they are appropriate from a sporting integrity perspective.
Team Performance Bonuses
A team-performance bonus in a player transfer agreement is payable by the buying club to the selling club if the player achieves certain team-specific aims. The exact trigger event can vary but can include winning the league, qualifying for European competitions, getting promoted or even avoiding relegation. These types of bonuses can be distinguished from individual player bonuses for goals, wins, appearances and winning say the Ballon d’Or.
To provide an illustration, let’s take Liverpool’s recent purchase of Darwin Nunez for an initial €75m, with €25m in contingent payments. With the €75m fee guaranteed, the remaining €25m is likely split into a variety of team-performance and player-performance bonuses such as team UCL wins or EPL championship wins, plus player contingent payments if the player makes x number of appearances or scores x number of goals.
Integrity Issues
With contingent bonus payments becoming more and more commonplace in player transfer agreements, there is a risk that team-performance bonuses can lead to integrity of competition concerns.
Take the reporting on the Jota transfer. Liverpool agreed to pay Wolves £40m in guaranteed fees with an additional £5m in contingent bonus payments. Let’s say for the sake of argument that the whole £5m was payable if Jota wins the EPL whilst at Liverpool. In this scenario, the mere perception that Wolves may have been less incentivised to win their final game at Anfield arguably threatens the integrity of competition.
Whilst it’s true that EPL clubs earn £2.2m per EPL league place (and Wolves were still playing for places on the final day), there could be a scenario in which a club’s final EPL position is already guaranteed going into the final day and they are due to benefit from an additional transfer bonus if their final-day opponent wins the league or qualifies for European competition. Clearly, such an unlikely scenario could not be foreseen when two clubs are negotiating a transfer agreement (not least because they don’t control the fixture lists), but as things stand there is a genuine risk of clubs taking advantage of the current regulatory vacuum.
Say, for example, a top English club buys five players from five different Premier League clubs and includes significant EPL win bonuses in each of those transfer agreements. Come the final day of the season, that buying club would then have a 5/19 chance of coming up against a team that is, at least to some extent, financially incentivised to lose (assuming the title race has gone down to the wire). It is not hard to imagine how such bonuses could also affect a relegation battle or top four race too.
Potential Solutions
Outright Prohibition: One option would be to prohibit team-performance bonuses altogether, which would completely mitigate any risk of such conflicts arising. Whilst this may seem severe, clubs would still be free to agree player-performance bonuses (which do not carry such an integrity/conflict risk).
Same League/Competition Prohibition: Another option would be to prohibit team-performance bonuses where the two clubs are competing in the same league/competition in question. So whilst Liverpool couldn’t agree to pay Wolves a bonus if Jota wins the EPL, Liverpool would be permitted to pay Benfica a bonus if Nunez wins the EPL (as Benfica can’t directly affect Liverpool’s league position in the same way that Wolves can).
Value Cap: Another ‘softer’ option might be to allow for team-performance bonuses to continue, but to place a cap on their value to ensure that they do not outweigh the selling club’s own prize money incentives. This would need careful thought, however, as there may be more than one player involved (for example a buying club could buy two players from the same selling club and include team performance bonuses in both transfer agreements), and the caps would also need to be tailored to each competition.
Disclosure: A final option might be to allow for team-performance bonuses to continue but ensure that any conflicts (or perceived conflicts) are disclosed if they do arise. This would at least bring some level of scrutiny and accountability.
Conclusion
The status quo undoubtedly raises difficult questions for football’s governing bodies who, despite their focus on other integrity issues such as betting and match-fixing, currently seem comfortable with the idea of clubs having a vested financial interest in the success of other clubs in the same league/competition. However, given the speculation surrounding two high-profile transfer agreements in the final weekend of EPL fixtures, perhaps it is time for football’s lawmakers to consider the potential integrity risks that team-performance bonuses pose.
