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Michy Batshuayi to Chelsea: the financial impact of the transfer

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Now that Michy Batshuayi has signed for Chelsea, we turn our attention (as we so often do here at WAGNH) to how the deal affects Chelsea from a financial perspective.

Regular readers of WAGNH will likely be very familiar with club finances and why we like to take a look at the numbers involved in Chelea's transfers. However, for those who might be wondering why we do this, here's a brief summary:

For Chelsea, financial fair play is never going to be an issue in terms of compliance, but it still very much affects the how the club does business. With enormous, but ultimately finite resources, Chelsea needs to maximise those resources in order to put the strongest possible squad on the pitch. This is especially important when you consider that the handful of clubs with more resources (Manchester United, Real Madrid, Barcelona, Bayern Munich, and Manchester City) are all in direct competition with Chelsea for trophies, either domestically or (usually) in the Champions League.

Batshuayi signed a five-year deal with Chelsea after agreeing to a £33 million transfer fee with Marseille. Clubs calculate player costs by spreading the players'  transfer fees is spread over the lifetime of the players' individual contracts. So, as Batshuayi signed a five-year deal, his transfer fee is amortised at £6.6 million per year.

When we add his estimated £70,000 per week wages to the amortised transfer fee, we see that Batshuayi will cost around £10.2 million per year (£6.6m amortised transfer fee + £3.6m annual wages).*

*Ideally, agent fees and image rights payments should also be taken into account in a full calculation of player costs. This is easier said than done, however. WAGNH does account for the overall amount Chelsea pays in agent fees each year, but it is very difficult to parse out how much each agent was paid on each transfer. Image rights payments usually add twenty percent to the player's base compensation (i.e. wages), but depending on which side of the table the weekly wage figure is coming from, it may already include the image rights payments.

This slots Batshuayi in as one of the most expensive players in the squad. Only Diego Costa, Cesc Fabgras, Eden Hazard, Willian, and Pedro will cost more next season (Juan Cuadrado carries a £10.38m hit, but his position in the squad is up in the air at the moment, with Juventus trying to sign him permanently after a very successful loan last season).

However, just because Batshuayi is expensive does not mean that we should expect him to be one of the top performers on the squad next season.

This is not something I'd usually say. In fact, I'd usually advocate for the opposite, as one of the primary reasons we spend time breaking down the finances is so we can clearly see how much of Chelsea's finite resources each player takes up, which then allows us to assess how the club is using its resources, which sorts of players the club prioritises, and which players represent good (or poor) value. If a club is spending a significant amount of its resources on a particular player, then we should naturally expect to see a significant level of production from that player.

However, this summer is different. Much like the huge new NBA TV deal causing a dramatic uplift in salaries in professional basketball this summer, the new Premier League TV deal means that clubs have much more to spend.

Unlike the NBA, however, player costs in football equate to transfer fees and wages, not just wages. As a result, we're seeing transfer fees skyrocket, while wages are only seeing a moderate uplift (unless, of course, a player decides to take his talents to China, which is another thing entirely).

One way to look at transfer fees are "£40 million is the new £25 million." So, if it was reasonable to pay a £25 million transfer fee for a player last summer, it's reasonable to pay £40 million for him this summer. Given that there is so much more money in football this summer than in previous summers, it's not going to be super-productive to compare deals made this summer to deals made previously without at least recognising the inevitable transfer inflation.

However, it would certainly be reasonable to compare the Batshuayi deal to other deals made this summer.

For those of you who have read my articles on WAGNH before, you'll likely know that I tend to stay in my lane, which happens to be nowhere near an actual football pitch. As such, I'll leave the tactical analysis and scouting reports in the much more capable hands of Joe, Graham, Dave, and Steve. I'll also point you to Ted Knutson's numbo-jumbo (numbo here and jumbo here) and Michael Caley's fancy stats (in which he tabbed Batshuayi as the best striker prospect on the market back in May).

The numbers seem to indicate he'll be a good player and for what it's worth, Knutson's numbers also showed that Bertrand Traore was very likely going to have a breakout year at Vitesse before the 2014/15 season and we all know how that worked out (one of many examples I could point to regarding the value of taking Knutson's numbers on board).

Normally, I'd leave it at that.

BUT... for those (no doubt, very few) of you who are interested in a scouting report on Bathshuayi's agent, I've got you covered.

Ten years ago, at age twenty-one, Meissa N'Diaye became the youngest-ever agent to be approved by the FFF (French FA). Now, he's one of the most influential agents in French football and I wouldn't be surprised to see him running a worldwide agency or a top club before he turns forty.

N'Diaye also speaks four languages and has two masters degrees: one from the Sorbonne and another, in international business law, from the Centre of the Law and Economics in Sport at the University of Limoges.

Batshuayi is his biggest client, at least in terms of transfer deals, but N'diaye also has a growing roster of talented clients, including Wissam Ben Yedder, Benjamin Mendy, Bakary Sako, and Georges-Kevin N'Koudou.

For £500, just about anyone can become an FA-registered intermediary (what agents are now technically called) now, which can (and does) lead to people posturing as agents without ever having represented a footballer. Additionally, just like in most professions, there are shady and downright incompetent football agents. Due to less regulation in football than in some of the big American professional sports, there are more cracks for which sleazy con-men can crawl their way into the sport.

That said, football is an ultra-competitive industry, both on and off the pitch. As an agent, unless you're able provide great value to your clients as well as proving yourself trustworthy to others in the industry in order to build and maintain the relationships that are fundamental to being a successful agent, you're probably not going to last very long.

Some players choose not to use agents (for example, Juan Mata when negotiating his Chelsea contract), but most do, because they provide a valuable service and a return on the player's investment (a percentage of the player's wages. Clubs also often pay agents fees when a transfer is made).

Meissa N'Diaye is, by all accounts, is one of the many good agents working in the sport, and certainly someone to watch, as he'll very likely be making a significant impact on the industry sooner rather than later.