[Football] How transfer sell-on clauses typically work

[Bozza]

There was a debate on a thread a couple of days ago about how transfer sell-on clauses typically work. I can't find it now, so I've taken the liberty of starting a new thread...

I had always thought that sell-ons would be based on the profit of the subsequent player sale, a view shared by one of those debating it, whilst others seemed to think sell-ons were based on the gross selling price when a player is sold on again.

So, I asked the best person I could think of, Paul Barber, and what he said is below. I stress this is all speaking generally and is not indicative of any deals the Albion have done, are doing or will do....

In my experience, calculations for sell-ons are only ever made on the amount over and above what the selling club has already received.​

​

So, in its simplest form, player is sold for £10m with a 10% sell-on.​

​

Player subsequently sold for £15m.​

​

Original selling club receives 10% of £5m profit = £500k.​

​

There can however be many, many (almost limitless) different variations of the simple model above.​

​

Again in its simplest form, where the original selling club has also included add-ons in the original sale: for example, they receive £1m if the club they sell to win promotion.​

​

It would then be £15m - £10m - £1m = £4m profit x 10% sell-on = £400k to original selling club.​

​

I do not know of any cases where a sell-on has been calculated on the subsequent sale price. That would be nice but doesn’t happen!​

 

[Bakero]

That debate was on the Cucurella thread

Here's what I said there:

Birmingham had a 10% sell-on clause when they sold Bellingham for 25 million.

When Dortmund sold him for 88 million, it was reported that the Blues were set to receive over 6 mill.

That's calculated at 10% of the profit Dortmund made (63 million: 88 mill sale minus the 25 they sold Birmingham).

View attachment 165030

The Times

You'd have to imagine a sell-on based on profit is standard when a large initial fee is involved. Otherwise what's the point for the buying club?

Imagine Chelsea sell Moisés for 100 million in a couple of years and we had a 15% clause on the total fee. We'd end up with 130 mill profit (the initial 115 + the 15 sell on) while Chelsea would be 30 mill down. Even if they sold him for the price they bought for him they'd be making a loss of over 17 million. In fact, to make even a minimal profit they'd have to sell him for ~136 million.

I know we like to think Boehly is dumb but he ain't that dumb.

 

[PILTDOWN MAN]

There was a debate on a thread a couple of days ago about how transfer sell-on clauses typically work. I can't find it now, so I've taken the liberty of starting a new thread...

I had always thought that sell-ons would be based on the profit of the subsequent player sale, a view shared by one of those debating it, whilst others seemed to think sell-ons were based on the gross selling price when a player is sold on again.

So, I asked the best person I could think of, Paul Barber, and what he said is below. I stress this is all speaking generally and is not indicative of any deals the Albion have done, are doing or will do....

In my experience, calculations for sell-ons are only ever made on the amount over and above what the selling club has already received.​

​

So, in its simplest form, player is sold for £10m with a 10% sell-on.​

​

Player subsequently sold for £15m.​

​

Original selling club receives 10% of £5m profit = £500k.​

​

There can however be many, many (almost limitless) different variations of the simple model above.​

​

Again in its simplest form, where the original selling club has also included add-ons in the original sale: for example, they receive £1m if the club they sell to win promotion.​

​

It would then be £15m - £10m - £1m = £4m profit x 10% sell-on = £400k to original selling club.​

​

I do not know of any cases where a sell-on has been calculated on the subsequent sale price. That would be nice but doesn’t happen!​

Thanks for that, it would be nice to know when it becomes payable. Is the payment structured over the same period as staged payments the selling club agree or does it have to be paid straight away?

 

[Sarisbury Seagull]

Yeah that was always my understanding.

I was surprised how many in that thread thought it was on the whole value of the transfer and not the profit. As @Bakero says, even Boehly is not that stupid.

 

[Bakero]

Thanks for that, it would be nice to know when it becomes payable. Is the payment structured over the same period as staged payments the selling club agree or does it have to be paid straight away?

Often gets paid in installments, I believe.

Just checked and according to a piece in the Athletic, that is the case.

"The payments will arrive based on a structure agreed between the selling and buying clubs, which more often than not means the fee is received in instalments. Some clubs who want the entire sell-on fee up front negotiate for that to happen, usually at a reduced percentage of the overall fee."



Here's a quote from the Carlisle chief executive:

“You get paid your money when the seller gets paid their money,” he said. “Say a player is transferred for £20m and it’s paid over four years, you get your instalments over four years. So anything we get on that kind of deal might be quite small, and a long time in the future.”

 

[PILTDOWN MAN]

Often gets paid in installments, I believe.

Any reason for your belief? Only ask as so much on here is, well, made up.

 

[Bakero]

Any reason for your belief? Only ask as so much on here is, well, made up.

Added evidence

 

[Neville's Breakfast]

So presumably all transfer details are public knowledge so that potential recipients of sell ons know what to expect ?

 

[PILTDOWN MAN]

Added evidence

Thank you. I like factual posts.

 

[Joey Jo Jo Jr. Shabadoo]

So presumably all transfer details are public knowledge so that potential recipients of sell ons know what to expect ?

Why would they be public knowledge? Obviously things get leaked in an unofficial capacity or by people trying to appear in the know or making educated guess but they don't need to be public knowledge for the clauses to work.

The sell on clauses are normally between clubs and confidentiality agreements that applied to the original transfer would apply on any future fees too. So our undisclosed fee for Caicedo can be revealed to his previous club so they know how much they are getting but they can't make it public knowledge what those amounts actually are.

 

[CheeseRolls]

Thanks for that, it would be nice to know when it becomes payable. Is the payment structured over the same period as staged payments the selling club agree or does it have to be paid straight away?

Infinite possibilities. There have even been reported cases of the selling club cashing out early e.g. selling club has cashflow problems, buying club offers them a fee to waive the right to any future sell on clause.

You also have to consider sneaky Spurs type manouvres, where Zamora went to West Ham valued at a pittance in a part exchange deal to avoid paying us more money.

 

[Joey Jo Jo Jr. Shabadoo]

Infinite possibilities. There have even been reported cases of the selling club cashing out early e.g. selling club has cashflow problems, buying club offers them a fee to waive the right to any future sell on clause.

You also have to consider sneaky Spurs type manouvres, where Zamora went to West Ham valued at a pittance in a part exchange deal to avoid paying us more money.

We did this with Gareth Barry and Michael Standing where we agreed a lump sum with Villa and waived our rights to any future fee's based on the appearance and sell on clauses in the original deal. It cost us in the long run as we missed out on about £1.5 million when Barry moved from Villa to Man City but as Martin Perry says in the link below it was the right decision at the time.

Brighton won't benefit from Aston Villa selling Gareth Barry

BRIGHTON have revealed they will not receive any further money from Villa following Gareth Barry’s move to Manchester City.

www.birminghammail.co.uk

 

[Neville's Breakfast]

Why would they be public knowledge? Obviously things get leaked in an unofficial capacity or by people trying to appear in the know or making educated guess but they don't need to be public knowledge for the clauses to work.

The sell on clauses are normally between clubs and confidentiality agreements that applied to the original transfer would apply on any future fees too. So our undisclosed fee for Caicedo can be revealed to his previous club so they know how much they are getting but they can't make it public knowledge what those amounts actually are.

I’m thinking about trust. I guess they wouldn’t need to be public knowledge (my post was poorly worded) but the details would need to be independently verifiable to avoid shenanigans.

 

[Jolly Red Giant]

It depends on the wording of the clause in the contract.

 

[US Seagull]

Often gets paid in installments, I believe.

Just checked and according to a piece in the Athletic, that is the case.

"The payments will arrive based on a structure agreed between the selling and buying clubs, which more often than not means the fee is received in instalments. Some clubs who want the entire sell-on fee up front negotiate for that to happen, usually at a reduced percentage of the overall fee."



Here's a quote from the Carlisle chief executive:

“You get paid your money when the seller gets paid their money,” he said. “Say a player is transferred for £20m and it’s paid over four years, you get your instalments over four years. So anything we get on that kind of deal might be quite small, and a long time in the future.”

To add to this, when I was trying to find an answer either way to the question of what a sell-on applies to, I came across that case that involved BHA and Malaga (I think - can't be bothered finding it again now). That didn't answer the sell-on question since it was an initial free transfer with a sell on (which Malaga tried to wriggle out of by terminating the players contract and then receiving a fee from the club they were (not) selling to that was definitely not a transfer fee - in their opinion). But the relevant part looking over the background in the ruling for that was that the sell on was expected to be paid on basically the same schedule as Malaga would be getting paid for the player (generally within 30 days of them getting a tranche of the fee, they would be required to pass on Brighton's share).

So yeah, I suspect this is pretty standard because otherwise the selling club might not have enough money on hand to pay the first club.

 

[Silverhatch]

Yeah that was always my understanding.

I was surprised how many in that thread thought it was on the whole value of the transfer and not the profit. As @Bakero says, even Boehly is not that stupid.

But in Caicedo’s case IDV got the sell-on calculated on basically the whole £100m give or take Albion’s £5m original fee.

 

[Neville's Breakfast]

But in Caicedo’s case IDV got the sell-on calculated on basically the whole £100m give or take Albion’s £5m original fee.

The give or take bit defines it as the profit rather than the gross amount.

 

[Bakero]

To add to this, when I was trying to find an answer either way to the question of what a sell-on applies to, I came across that case that involved BHA and Malaga (I think - can't be bothered finding it again now). That didn't answer the sell-on question since it was an initial free transfer with a sell on (which Malaga tried to wriggle out of by terminating the players contract and then receiving a fee from the club they were (not) selling to that was definitely not a transfer fee - in their opinion). But the relevant part looking over the background in the ruling for that was that the sell on was expected to be paid on basically the same schedule as Malaga would be getting paid for the player (generally within 30 days of them getting a tranche of the fee, they would be required to pass on Brighton's share).

So yeah, I suspect this is pretty standard because otherwise the selling club might not have enough money on hand to pay the first club.

That's the case of Jack Harper, the Kid from Madrid.

 

[HeaviestTed]

There was a debate on a thread a couple of days ago about how transfer sell-on clauses typically work. I can't find it now, so I've taken the liberty of starting a new thread...

I had always thought that sell-ons would be based on the profit of the subsequent player sale, a view shared by one of those debating it, whilst others seemed to think sell-ons were based on the gross selling price when a player is sold on again.

So, I asked the best person I could think of, Paul Barber, and what he said is below. I stress this is all speaking generally and is not indicative of any deals the Albion have done, are doing or will do....

In my experience, calculations for sell-ons are only ever made on the amount over and above what the selling club has already received.​

​

So, in its simplest form, player is sold for £10m with a 10% sell-on.​

​

Player subsequently sold for £15m.​

​

Original selling club receives 10% of £5m profit = £500k.​

​

There can however be many, many (almost limitless) different variations of the simple model above.​

​

Again in its simplest form, where the original selling club has also included add-ons in the original sale: for example, they receive £1m if the club they sell to win promotion.​

​

It would then be £15m - £10m - £1m = £4m profit x 10% sell-on = £400k to original selling club.​

​

I do not know of any cases where a sell-on has been calculated on the subsequent sale price. That would be nice but doesn’t happen!​

Id argue that to say in its simplest form would be “it’s on profit”

 

[ElectricNaz]

Surely transfer clauses work in a way they're designed to in a contract.

So it could be a % of the future transfer fee, it could be a % of profit, the % could change year on year as the player gets longer into their contract, the % could change depending on which club / league they've sold to (ie higher if selling to another PL club vs a European team), could increase based on what competitions either club are playing in, could be lump sum or installments etc....

It could basically be anything. Without seeing the deal sheet itself, no one outside of Brighton and Chelsea execs will ever truly know.