Why clubs spend a lot on star footballers

As this season’s English Premier League transfer market shut down on Thursday, one of the open debates is how expensive football players have become. Is it just clubs conspicuously buying to signal power and superiority or is it a case of auctions to “search for fools” where sellers win while buyers lose big money, a theory that earned Israeli psychologist Daniel Kahneman a Nobel Prize in economics?

For example, Everton just acquired Richarlison de Andrade for £50 million (Sh6.5 billion), which is a third of the club’s 2016/17 revenue, a talent who scored only five goals in 41 appearances for Watford last season.

At the same time, there are high-value sports personality brands who have become juggernauts and help brands unlock new markets, like Cristiano Ronaldo.

When Juventus paid $117 million (Sh11.7 billion) coupled with a $35m-per-year net salary to get him from Real Madrid, many sports business analysts termed such spending on a 33-year-old talent as financial imprudence.

But the player has proven to be a fast selling brand, in just 24 hours after his signing Juventus reportedly sold 520,000 jerseys worth $60m (more than half his transfer fee) compared to previous season where the team only sold 850,000 shirts the entire 2016/2017 season. This means any brand advertising on Juventus jersey has broken into new territories in terms of image visibility.

Floyd Mayweather is another brand. The 50-fights-unbeaten-boxer in his last professional match against Connor McGregor pocketed $200 million for being in the ring for only 36 minutes.

He attracted 4.3 million pay-per-view worth more than $400 million, second biggest selling pay-per-view box office record of all time. According to 2017 Business Insider ranking, Floyd dominates the top four box office records on pay-per-view event and since his retirement boxing events manage only one million pay-per-view.

The bigger picture going by recent soccer transfer deals is that there is a demand-side problem — too much money chasing after talents.

For example, while analysts were calling Ronaldo’s acquisition imprudent, a Chinese club had a counter offer to pay him more than $200 million in a two-year deal.

Raheem Sterling is demanding his salary be matched with that of Sergio Aguero and Kevin De Bruyne, more than $300,000 a week. If Man City will not offer him his demands, a club somewhere will certainly pick him up.

That is how broken the football transfer market has become and Kenya’s media industry seem to be headed that direction.

A story is told of a media personality who asked for his salary be doubled to more than Sh1.5m to match his colleague’s. When the employer declined, a competitor in the nick of time readily offered. The top talent managed to move with a number of sponsorship deals.

This story is just a piece of reality of how high value media personalities are being poached with staggering salary figures ranging from Sh800,000 to Sh1.5 million per month.

Many will ask how sustainable this trend is.

The rude awakening is that media personalities are growing into powerful assets, like football players, to even move with sponsorship deals.

Just like in soccer where players earn more than managers, the most lucrative job in Kenya in the near future will be TV anchoring and radio hosting with the high-value talent being paid more than managers.

What this means for media owners is that they have only two options, play hard by matching the salary offers of your high value personality brands to retain top talent and enjoy Champions League football like Real Madrid, Juventus and Barcelona or go home.

Operating with a low budget will mean losing your top talent to competitors and end up being relegated.