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How Do Soccer Transfers Work? Everything You Need to Know

How Do Soccer Transfers Work? Everything You Need to Know

There is a crazy flow of cash in the soccer transfer markets twice every year. Every club revises its lineups and gets rid of some players while enrolling newer talent. And while this happens, the fans eagerly await big news to light up the season coming ahead!

League soccer came into play in the latter parts of the 19th century. And as long as there has been league soccer, there have been transfers. Though soccer transfers in the early days weren’t nearly as extravagant as the transfers, we have today.

The first player ever to command a £1 million transfer fee was Trevor Francis in his move from Birmingham City to Nottingham Forest in the Premier League in 1979.

1979-1980 European Cup: Nottingham Forest FC All Goals (Road to Victory)

And the transfer market ever since has exploded.

We now have players exceeding the €200 million mark in only a time of 50 years. And FIFA estimates a staggering expenditure of $48.5 billion on international transfers in the past decade alone!

So, where does all this money come from, and where does it go? And more importantly, how do soccer transfers work exactly?

How Do Soccer Transfers Work?

Soccer transfers work through a player, agent, and club.

Agents connect a player to interested clubs, who then formally file a transfer request to that player’s existing club.

Once the clubs have agreed on the expenses and miscellaneous, the buying club comes in contact with the player. The price payable to the club is estimated from the time left in the current contract, the financial needs of the selling club, and the value of the player, among other things.

How soccer's transfer window works

And then the buying club has to strike a bargain with the player as well. The contract with the player includes his salary, bonuses, image rights, etc.

However, there are only two transfer windows every year. One during the end-season break and the other during the mid-season break. No wonder it’s always such a hassle!

Though the transfer windows for different leagues open independently, all the transfers must close before the transfer deadline, respectively.

But even if a club misses a transfer deadline, it can always eye down the player for the next transfer window. Or, it can loan out or loan in players mid-season, which brings us over to the three types of soccer transfers.

The History of the Football Transfer System Explained

We often see the headlines highlight how a club goes bonkers and spends hundreds of millions of dollars on just a single player, especially in recent years.

Seeing such a large flow of cash begs the question, who does this all go to? And putting it simply, it all goes to the club selling a player.

Like in Neymar’s notorious transfer to PSG worth $263 million (2017), Barcelona received the lion’s share, if not all the money.

This is the most common type of soccer transfer you’ll see today. Since the competition is high through the roofs, clubs and players don’t tend to wait till the contract ends.

Neymar’s record transfer to PSG?

The transfer cost is then calculated by considering how much time the player in question has left at the club. The more time remaining on the current contract, the higher the buying club will have to bid.

Of course, other things are considered as well as the potential of the player, how much revenue he drives, etc.

But once both the clubs agree on a price tag for the player, the buying club then has to strike a deal with the player. This is where both the parties call out their legal representatives and agents to conclude a new contract.

The pro of a paid transfer is that a club gets the complete ownership of a player. It can play the player against any team in any league or cup, even against his former club.

Moreover, the club can also benefit from the player if he develops during his stay. He can then be sold off at a much higher price later on if the player and club both wish to part ways. 

a thrilling soccer match

The downside is the insanely high expenditure! A club can only make a few transfers each season and it has to invest its revenue wisely.

Tying up all of the transfer budgets in an expensive player won’t leave any room for improvements to the squad in other positions.

That’s why you only see rich clubs with big revenues sign expensive players every year. And other talent-building clubs like Liverpool and Arsenal develop players and earn from their sales to bigger clubs.

Free Transfer

Many soccer fans around the world wondered what a free transfer is when Lewandowski switched to Bayern from Dortmund (2014) without a dime spent.

Do free transfers indicate a player’s competitiveness or a lack of demand in the transfer market?

Absolutely not!

The free transfer was born after the Belgian player Jean-Marc Bosman’s conviction of his club in 1995. Though he was strictly a mid-tier soccer player himself, he shifted the transfer momentum in soccer forever.

This type of transfer only happens when a player’s contract with a club is expired or has less than six months remaining.

Since without a contract, a player can’t belong to any club, he is free to explore the transfer market independently.

This excludes the involvement of the current club in the transfer proceedings of a player. A player is free to reach out to other clubs on his own or through his agent.

Though it must be noted that a player can only reach out to other clubs when his current contract has ended. In soccer, it is strictly illegal for a player to communicate with other clubs without informing the current club while still under a contract.

However, this doesn’t happen as commonly as the paid transfers. Most of the clubs endorse a duration of at least five years in a contract with the player. So that they can earn from when the player wishes to leave the club for another.

The biggest advantage, however, of a free transfer is that it gets much easier for a player and other clubs to come into an agreement. 

7 Best Free Transfers This Decade

A player can entertain requests from different clubs without any restrictions. Since there won’t be a hefty price tag payable to the former club, new clubs don’t hesitate in showing interest in players open to a free transfer.

The con of having too many options is that a player might end up signing a lower deal. Since a player has no insurance for playing if doesn’t make the transfer in time, other clubs can use this to their advantage for bringing down a player’s wage demands.

Loan Transfer

Loaning a player isn’t exactly considered a transfer in soccer. But since it means a player will have to play for a different club, we’ll count it as a type of transfer.

As the name suggests, loan transfers are when a club lends its player to another for an agreed duration. The loan duration can span from a few weeks to a few seasons!

The buying club may not always pay any amount to the parent club of the player. However, they still have to pay the loaned player’s salary, bonuses, and other expenses either partially or completely.

How The New Loan System Will Change Football FOREVER! | Explained

And eventually, the player may even be purchased from the parent club if he proves to be a good match!

But why exactly do clubs loan out players?

Loaning a player out is usually a characteristic of the big and rich soccer clubs.

When a club has too many big names in its squad, but they also need their young talent to gain experience, they loan their players to other clubs where they get more minutes on the pitch.

A soccer match of young players

Also, a club may loan a player out when they can’t afford his expenses but want to keep him. However, this doesn’t happen quite as often either.

A loan transfer is advantageous to everyone, the parent club, new club, and the player!

The player gets more playing time. The new club gets a free or near-free talent on their team, and the former club lessens its expenses.

But the con is that the player will not have enough stability to develop chemistry with either team.

If a player is continuously being loaned out, he will not have good chemistry with his parent club if he is ever called back for games. And even if he does, it will take him a lot of time to catch up with the new strategies.

What is the Difference Between a Transfer and a Loan in Soccer?

Loans and transfers stood poles apart in soccer until the 16/17 season.

Unlike now, a club could loan in or loan out a player even outside the transfer windows. It was called the “Emergency Loan”. It benefited a club that saw too many injuries and needed a star player mid-season.

10 Loans That TRANSFORMED A Career!

Now, the loan and transfers both need to close before the end of the transfer window. The only difference marking a solid line between the two is the ownership of the player in question.

In soccer transfers, the ownership of a player is changed as a lot of money is paid to the parent club upon signing.

In soccer loans, the ownership of the player remains with his parent club. Also, the loan-out player cannot play against his parent club either in leagues, except for the local cups.

Since the player’s ownership does not transfer during a loan, the new club can’t sell the player either. They can only do so after coming into an agreement and officially transferring the player from the parent club.

A soccer player is standing on the field with a ball

Besides the transfer money, a loan differs from transfers in terms of the contract with a player.

In a soccer transfer, the buying club has to pay the player his salary, bonuses, image rights, etc. But in a soccer loan, the salary and bonuses of the player may either be paid entirely by the new club or split between the new club and the parent club.

How Are Transfer Fees Calculated in Soccer?

A wild guess is that the better a soccer player at any given time, the higher the transfer fee, right?

While that is true, there’s quite a bit more to it than that!

How is a player's transfer fee calculated? | Oh My Goal

Transfer fees are calculated depending on the reason for the early termination of the soccer contract. And the following factors determine what makes the price fluctuate between high and low.

The most decisive factor for transfer fees is the soccer player’s current abilities. How physically fit, and impactful a player is on the pitch and how well he coordinates with the rest of the team.

And more importantly, is he in his peak form that the current club can benefit from in the remaining years of the contract?

This is called future potential!

The reason why Ronaldo’s transfer to Manchester was less than 10% of Neymar’s transfer to Paris was not because he was lesser of a player.

It was because Neymar’s future potential is much more diverse as he’s young and just getting started. On the contrary, Ronaldo is still the most fearful player on the field, but who knows when he might hang his jersey and retire?

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And it is the future potential of a player that makes a club resist his transfer.

Soccer clubs only transfer players out when they’re either in need of revenue. Or when they can’t find a player’s playing spot, and it is just an ongoing expense.

So naturally, if a player with potential wants to leave the club, the selling club raises the stakes to get a dying benefit out of it!

Can a Soccer Player Refuse a Transfer?

Unlike the transfers in other sports, the Veto for making a soccer transfer always lies with the player!

The player wearing the number 9 launched a new team

Two clubs can come to an agreement over all the proceedings. But should a player refuse to part ways with the parent club, the transfer won’t happen.

However, there are more subtle ways a club can force the transfer upon a soccer player. Typically, the club removes a player from the squad or benches him to force their decision.

Not only that, but the club may also take a player out of their training sessions to force their decision. Training with other coaches or playing with the youth team notoriously wrecks a soccer player’s career.

And so, to avoid all these unfortunate circumstances, a soccer player generally seconds the decision of his club.

He may protest and showcase his unhappiness with the decision. But if he sees a career ahead of him, the owner club’s decision is more often imposed.

10 Players Who REJECTED Big Transfers!

Who is the Most Expensive Transfer in Soccer?

Neymar’s transfer to Paris from Barcelona in 2017 is the most expensive transfer in soccer history, standing at $262 million.

The Brazilian forward portrayed class in the South American leagues. And then proved his worth in Spain while playing for Barcelona. But the mid-contract transfer to PSG proved not only to be a game-changer but a trendsetter for ridiculous transfers to come.

Neymar Officially Signs With Paris Saint-Germain | ESPN FC

Kylian Mbappe broke the record for the most expensive transfer for a teenager when he switched allegiance from Monaco to PSG in 2018, standing at $212 million.

But the records for the most expensive soccer transfers are far from being locked out at this price tag. It won’t be long before we see players exceedingly cross even this mark and reach unbelievable amounts of money for an exchange.


The soccer transfer season is the most awaited time of the year for soccer fans across the world.

It is the most hyped event as transfer deals switch momentum and clubs compete for the bigger fish in the pool.

That is partly because soccer transfers are strictly limited to these two transfer windows. If a club cannot close a deal within the window, it will have to play with the same lineup next season.

And it is this urgency that brings clubs, players, and agents closer together to find a profitable way out for each party!