A justification of the Coutinho fee: How we got here, and why fans shouldn’t care

Like most football fans, I was shocked to hear of the staggering £142 million fee for Coutinho. There is a consensus throughout the community that these sort of fees are unjustified and ridiculous. It has led many to question the sustainability of the transfer market and the implications marquee transfers have on fans. In response, I sought to analyse the Deloitte money league and argue in favour of the sustainability of marquee fee inflation.

For some context, the signing of Gareth Bale was 16% of Real Madrid’s 12/13 revenue, whereas the Coutinho fee is 22% of Barcelona’s 15/16 revenue. As the 16/17 Deloitte money league is yet to be released, I am forced to rely upon the data from 15/16. I predict the 16/17 data will show Coutinho to be a similar percentage of revenue to Gareth Bale. I would like to stress I haven’t selected Bale for comparison with Coutinho based on his technical ability, but on the basis they were both marquee signings for Spain’s elite clubs. Now, we must examine what is causing the increase in real terms spending. 

Although TV revenue has increased marginally for Barcelona between 15/16 and 12/13, it has reduced as a proportion of club revenue. Therefore, the real terms increase between the Bale and Coutinho fee must be explained by match-day or commercial revenue.  

Since 2013, Barcelona's match-day revenue has stagnated in real terms and fell 5% in its contribution to overall revenue. This is not because of fans being priced out of the game or a lack of interest in the club. Camp Nou season tickets are famously cheap and the ground is near capacity. Match-days at Barcelona are both accessible and irresponsible for inflation in marquee signings.

The stagnation in match-day and TV’s relative contributions to Barcelona revenue indicates it is not the fans bearing the burden of transfer inflation, but corporations. Barcelona’s commercial revenue has increased 46% between ’13 and ’16 by a total of £69 million. This is the key input in transfer market inflation and the reason the differences between the Coutinho and Bale fees.

Increased commercial revenue is partly due to the increased awareness of football in international markets. For example, 82 million more Americans watched the Brazil World Cup than the one in South Africa, which is a trend in viewership that expands throughout the Indian and Chinese markets. This places Barcelona in a prime position to act as a vehicle in promoting global brands, increasing the amount of investment they can attract in commercial revenue.

So, as long as TV and match-day revenues remain stagnant, the numbers involved in football transfers are irrelevant to fans as they are not directly contributing to it, or affected by it. The only risk higher transfer fees pose to football is if they increase as a proportion of revenue, as clubs will be at a greater financial risk if a player receives a long term injury. In conclusion, not only is the Coutinho fee proportionate to fees in years gone by such as the transfer of Gareth Bale, it is commercially justified and not a concern for fans.