A special analysis on the transfer market, how it works, and what mistakes to avoid.

Back in 1983, AC Milan scouted a young black promise from Watford. Rumours said that Milan was interested in John Barnes, but the Italian team confused the forward with his black teammate Luther Blissett. Regardless if this was true or not, the team would end up signing Blissett for £1.1M. Blisset would join the team and have an unsuccessful year in Italy, and was then sold back to Watford for barely over half the sum Milan had origanlly paid for him. 

Transfer mistakes are very easy to make. Each year, European clubs pay each a total of between £600 millions to £1.2 billions in transfer fees, but most of those signings are not worth what they were paid for. 

What many don't realize is that salaries reflect more in a team's performances than signing fees. In other words, the amount that a club spends on the signing of a player does not affect the team's results. However, high salaries do reflect in the team's performances. The book Soccernomics (Great read, highly reccommendable) studied the spending of forty English clubs from 1987 to 1997, and found that their outlay on transfers explained only 16 percent of their total variation in league position. Meanwhile, their spending on salaries explained a massive 92 percent of that variation, and from 1998 to 2007, spending on salaries by clubs in the Premier and the Championship still explained 89 percent of the variation in league position. Soccernomics quotes: "In short, the more you pay your players in wages, the higher you will finish; but what you pay for them in transfer fees doesn't seem to make much difference." It is clearly better to invest in a player's salaries than to have to replace those same players. 

To put it in perspective, between 1998 and 2007, Manchester United averaged second in the league position, the highest from all teams. What's fascinating is that United's wage spending relative to the averaged spending of all clubs was the second highest (3.16), behind Abramovich's Chelsea (3.50) who averaged third place in the Premier.

Many teams have different ideas, or systems, if you will, when searching for new players.

Jean-Michael Aulas, the president of Olympique de Lyon, has always been successful in the transfer markets. He has revealed many of his secrets from which we can learn from. Aulas has a simple belief, which may seem obvious to some, but it is worth a mention: If you buy good players at a low cost you'll win more games. You will have more money to spend on more playes for less than they are worth. Improving your team will bring in more fans, which generates income. Unfortunately for the sport, most football supporters now-a-days follow the team who is winning, not the team they've always supported. Although some fans remain loyal to their club, most fans in the modern day go with the team at the top. Lyon almost duplicated their sales in jerseys when the team started winning. The reason is clear: Spending on the squad will attract more fans, and these said fans will return the expenses in shirts in a never-ending cicle. 

Aulas insists that buying a player in his early twenties is always the safest bet. He has a firm believe in the idea of signing players between 20 to 22 years of age. The interesting thing about this is that he specifically chooses only those players between the mentioned age bracket, and there's a curious reason behind it. Soccernomics uses baseball as an example to compare both parties. In America, baseball teams draft young players from either high school or college (University). Teams used to sign players directly from high school, when they are still 18, or so, but what they failed to realize was that prospects at that age will most likely not end up being the player they are expected to become. By contrast, once you enter university at around 20 years of age, managers have a better idea of what you'll become in the years to come. The same goes with footy: an 18-year old signing can go both ways, but signing a 21-year old is a more solid option. Many youngsters have been talked up to being the next Pele, or the next Maradona, but most of them are forgotten two months after. Only real geniuses such as the two previously mentioned could have been considered World class players as teenagers.

Another bit of advice given by mister Aulas is to avoid centre-forwards, as they are the most expensive type of players and can be deceiving. Torres or Carroll are prime examples of these kinds of mistakes. On the other hands, goalkeepers are the cheapest and they last longer. 

And to finish it off, Aulas advices teams to sell a player whenever a team gives more money than he is worth. He suggests putting a price-tag in each of your players, and once an offer with a bigger number comes, accept it!Jean-Michael always claims his players to be untransferable, until the right price comes. Before Lyon sold Essien to Chelsea for £27M, Aulas stressed that Michael wouldn't leave the team. Obviously, he did this to overprice his player and get more than what he wanted for him. Of course, teams like Chelsea, City or Real Madrid who have rich owners don't realize this and give as much money as the club demands. 

There are many different manners in which a player can be overpriced. The Euro just finished and I've noticed how many fans think players are superstars because of one tournament. This is one of the reasons why players are valued at such a high value and in such a short period of time. Stars of International tournaments, whether it be the World Cup, the Euro, the Olympics or any other will always be overpriced. During the Euro that just passed, players such as Moutinho, Dzagoev, or Coentrao had a very good tournaments. However, these players had been ignored since now. Although Mountinho has been a factor in Porto's success, you cannot claim he is the man United need after watching five of his matches with Portugal. I'm not saying he is not a great player, nor that he can't be a decent option for United, I am just saying that one can't come to the conclusion that he would perfectly fit in a team because of one decent tournament. Same with Dzagoev: He had three impressive games but now rumours link him with Arsenal. Dzagoev has been a promise for all his life and he has still yet to explode as a true top player, or at least with his club. Fabio Coentrao was a fortress on Portugal's left side. Nevertheless, if you have watched Madrid play this season, you'll know that Coentrao's performances were just as unprecedented as Bendtner's. 

Some nationalities are extremely overvalued. A player automatically becomes ten times better because he is Brazillian. Let's use Neymar as an example. Has he got talent? Yes. Is he as good as he is talked up to be? No. Neymar is good, but he is no where near being a world class. His fancy tricks and his crazy hairstyle catch people's attention, but if I were to tell you he was from, say Bolivia, his price would definitely go down. It is important that a player's nationality does not change your point of view. The same goes when predicting a team's success at a tournament. In this case, Netherlands would fit my argument. They were one of the favourites to win the 2012 Euro for being the Netherlands, yet only few took the time to actually analize their team and realize they had no chemistry in the squad. 

It'd be a sin to study the market and not mention two geniuses I highly admire in the football world, specially when it comes to transfers, from whom I've learned a lot - Brian Clough and Peter Taylor.

Brian Clough managed Hartlepools United, Derby County, Brighton & Hove Albion, Leeds United and Nottingham Forest, winning two Champions League with the latter, but many don't know about his companion, Peter Taylor, who was a huge factor in Brian's successful career. Taylor signed the players, and Clough made them champions. Peter Taylor not only could get exactly the players the team needed, but he would make a profit from them by later on reselling them. While in Nottingham, the duo signed Gary Birtles for £2.200 in 1976, and sold him to Manchester United in 1980 for more than a £1.800,000 profit! Not only that, but Birtles would later on, in 1982, return to Nottingham for a quarter of the amount United paid for him. In 1990, they signed Roy Keane for approximately £50,000 to sell him to United for £3.6M, where he would become a Red legend.

Peter Taylor writes in his book With Clough by Taylor that a team should be as eager to sell good players as to buy them. He explains: "It's as important in football as in the stock market to sell at the right time. A manager should always be looking for signs of disintegration in a winning side and then sell the players responsile before their deterioration is noticed by possible buyers."

The two Englishmen always wanted to sell a player when he had reached his peak and was now facing downhill. This leads me to my next point: sell players in their thirties, as they are overrated. Arsene Wenger is known for his trust in the youth, and his disbelief in the old. Teams these days like to pay crazy amounts for players that have already reached their peak and will only deteriorate, but Wenger, who graduated as an economist noticed this mistake in different squads. Clubs tend to overprice players who played well the previous season, but are in an imminent decline. Arsenal always sell their midfielders or their strikers near their thirties: Patrick Vieira (29), Henry (29), Petit (29), and Overmars (27), and who would have thought - Robin Van Persie is 28!