Money

What Neymar’s record-breaking $263 million transfer fee means for the future of soccer

As European soccer leagues kick off this month and the transfer window comes to a close, it will be hard for any of the typical last-minute market drama to compete with Qatari-owned Paris Saint-Germain paying Barcelona $263 million for one player. That fee is more than double the previous world record.

The 25-year-old Brazilian player, Neymar da Silva Santos Jr., who is referred to simply as Neymar, is widely regarded as the third best player in the world after Lionel Messi and Cristiano Ronaldo. And he's now the most expensive.

He's set to take in $350 million over the next five years. In total, the Parisian club will invest over $600 million in their new star.

Transfer values have grown exponentially, and some experts speculate that, as television viewership grows, those fees will continue to rise as well. Last year, Paul Pogba moved from Juventus to Manchester United for a record-breaking $116 million. In 1990, Juventus broke the record when they spent $11.6 million on Italy's Roberto Baggio.

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Lionel Bonaventure | Getty Images

Given this trend, it shouldn't come as a surprise if, for instance, a team activates Messi's release clause next year by spending $340 million on him.

The prices are certainly unprecedented, but the question is: Are they reasonable?

Well, if you take UEFA's Financial Fair Play regulations at face value, they have to be. The rule, which was established in 2011 as an effort to inhibit spending, states that a team cannot spend too much more than it earns without facing sanctions.

PSG club president and Qatari billionaire Nasser Al-Khelaifi believes his club won't have an issue turning a profit.

"When you consider Neymar as a brand, maybe it won't seem so expensive. I'm sure we'll make more money than we've paid," he said in a press conference when the player was unveiled, referring to ticket revenues, championship earnings and new sponsorship opportunities.

Skeptics like Marc Ganis, co-founder of Sportscorp, a business sports firm, believe PSG won't be able to cover the cost. "There's no way for it to make economic sense," he told The Washington Post. "They can only chip away at it."

These superstars and their high market value are outliers, of course. But the difficult task of quantifying a soccer player's worth has recently been a subject of discussion.

There are helpful metrics that break down data points, like a player's performance statistics, age and commercial appeal. But, as Rory Smith argues in The New York Times, at the end of the day, "The only measure of worth that counts is what someone is willing to pay."

Smith cites the case of the French midfielder Moussa Sissoko. When he was at Newcastle United last season, the club believed he was worth around $20 million, but when the Spanish powerhouse Real Madrid suggested they were prepared to pay twice that, Newcastle increased its valuation and later transferred him to Tottenham Hotspur for close to $40 million.

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Jacques DeMarthon | Getty Images

Another example is Anthony Martial. Manchester United agreed to a $46 million deal in 2015 for Monaco's striker, with the option to have to pay a total of $75 million in add-ons as the Frenchman continues to achieve. As the Bleacher Report points out, though, at the time, Martial had yet to really prove himself. He was 19 years old and had 15 goals across the previous two seasons. That's a fair number, and an impressive record for a teenager, but it didn't necessarily make him worth the money.

Even Louis van Gaal, Manchester United's coach at the time, acknowledged the risk. He said the price tag was "ridiculous" and a "reflection of the crazy world we live in."

As money continues to pour into the sport, Neymar's transfer will offer an interesting case study. Will PSG ultimately violate the Financial Fair Play rule, or will the Brazilian end up offering a substantial return? He did net a goal and had an assist during his debut on Sunday.

Whatever happens, billionaire investors will take notice. When the time comes for them to spend their own money on players, they will continue to try to determine what counts as a fair price.

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