How profit is redefining the loan system

By Calum Pettitt

The loan market is now seen as a key component for any team that is hoping to gain promotion to the Premier League. It is certainly no coincidence that the teams at the top of the Championship are often bolstered by a host of top flight talent which allows for rotation and an increase in quality at little price.

It is not very challenging to identify sides that are benefiting from players from top sides, Middlesbrough have the likes of Patrick Bamford, Thomas Kalas, and Kenneth Omeruo. Derby have added considerably to their squad with Darren Bent, Tom Ince, and earlier in the season with the ever-increasingly impressive Jordan Ibe. Bournemouth have added established Polish international Artur Boruc who has played no small part in the Cherries maintaining the fourth fewest goals conceded in the division. The importance of the loan market is not exclusive to sides at the peak of the table, clubs having slightly less successful seasons are also benefiting from the abundance of talent available through the loan market. Reading added FA Youth Cup winning captain Nathaniel Chalobah, Bolton have acquired Ben Amos and Saidy Janko from Manchester United, as well as Barry Bannan from Aston Villa.

This indicates one reason why the loan market is so important to Premier League clubs as they are all aware of how high the quality of coaching has become in the lower divisions, and how the young players that are struggling to make headway in the first team can go and ply their trade at a Championship side who are comfortably seeing attendances of 25,000 a week.

However, these loan deals are not only beneficial to the sides who are receiving a top flight player – they give the player who is shipped out an opportunity to re-establish some form and confidence, as well as potentially taking financial pressure off of the club which he is serviced to. Furthermore, in the cases of the waves of young talent temporarily leaving Chelsea and lighting up the Championship, it gives their employers a chance to see how the players deal with regular first team football, safe in the knowledge that they are receiving high quality coaching from the likes of Steve McClaren, Steve Clarke, and Aitor Karanka among others. The key example from this season is Jordan Ibe. Ibe was struggling to breakthrough in the Liverpool side and was sent on loan to Derby County where he was so impressive that Liverpool recalled him and are now prepared to offer the 19 year old a new deal that is rumoured to more than quadruple his current wages.

There is one growing trend of the loan market that has emerged in recent years and that is centred on the fact that clubs are now run more so than ever in a way that is designed for them to be profitable. This means that while clubs are obviously always looking to develop new talent for the first team, the loan market gives the top clubs in the country the opportunity to loan players all over the world in order for the players to gain form and a reputation. This means that these clubs can then sell these players for a sizeable profit, perhaps without ever having the intention of them appearing for the first team side. Take Chelsea, for example, it is unclear as to whether players such as Bamford, Chalobah, and Kalas will ever break into Chelsea’s first team – but is clear that they are gaining ever-growing reputations within the game and will surely be sold for a handsome fee if they are ever deemed surplus to requirements at the Bridge.

A further issue is that the majority of the clubs in Premier League have no motivation to blood their own academy products for the first team, as they can recruit players from all corners of the globe. This is evidenced once again by Chelsea having Ryan Bertrand and Patrick Van Aanholt as long term replacements for Ashley Cole, before signing Filipe Luis for £16M and seeing both youngsters leave for new clubs. This new business stream that Chelsea have identified is certainly a great way to make profit on players, as we have seen with Romelu Lukaku. Lukaku was signed for a fee believed to be around £19M and was later sold for around £29M to Everton. While Chelsea are clearly the exception in terms of Premier League clubs’ loaning policies, with 26 players out on loan at one point this season – there are likely to be a number of clubs following suit and looking to capitalise on this new form of cash flow that is developing.

It is not just Chelsea who have used the loan market to their advantage in recent times, high profile players are being loaned out across Europe in order to play their trade elsewhere. As we have seen with the likes of Radamel Falcao at Manchester United and Fernando Torres at AC Milan. This certainly indicates a change from the stereotypical view of loanees, which is of a young, raw talented player having a chance to play in the first team – to some of the biggest names in football seeing themselves moving on the loan market.

In a further shift from common footballing stereotypes, we are much more used to clubs in poorer financial positions than the aforementioned Chelsea nurturing young talent and selling them for a profit to make ends meet. The most stand-out example is perhaps Crewe Alexandra, who have developed a whole host of talented players such as David Platt, Robbie Savage, Danny Murphy, and Neil Lennon. Further to this point, Crewe fielded a side that consisted entirely of academy products in the final fixture of the 2012/13 season.

However, Chelsea have taken this style and refined it into an art-form. Chelsea have started to treat the transfer market much like a stock market, they buy low and sell high, finding young talent and loaning them out to build a reputation before selling them for a very healthy profit. In short, they are starting to redefine what it means to be a selling club.

It is clear the loan system is still as effective as ever as a tool for developing young talent at a competitive level, and is a win-win situation for the clubs involved when used in the right way. However, it has also emerged as a prominent financial stream for certain sides as the lack of restrictions on how many individuals can get loaned out has allowed for players to develop domestically or abroad with little financial pressure on his employers due to reduced wage and fee demands. This in turn allows these clubs to sell these players on for a significant profit, potentially without the individual ever pulling on the colours in a first team game. While Chelsea at this moment of time remain the exception, it is likely that it won’t take very long for this sort of interaction with the loan market to become the norm.