Football’s Secret Trade: How the Player Transfer Market was Infiltrated (232 pgs., Wiley & Sons, 2017, $27.95) is an exposé of the increasingly complex financial transactions conducted by football (i.e., soccer) clubs worldwide.

As it would seem, there is some complicated plumbing involved in the world of football, which might not live up to the sport’s moniker of “The Beautiful Game.” As more and more financial resources are needed to remain competitive at football’s highest levels, an increasing number of clubs have turned to creative financial vehicles in order to stay afloat.

Although these vehicles are most commonly tied to the future value of players’ contracts, clubs are becoming ever more creative when it comes to “securitizing” their cash flow, even selling off their future television revenue.

Predictably, serious issues can arise when clubs are unable to secure sufficiently lucrative transfers for players whose expected value has been used to secure financing, or when missing qualifications for a prestigious international competition eli-minates a valuable source of broadcast time.

The authors, Alex Duff and Tariq Panja, have set themselves on the task of examining this increasingly convoluted financial wizardry. The authors are two British journalists who have worked for Bloomberg News and the Associated Press, among other outlets, covering the business that surrounds a multitude of sports, including football.

The authors approach their book with a cynical, highly investigative eye, giving ample space to several points of view on every aspect of the issue. FIFA, football’s governing body, would like to reduce the influence of third parties like financial institutions, while players, their agents, and some of the clubs they play for have a vested interest in allowing the practice to continue and grow.

The authors find that football’s unique financial instruments originated not at the highest levels of the game, where clubs spend tens of millions in order to poach each other’s players, but instead were first conceived in the lower leagues of South America.

As in many other football-loving countries, very few of the thousands of young players competing in both football academies and the lower divisions of the national league system will ever find their way to a top club. However, this hasn’t stopped players from securitizing their potential future value: many young players enter contracts supplying them with a cash windfall in exchange for a percentage of their future earnings. The potential for growth is so appealing that these contracts are becoming increasingly standardized, and are attracting formal investors, like hedge funds.

In addition to these contracts, players’ agents also receive a portion of their clients’ wages if they are able to help them secure a transfer to a wealthy club. It didn’t take long for agents to start looking for a more lucrative way to maximize the avenues through which they can earn, and indeed the authors dive into an impressive exposé of a phenomenon that FIFA has expressly scorned: clubs owned and operated by football agents.

Agents often pick clubs located in unremarkable suburbs of big cities, easy to reach from their offices but far from prying eyes, since most local fans gravitate to their larger neighbors. Although these clubs field a full roster and typically compete without much distinction, just below the top divisions of the football pyramid, they might have hundreds of players registered on their books. Agents sign promising players to these clubs, but most are immediately loaned out elsewhere.

Typically, a larger club will loan out players to a smaller club for a limited period of time (usually a single season). The club taking in the player normally pays his salary and provides a small fee to the club that retains his contract. And it’s precisely these fees that agents are after: by taking full ownership of players, they can loan them out season after season and pocket the associated fees.

But this tactic doesn’t really work with players above a certain skill level. Although even some smaller top-tier teams might have to take in a few players on loan to fill out their roster, teams prefer to tie players down for multi-year contracts. But here too agents have gotten involved, and have found ways to appropriate portions of their clients’ transfer fees.

Traditionally, when a player changes teams, the new team would pay compensation to his previous club. The world’s top teams can pay exorbitant fees for individual players (and recently, a few of the biggest names have broken the hundred-million ceiling). Over the course of the past decade, particularly bold agents have collaborated with a number of different institutions, including investment firms, to exploit lucrative loopholes in the system.

Some players, like the Argentinean Carlos Tevez and the Brazilian Neymar da Silva Santos, have had their representatives write contracts ceding only their registration rights, while their broader “economic” rights are in the hands of their management companies. This means that to entice these players to change clubs, fees are paid to the players and their representatives directly, not to their previous employer.

This trend has proven unpopular with clubs, for whom the collection of these fees can constitute important windfalls. FIFA has decried the practice, which can lead to a multitude of different financial backers benefiting from a player’s sale, but concrete action to put a stop to it had been slow, ineffective, and circuitous.

The last great financial innovation the authors investigate is one undertaken by the clubs themselves. To this end, the book examines a poignant case study: that of the Spanish football club Atletico de Madrid. As a testament to the difficulty of building a club capable of obtaining consistent success, Atletico, despite being Spain’s third most successful club, underwent a troubled period in the wake of the 2007-08 global financial crises, which hit Spain particularly hard, and credit lines began to dry up. In addition to regularly selling off the club’s most talented players, club chairman and majority owner, Miguel Ángel Gil Marín, had to turn to more creative revenue streams, including opportunistically selling its old stadium in favor of a new facility built for Madrid’s failed bid to hold the 2016 summer Olympics. Other solutions have been to pay particular attention to hiring talented coaching staff, and the sale of futures contracts involving TV rights and the transfer value of promising young players, similar to the aforementioned contracts popular in South America.

Three years ago, Gil Marín sold a large stake in his club to a Chinese conglomerate, the Wanda Group. Gil Marín had inherited the club from his controversial father, Jesús Gil, a wealthy property developer and mayor of a seaside town in the south of Spain. Although in the past it was common for colorful local entrepreneurs to own football clubs, in this day and age it would seem that elaborate corporate shareholder and management structures that reflect the rigors of modern business are necessary to remain competitive and profitable.

It remains to be seen if the securitization of costs and revenues in football is a symptom of the increased revenues and expenses that surround the sport, or if football’s governing body, FIFA, will be able to implement its promised crackdown on the increasingly elaborate operations going on behind the scenes of the “beautiful game.” In any case, Football’s Secret Trade is a poignant look into this complex aspect of the world’s most popular professional sport.

(By Yuri Serafini)

Audio Version (a DV Works service)