Case Study 1: Draxler, Verratti and Diallo Transfer to the Qatar Stars League.

Introduction:

In September 2023 L'equipe reported that PSG were being investigated by UEFA for the transfer of Julian Draxler, Marco Verratti and Abdou Diallo. The three players were Qatar Stars League teams for roughly a combined €80 million. The rumors surrounding this was that these fees had been inflated and this was able to happen due to the proximity of PSGs owners (Qatar Sports Investments) to the clubs in the Qatar Stars League (1).

Inflating the price of players in this way would allow clubs to illegitimately increase transfer revenue can serve as a mechanism to skirt around Financial Fair Play regulations.

The concept of an investigation into this led Kieren Maguire on the Price of Football Podcast (21st September 2023) to ask 'How do you determine a player's value' (2).

This is a legitimate question and one of many regarding transparency in the transfer market. The scenario here is a very high profile one and, hence, invoked a UEFA investigation but imagine this happening in lower league or less regulated jurisdictions and it becomes worth putting a mechanism in place to solve.

This is a situation the SCTP would be able to solve for succinctly, below is a description of how.

Initial State:

Assume that the SCTP existing and the parties we are going to discuss have all onboarded via their own nodes thus operate independently and with authority over their own data.

Imagine that the clubs below have all onboarded to the platform:

  • PSG

  • Manchester United

  • Real Madrid

  • Chelsea Al-Ahil

  • AC Milan

  • Scunthorpe United

  • Benfica

Let’s say from this point Chelsea, look to use the SCPT to sell Raheem Sterling. If a team looking to sell a player via the SCTP it would work like this:

  • Chelsea create a smart contract on platform to show that are looking to sell Raheem Sterling:

    • This is effectively a contract similarly to that discussed in the SCPT page but in reverse where Chelsea are saying they are open to offers for Raheem Sterling.

    • Chelsea would be able to choose the visibility of this smart contract, either everyone else on the platform can see that the player is for sale or only selected clubs would be able to see:

      • By allowing all clubs to see that Raheem Sterling is available it means that teams they may not have relationships with are now potential customers.

      • By selection specific clubs rather than broadcasting the smart contract it means they can exclude rival clubs or clubs that they do not want to do business with from the transaction.

    • They could choose whether to include information such as price they are looking to sell for or just leave it open to offers. If they were looking for a quick sell they might choose to add a price, if they were looking to create a bidding war they would probably not.

Let’s say in this scenario they make the smart contract showing Raheem Sterling’s availability to all other clubs on the platform.

In the circumstance where Chelsea have made this offer available to all other participants each club would be able to see the smart contract details and with the contract logic configured as such they would be able to submit counter offers allowing for the contract to complete in the method described in the SCTP page.

Each club interested in buying Raheem Sterling would be able to place a counter offer with the amount they would be willing to pay.

Offers would only be visible to the club that placed the offer, Chelsea and the governing bodies. Clubs would not be able to see other clubs offers.

The platform at this point can start to help service as an indicator as to the market value of Raheem Sterling. The market vale is effectively whatever someone wants to pay, but the consensus of other clubs gives validation to this amount.

This effectively answers the question posed by Kieren Maguire on the Price of Football podcast 'how does one determine the market value of the player?'.

By utilizing immutability and transparency (with appropriate privacy) regarding the offers for Raheem Sterling, the data exists that would enable an appropriate party to see what the consensus market value of the player is deemed to be by the market participants.

This obviously does not create a hard a fast rule as to what a players price is but it does show where one offer is out of line with the general valuation. This might be genuine where one group of teams has deeper pockets than others but the level of information can be extremely useful for identifying patterns.

For example, if, for the sake of argument, Chelsea did not accept any offers during that window then 1 year later put him on the market again one could extrapolate the new market value by looking at the previous bids and factoring in certain other factors I.e. 1 year less on his contract, 1 year older.

So then if Chelsea did decide to get rid of Raheem Sterling but were trying to do so via an arrangement with Scunthorpe United at an inflated price there would be several indicators that would flag the transaction.

See below, if the transaction occurred via the following steps:

1/ Chelsea create smart contract to sell Raheem Sterling but only make it available to Scunthorpe to make an offer on.

2/ Scunthorpe make an offer significantly above what the platform dictates is market value.

This would mean that even before the transfer was complete regulatory bodies could be made aware that it is not on the level.