Why do Football Clubs make bad decisions?
Poor decisions on terms and length of contracts can tie a club’s hands for years
While scrolling through the latest news in Danish Football this morning on bold.dk, one specific news article caught my eye. Danish 1st Division club Hobro IK had announced the re-signing of their defender Jesper Bøge through the summer of 2024. On first glance, there was nothing unusual about the signing. Bøge has been a solid player for the club for the past nine seasons. However, what made this particular signing different was the fact that Jesper Bøge is 31 years old, and was just given a new 3.5 year contract which will expire when he is 34.5 years old.
Why would a Football Club give such a long contract to a player at that age, whose skills will very soon (if they haven’t already) start to deteriorate? The answer is complicated, and goes to the heart of decision making, and strategy at Football Clubs. Was this contract a reward for his years of service to the club? Do they genuinely believe the player will be a strong contributor in 3 years time? Hobro are not alone in signing aging players to long term, guaranteed contracts. Recently, another Danish 1st Division club HB Køge signed 33 year old midfielder Mike Jensen to a 3.5 year contract which will expire when he is 36.5 years old. There’s nothing wrong with signing aging players; they can often contribute leadership in the locker room, help mentor young players, and still be important contributors on the pitch. However, when looking at the cost/benefit analysis of signing players who are 30+ (which frankly very few clubs actually look at), you’ll see that aging players are deteriorating assets who are more likely to get injured and whose performances generally decline over time. Savvy clubs will sign aging players to shorter, more incentive based contracts to ensure they stay healthy and continue to meet expectations.
That sporting director signing the aging player to a 3.5 year contract very well may not have a job when the player is at the end of his contract, so there’s little incentive to negotiate harder on the contract length.
The counter argument is that smaller clubs may have no choice but to entice top older players with longer contracts in order to sign the best players and stay competitive. While this may be true, the probability is high that these players will not produce at a level commensurate with expectations over the life of their contracts. Why not invest that money instead in developing younger players? Or on players at the back end of their career, but not quite on the downward slope (aged 28–29 for example). The answer is simple, clubs have little to no interest or incentive to make the hard decision, even if it’s in the best interest of the club in the long term. That sporting director signing the aging player to a 3.5 year contract very well may not have a job when the player is at the end of his contract, so there’s little incentive to negotiate harder on the contract length. With many absentee owners across European Football, the sporting leadership and decision makers often have little to no oversight when it comes to contract negotiations. What does an owner know about the market value of any particular player? How does he know that signing an aging player to a long term contract may be a poor decision for the club? Clearly, informed and engaged ownership (a topic for another article), is vitally important in the entire decision making process at a Football Club. These contracts can tie the hands of future staff (or even new future ownership), who may be tasked to rebuild an organization and/or reduce costs, but are burdened with these poor contracts.
Addressing the question posted at the beginning of this article, I firmly believe clubs generally lack the discipline, incentive, and long term vision to make sound decisions in general, but most specifically in the area of contract negotiations. While the minutiae of contract terms and length may not be sexy to the fans of a club, they can directly contribute to success on the pitch, a club’s long term financial well being, and overall club efficiency. Especially in light of the financial strain of COVID, clubs must take a hard look in the mirror and understand what commitments they are making, and how they want their organizations to look years into the future.
About the author: Jordan Gardner is an American sports executive and investor in several soccer clubs across Europe including Swansea City AFC in the United Kingdom and Dundalk FC in the Republic of Ireland. He is currently the chairman, co-owner and managing partner at FC Helsingør, an American-owned soccer club in Denmark, and was previously vice president, investment and business strategy for the digital media company JUGOtv before it was acquired by Relevent Sports Group. He was also the owner and chief executive of a live event ticketing and technology company based in San Francisco, California.