Transfer Loan Backs: Potentially The Next Big Club Transfer Tool

The loan system is being exploited in several different directions by clubs. – John Brewin

Succinct and to the point, ESPN writer John Brewin is not wrong in his assessment of how clubs in the Premier league have been using the loan system.  Whether or not the system is being utilized, exploited, taken advantage of or ruined, is a discussion that is on going and maintains strong arguments for both sides.

Part of what has made the loan system the divisive creature that it is today is its versatility.  Originally intended to be a way for very young players to go out from their parent clubs to a lower league club and gain valuable first team experience and return a better player, the system is now as nuanced and tactical in its application as any other tool a Premier League club has at its disposal.  The systems aforementioned versatility could see a rise in new leverage of the system: Transfer Loan-Backs.

The transfer loan-back (Term coined here first) is a phenomenon only seen during the January transfer window and whose title makes the term pretty self-explanatory.  It is the process of a club purchasing a player from another club and then immediately loaning the player back to his original club for the remainder of the season.  The merits, uses and prevalence of this leverage of the loan system is somewhat new and is more interesting in context to how the loan system has been used up to this point.

As mentioned above, initially he loan system allowed young players to go out and develop from increased game time and return to their parent clubs with experience and maturity that might not have been developed had they stayed in a youth team set up or holding a permanent place on the first team bench.  Daniel Sturridge, Andros Townsend, Jack Wilshere, and Danny Welbeck are prime examples of what the loan system can do for young players.

Another use of the loan system, some considered it an abuse, is evidenced by Manchester City who had so many senior players in their employ that some didn’t even make their Premier League squad at one point such as Emmanuel Adebayor and Craig Bellamy.  This resulted in a spotlight being shown on another use of the loan system, the older, unused player loan to a potential buyer.  Both Bellamy and Adebayor ended up signing permanently with the clubs they were loaned to, Cardiff and Tottenham respectively.

With this, the loan system added another nuance and use to clubs as a way to shop their players temporarily in an attempt to raise or prove the value of some of their fringe players that they wanted to offload.  Other clubs might have been wary about signing them permanently off the bat yet the loan gave them an opportunity to test drive the players first.

Loans can be used tactically like in the examples of MLS players like Clint Dempsey, formerly David Beckham, Robbie Keane, and Landon Donovan, who all did short-term loans in the MLS offseason to augment Premier League squads.

The transfer loan back is a nuance that only adds to the multi-dimensional swiss army knife that is the Premier League’s loan system.  While there aren’t a massive number of examples of this phenomenon in the January transfer window there are still some.

Since 2007, looking at every January transfer window, there have been seven transfer loan backs.  The first was in 2009 with Adam Ljajic from Partizan Belgrade to Manchester United.  This deal fell through in the end, but Manchester United kept chugging forward as in 2010 they signed Chris Smalling from Fulham and loaned him back.

Kevin De Bruyne’s move from Genk to Chelsea was next in 2012 with 2013 being a boom year. Jack Butland moved from Birmingham to Stoke and was loaned back,  while a similar deal was made between Crystal Palace and Manchester United for Wilfred Zaha. Chelsea wrapped up the loan back work and kept it international by signing Brazilian left back Wallace from Fluminense and loaning him back for the remainder of the season.

The most recent example from this past January window is Kurt Zouma from French Club St Etienne.  Chelsea signed the 18-year-old French Center Back and loaned him right back.

The practice of signing players and loaning them back to clubs for the remainder of the season is and incredibly curious and interesting tactic for clubs.  Every time that it has happened, it has been a young player thought to have major potential.  Obviously they weren’t needed immediately at their new club so they were loaned back for the remainder of the season, but then why sign them in January?

The natural argument is to cut off the potential of a bidding war that could elevate the transfer fee paid for the player during the summer transfer window dramatically. Why then would the selling club allow the player to be sold though? If they know the player will go in the summer anyway, why not keep him and hold out for a much bigger fee in the summer?  A possible answer could be that players push for a move and this solution suits all parties, the player and purchasing club get their move, while the selling club gets their money and retains their asset for the remainder of the season.

Another possibility, though there’s no proof of this, is that maybe the deal was going to happen in January anyway simply from the bigger clubs pressure and players desire and protest. A transfer fee remained the only obstacle and couldn’t be agreed on due to both sides being stubborn. In comes the loan-back potential that allows the club to rationalize a lower asking price since they get to keep their asset while ensuring the player gets his desired move and doesn’t continue to rumble the dressing room.  Again that’s pure speculation though.

All in all, to say there’s a growing trend of these kind of deals is most definitely a massive stretch of the term trend since there are only a handful of examples since 2007.  It appears though that the practice is increasing somewhat and given the characteristics, it could be something that major clubs use more often with the prevalence of Financial Fair Pay as clubs look for younger players at lower prices.

The loan system was conceived out of simplicity and to give youth players the opportunity to develop.  It has since grown and developed into a nuanced and tactical tool utilized by both major clubs to farm out players and smaller clubs to leverage.  The versatility of the loan system continues to have its limits of versatility pushed and the transfer loan-back practice is but the latest to emerge.  Every transfer window provides a new opportunity to see the loan system change and develop and with Financial Fair Play becoming more and more prominent, the loan system could yet see more changes and growth.

Reporting on the business side of the world's game.