The negotiations around Ibrahimovic’s potential transfer at this point in time are relatively opaque and confusing. Why all of this has come to a head now is unclear and will still take time to figure out.
But from what has been reported, let’s take a look at where the negotiations stand and why they are proceeding in the complicated fashion they are. In other words, let’s follow the money.
The Ibrahimovic deal has evolved into a zero sum financial game at this point in time. By that I mean there is a fixed sum of money that Milan is willing to invest to acquire Ibrahimovic’s services. From what’s been reported Milan is willing to pay a transfer fee of 40M euro and pay Ibrahimovic 8-9M per annum in wages for the next four years. In total Milan is willing to invest 72-76M euro to acquire Ibrahimovic’s services for the next four years. However, this sum of money is less than the sum total that Barca spent in cash to acquire Ibrahimovic last summer (49M euro) plus the remaining amount guaranteed to Ibrahimovic on his current contract (approximately 48M euro *note there have been conflicting reports for Ibrahimovic’s wages with some estimates as high as 14.5M euro but that figure seems to include prior bonuses. More recent reports have set the figure at 12M/ year.). So there are two magic numbers at work: 97M euro vs. 72-76M euro. That’s a gap of roughly 21M – 25M euro.
What these negotiations are currently about is which couner party – Barca or Ibrahimovic – is going to absorb those losses and by what proportion.
Milan has shrewdly positioned themselves as the only viable exit solution to remedy a situation in which there is tension between the team and the player. Galliani has done a masterful job of coming in late to the transfer window while trying to engineer this deal. From the start what was clear is that Milan wasn’t going to do badly in terms of finances here. While taking on a striker who will age is a risk, Milan clearly feels that Ibrahimovic’s “star” status is worth it to them and is in accordance with how they’ve recently run their business.
If Milan couldn’t get the deal done on their financial terms they would just walk away. That’s their leverage – they’ll just leave Barca and Ibrahimovic to each other and the burgeoning problems developing between them. Barca opened itself up to the other party having this kind of leverage because it did not pursue a sale earlier in the transfer period. By not creating a situation where multiple teams would bid up Ibrahimovic’s price, Barca left themselves vulnerable.
Milan first proposed a loan deal because a loan put Milan under the least financial risk and importantly was the only way Milan could pay all of Ibrahimovic’s wages at their current rate. Milan doesn’t particularly care who gets their money – Ibrahimovic or Barca. What they care about is the total money they will spend. So if they did a loan no transfer fee would be required and they could just pay Ibrahimovic his current contracted wages. This was the most straight forward way to structure the deal for Milan and Ibrahimovic.
Clearly, however, a loan would be a financial disaster for Barca as they would lose millions. So they rejected that arrangement. At the same time they clearly want Ibrahimovic out and don’t want to pay his wages. So what to do?
Milan then agreed a to sale. Barca sought a transfer fee of 40M euro. Remember Milan appears to have budgeted around 72-76M for Ibrahimovic so this transfer fee isn’t a direct problem. It’s within budget for them. However, 40M plus the remainder of Ibrahimovic’s wages as guaranteed by his current contract is more than Milan is willing to
By agreeing to a transfer fee of 40M Barca would absorb 9M in losses from what they paid in cash the year prior. So of that 21-25M gap 12-16M remains after Barca takes it’s losses.
At that point, the key thing to make this deal work from Barca and Milan’s perspective was to try to get Ibrahimovic to assume the remaining 12-16M gap in losses by reducing his wages. Barca gets their 40M cut to give up the player that way and Milan stays within the range they want to spend. Again, from Milan’s point of view they primarily care about their total expenditure and less so about which parties will get what money from them. Milan just needs to offer Ibrahimovic enough wages so that he will not wind up an unhappy player for them. That’s what they’ve been figuring out and negotiating directly with Ibrahimovic these past few days.
In essence, Barca and Milan are asking Ibrahimovic to subsidize his own transfer by absorbing this 12-16M loss.
This makes no economic sense for Ibrahimovic as he has a guaranteed contract. A footballer’s career is very short and Ibrahimovic is currently at the stage in his life where he is likely at his maximum earning potential. Turning down money when you are at your peak earning power is turning down money you will likely never see again.
But it is now clear that Ibrahimovic himself no longer wants to stay with the club and has in turn opened up negotiations for a new contract with Milan at a lower annual wage. There’s been some reports of Milan being willing to do a 5 year deal which would add one year of guaranteed money to Ibrahimovic compared to what he has now. That extension will help make up for some of Ibrahimovic’s lost future earnings. An extension of this type is Milan’s way of trying to build good will with Ibrahimovic and keep him happy.
Nonetheless, Ibrahimovic and his agents aren’t foolish and they see what’s happening. He is the counter party guaranteed 48M over the next four years who is being asked to absorb a 12-16M loss to subsidize his own sale. This more recent talk about Ibrahimovic getting an “exit bonus” isn’t unexpected in light of this. Railola’s goal for his client in this transaction will be to minimize how much of a this financial hit Ibrahimovic assumes in the process of leaving a club he no longer wants to be at. An exit bonus or Ibrahimovic receiving a percentage of his transfer fee would decrease Ibrahimovic’s losses by forcing Barca to assume more of the gap than the 9M they have agreed to already take on. In addition of course the agent will also likely want his cut of the pie as well.
As is evident, these are extremely complicated proceedings given the amount of money at stake and the complex, triangular negotiations. Much of what’s been reported is likely false or incorrect, particular in terms of the exact dollar amounts being discussed that will exchange hands. The big picture of these negotiations at this point in time is this: whether or not the deal gets done and how much money Barca loses financially both depend on how much Ibrahimovic himself is willing to lose in order subsidize his own transfer.