Barca – Ibrahimovic – Milan: A Zero Sum Negotiation

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
invest.

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.

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146 Comments

  1. August 27, 2010

    Why couldn’t Inter have defended this way at the Camp Nou in that second leg?

    • Helge
      August 27, 2010

      Because Mourinho was still their coach.

  2. August 27, 2010

    @ Devil’s advocate AKA Kxevin 😀 :

    “Ibrahimovic functions best as a sole striker.”

    He did well partnering Larsson for the NT. He was amazing at Ajax and at Juventus. He wasnt the sole striker for both clubs. At Inter, whenever there was a partner it went well. But that was an option most of the time.

    “Villa likes to work as part of an attacking team, but as Opcion N. 1. ”

    I dont know what option number one means. If it means being the leading striker at offense, thats not accurate. For Spain in euro Torres was the leading forward and Villa exposed spaces. In the world cup we saw that this is actually how he click best.

    Last season he played his best games when Henry was still offering something. Or when Keita was on the field and making his runs to the box (Note: Almost everytime Keita scored last season, it was one ofIbra’s best games for the team. Checked). That tells a lot.

    For the attributes he has, he is definitely a better second striker if you want to define the best position for him. One of the reasons he didnt perform brilliantly last season was the lack of supportive striker who attack the box during buildup (AKA Henry/ or better:Villa). Messi does not attack the box during buildup, he drag the lines to the offense aria. Big difference.

    The rest were based on the mentioned assumptions. So…

    I dont think there is any use to be creative finding a meaning in the vacuum. Because thats the best explanation about the situation: Vacuum.

    • Kxevin
      August 27, 2010

      Ibrahimovic had his best years as the sole target option. He thrives on the freedom. It was also his best year as a professional goal scorer. Coincidence? Good question.

      Villa kicks butt at Valencia being partnered with the likes of Mata, but there’s no question who the target man is.

      I think that the potential situation would have been different, and more complex. Villa does indeed work well with a distraction, be it Messi, Ibrahimovic or Mata. My question is simply whether the three of them would have been able to function as well as everyone thinks.

      In theory, the three of them are running around, wreaking havoc and scoring bazillions of goals. In reality, what if it didn’t work out that way?

      • August 27, 2010

        “Ibrahimovic had his best years as the sole target option.”

        What years?

        As for Villa when there was a chance to partner a quality striker, Villa had his best performances (Morientis). Lately, it was even uncertain that Villa was a lone striker at Valencia. Even while playing against us we saw Silva and Mata as much as villa heading the offense. He was opening to channels, AKA the role he can play with Barcelona.

        But why going far. We saw a demonstration in Gamper cup. You have the match. Watch it again and notice how for the first time since seasons, its the left plank that was opening the spaces for the right flank to expose. The link between Villa and Ibra-for being the first game- was exceptional only to pass to Jeffren on the left who’s feet race his shoes and flop over the ball leaving it behind. Imagine if it was Messi instead of Jeff at the end of these passes.

        “In theory, the three of them are running around, wreaking havoc and scoring bazillions of goals. In reality, what if it didn’t work out that way?”

        In theory Messi will not make it as a goal keeper, and Valdes cant score more than Messi. In reality who knows if we dont try? That assumption is always valid. But their are indications. I think its more accurate to build evaluations based on indications, not assumptions.

      • Kxevin
        August 27, 2010

        Well we’ll never know, because the deal is done. The question remains valid, as something triggered this deal, which began to percolate right around the time that the World Cup stars returned from their vacations and the team began working together. I refuse to believe that an agent precipitated the transfer of a player, particularly a player that Guardiola would have been watching during practice and saying, if our wild dreams were in fact to become reality, “Holy crap! World domination!”

    • Bill
      August 27, 2010

      Yeah, Ibra worked better, in my opinion, as a second striker, and not an out and out striker. I don’t even know where the notion of him as a back to goal striker came up. He worked well when he played with Trezeguet, Adriano and Larsson. The free role behind strikers, on a counter attacking team is what Ibra molded himself to thrive in. His role at barcelona was completely wrong for him.

    • Bill
      August 27, 2010

      So, Atetico, who at some point last year were 12th in the league, tears it up in europa and the supercopa…and people say la liga is weak? Great job Atletico. We need them and Sevilla to step it up this season and throw in a few wrinkles to the real-barcelona axis.

  3. Jnice
    August 27, 2010

    YES… Inter can’t match Barça for trophies this season.

    • jord(TM)
      August 27, 2010

      I hope Internacional beat them in the club world cup too 😀 .Sneijder ballon d’or my ass.

      • IS
        August 27, 2010

        They don’t get to go to the Club World Cup – it’s for the Champions of Europe – Athleti 🙂

      • IS
        August 27, 2010

        No wait – that can’t be right… my bad

  4. Vj
    August 27, 2010

    PK Inter.. Haha this one isn’t over yet!

  5. Roz
    August 27, 2010

    Penalty

  6. Helge
    August 27, 2010

    De Gea! He’s my man for the Fantasy League.

    And well done, Mr. “European Club Forward of the Year” – fckin disgrace!

  7. Vj
    August 27, 2010

    De Gea. Iker’s successor?

  8. jord(TM)
    August 27, 2010

    SAn DeGEA, shouldve taken him when they signed asenjo :/

  9. Euler
    August 27, 2010

    The “best striker” just got stopped on a PK by a 19 year old keeper.

    Terrible PK by Milito. Just terrible.

    Messi definitely couldn’t have done that…

  10. Roz
    August 27, 2010

    well thats over…De Geas gonna be special

  11. Euler
    August 27, 2010

    Inter’s loss just further shows how special and difficult what Barca achieved was.

    Inter was played off the pitch today. Atleti was far superior.

  12. Vj
    August 27, 2010

    World’s Best Forward – Misses a penalty..

    World’s Best Midfielder – Subbed off for an 18 yr old..

    World’s Best Goalie/Defender – Stranded as El Kun tapped in..

    World’s Best (Supposedly) – Humbled by Pathetico!

    Our record won’t be matched!!

  13. Kari
    August 27, 2010

    Pathetico–no, ATLETICO Madrid!

    Yeah, “World’s best Forward and Midfielder and Defender and Goalkeeper” eh?

    Our Sextuple stays in tact!

    • Diego S.
      August 27, 2010

      From Now On They’re Atletico .. Unless they beat us then they’re back to Pathetico

      • Kari
        August 27, 2010

        I’m down with that.

        Atletico it is, until they beat us.

  14. Shaun
    August 27, 2010

    Moltes gracies, Atleti.

    Now if you could just lose to us in the Calderon….

    • Shaun
      August 27, 2010

      Oh, and does anyone else notice Atletico has won more trophies in the past year than Real Madrid?

      😀

      • Diego S.
        August 27, 2010

        Not Only Last year .. But In the Last 2 years

  15. y2k156
    August 27, 2010

    I watched the entire match hoping that Inter would lose. Childish but i did not want them to win six trophies just year after we did. Though i do not have any special feeling aginst Inter as such (though their behaviour in return leg last year still makes me mad as hungry boar).

    Atletico were quite good and their defence is looking stronger. And that was their weak point. They have got the best strike partnership in La Liga and with strong defence, they are going to be handful. But than, what chance is that they will actually start performing week in and week out. I have already assumed that they shall be a thorn in our side again. Damn!

  16. jord(TM)
    August 27, 2010

    Who wouldve thought after Torres left for Liverpool he would be yet to win anything at anfield and Atleti would have started to rack up silverware?Im glad for them.

  17. Vj
    August 27, 2010

    Also, modern day football is filled with hypocrites..

    ||http://blogs.telegraph.co.uk/sport/stevewilson/100011973/why-isnt-tottenhams-jermain-defoe-suffering-the-thierry-henry-treatment/

  18. vicsoc8
    August 27, 2010

    From Pep’s twitter:

    “With Mascherano renouncing his percentage of the transfer fee, Barcelona will in the end only have to pay little more than 19M”

    I’m still not sure he was the best choice, but if this is true he’s already taken a large step to winning my heart.

  19. Jnice
    August 27, 2010

    From Gabriel Marcotti’s twitter:

    -Sky Italia; deal reached, one-yr loan, Milan obliged to buy him outright in a years’ time or pay penalty, one final sticking point…which is, according to Sky Italia, Ibra wants golden farewell from Barca, amt to be negotiated.

    In his own words:

    -“Basically, loan + forced buyback is ploy to get accounting + fiscal advantages. Remains as asset on Barca’s books at 57m for 1 more year”

    -“Milan get Ibra on loan. Next summer, Milan have to buy him at pre-arranged price (my guess, 40m)”

    – “Sky Italia’s reporter A.A. has basically been living with Raiola last 72 hrs… grt source”

    -“Barca paid 70m for him, but, on their books, he depreciates every yr over 5 yrs, so now, after 1 yr, he’s a 56m asset.Nxt yr, he’s 42m asset”

    *http://twitter.com/Marcotti

  20. Diego S.
    August 27, 2010

    Can UEFA withdraw the Awards Or Is it too late ?

    • Kari
      August 27, 2010

      Nope. They can just sit there feeling stupid right now. Muhahaha

  21. Kxevin
    August 27, 2010

    Done deal. Rosell is coming back from Ibiza. Question is, what’s the penalty for backing out of the deal, eh? It better be more than 40m, is all I know.

    Now, with 4 days left in transfer season, replace or are we set? People who didn’t like Ibrahimovic have their wishes. He’s gone. Krkic fans wondering about Villa standing in the way of the Boy Wonder can feel better about things, going forward. Pedro! is no longer a super sub. And our attack is suddenly, swiftly, Ninja-less.

    Personally, I’m waiting for Guardiola to talk about what the hell happened. If he blames Raiola, then he’s a punk. There HAS to be something else.

    • Nik
      August 27, 2010

      As a fan, I’d love to understand what the hell just happened in the past week and why. However, I’ll be surprised if he illuminates anything at all. What’s the use of speaking now? Best thing for Pep and the club is to move past it as fast as possible. I just hope we don’t have to go through this circus again anytime soon.

  22. Eklavya
    August 27, 2010

    Kxevin you sound like a conspiracy theorist now.

    • Kxevin
      August 27, 2010

      No, just somebody wondering how it all went bad. It wasn’t that long ago that a packed Camp Nou was rapturously welcoming the man we dubbed BANGS. Then, just as suddenly, 21 goals/9 assists weren’t enough, he was bad value, the deal was stupid, why did we get rid of Eto’o, etc, etc. Maybe that last bit answers the “What happened” question. Maybe his production really was insufficient, and he screwed up our play as badly as some in this space suggest.

      I want to hear what Guardiola has to say. He promised, when this was all done, to make everything clear.

      • Eklavya
        August 27, 2010

        I was referring to the “Devil’s advocate” comment.

        I also wonder if Pedro will manage to score as many as last year…

  23. Nik
    August 27, 2010

    You know, it makes perfect sense for Atletico to have won. After all, they exist to defy expectations, whether they be good or bad expectations.

    And no matter how the club tries to spin it, the Ibra situation is a total disaster. Any player deserves two years to prove his worth, and it’s a shame Ibra wasn’t given the chance to do so. People can claim all they want that Ibra + Villa couldn’t work together, but I saw no such indications in the Gamper game. Also, I don’t buy any attempts to frame him as a selfish, disruptive force in the club. After all, there were no such comments earlier.

    Bottom line: for a club that claims to be a model for how football should be played, it’s unacceptable to be participating in this kind of madness.

  24. Euler
    August 27, 2010

    The Club is going to blame the agent and secondarily the player. That’s how this is going to play out.

    If those goes through as a one year loan with a requirement to buy that makes the deal very complicated. Lot’s of financial magic going on there.

    It’s why things like audits can be so deceiving.

    Barca’s book will take a beating from this transaction. My post above was about the cash spent.

    But that doesn’t include the Eto’o factor. In Barca’s books he as to go down as an asset with a value. However, practically speaking Eto’o’s book value wasn’t close to his market value and Barca would have likely let him go on a free were the deal not made.

    The financial repercussions of this whole thing are still very unclear. Ibra’s exit bonus could be very large.

    In fact they might have structured the deal in this complicated fashion to be able to pay Ibra his exit bonus while essentially hiding it in their accounting books.

  25. jord(TM)
    August 27, 2010

    I like the obligation to buy, as opposed to option.Wonder what the financial penalty for them refusing to buy him is.Has to be more than the obligation fee right?

  26. August 27, 2010

    What happened was simple:

    – An Agent trash talking.
    – President seeking offloading
    – Coach unsettled but stalling
    – Player pending freefalling

    After the whole scenario end, the creative reasoning take place to put some makeup.

    Done.

  27. Kari
    August 27, 2010

    “Inter Coach Rafa Benitez: We Lost The Midfield Battle Against Atletico Madrid”

    Midfield battle. Against Atletico Madrid.

    That sound your hearing is my teeth grinding together. Angrily.

    • Euler
      August 27, 2010

      It must have made Rafa sick to his stomach to have to admit that. In theory Inter had a numerical advantage in midfield as Atheti plays a two striker formation. Inter looked to be playing a higher defensive line than they did last season. That allowed Atleti to exploit space behind the defense with intelligent movement and their better pace.

    • Diego S.
      August 27, 2010

      Good For You .. The 1st Time is Always the Hardest

  28. Euler
    August 27, 2010

    The obligation to buy issue is just accounting. It’s Barca trying to minimize the losses it will need to put on it’s books for the deal and also maximizes how the deal will look for Milan.

    How this impacts Ibra’s ability to get a large cash payout is unclear. And that’s probably what they will talk about tomorrow.

    What an absolute mess all around.

    The entire issue from start to finish has been an embarrassment for a club that’s very explicit about the different standard it tries to hold itself to.

    I can only wait for Robinho walking through the door to complete a splendid summer at Camp Nou.

    • Ciaran
      August 27, 2010

      It is gonna be Robinho. I’ve thought it for weeks.
      It’s not the worst thing though.
      Assuming Villa | Messi | Pedro is Pep’s first choice strikeforce, Robinho would be able to sub in for any of three. Bojan would be also available with Jeffren getting minutes in the Copa.
      It’s not all bad.

      • Euler
        August 27, 2010

        It’s not the worst thing though.

        That entirely depends on whether or not Pep really wants him. I can’t see Robinho as being the kind of player Pep would want or would get along with.

        It could either be a great deal or yet another epic disaster.

        Either way it’s a huge risk especially given his massive wages. I wouldn’t even think of it unless it’s a loan and City pays a good chunk of his wages.

      • jord(TM)
        August 27, 2010

        I just think if pep wanted Robinho he’d have been here since january. Every time he was offered the reports were both he and the captains vetoed it.This summer made me trust the papers only to get matchday line ups truthful but in this case they have some strange robinho fetish so its not like they would make up pep and the team not wanting him when their agenda all along has been to sign him.Maybe Pep relaxed his stance, or maybe he never had any stance in the 1st place, but signing robinho seems like another recipe for a new exit case this time next summer.Then again what’s barca without one.

  29. Diego S.
    August 27, 2010

    Now That Ibra is 99% Gone .. Where Do We go From here ?

    1- Go Into the Season with the Current Squad
    2- Find a Replacement Quickly in the Remaining 4 days
    3- Promote a Youngster in the CF/Wing Position
    4- Wait till the January Transfer Window to Open

    • August 27, 2010

      5- Make sure not to sell Messi, while looking for a Messinho 😀

      If we do not get a good first payment in Ibra’s transfer, I cant see us doing much. I will repeat my same old suggestion: Loan Robinho with an option to buy.

      Hillal mentioned Romelu Lukaku in the last post I think. If Sandro bring him, I will have no more complains about his Sandrotic mental stability. But its extremely -highly- unlikely.

      We needed a player (As Pep pointed out) when we had a squad of 19. We -almost- bought Masche and -almost- sold Ibra. So we are still in the same position. Without an additional striker, we need to keep kissing lady luck feet all the season.

  30. Ciaran
    August 27, 2010

    Apparently, now, the fee is €30million!

    • jord(TM)
      August 27, 2010

      30 million?Suddenly im much more pissed if thats true…

    • August 27, 2010

      There is a strategy called “Boiling the frog”. In short, if you throw a frog in boiling water it will jump out directly. If you put the frog in normal water and start to heat the water gradually, the frog will not even figure, and you will boil it.

      We are the frog.

  31. flyzowee
    August 27, 2010

    Well said Nik

    Weve acted like total amatuers in this deal. ACmilan have jus waited till the final hour, bent us over and had their way.
    Now were back to square one

    We dont have a genuine lw threat coz villa is now officially our CF.

    We have 19 players for 50-60 plus games.

    I think the footy gods have been very kind to us in terms of injuries and tbh im expecting some vital absences in some vry vital games 4 us.

    With henry, marquez, chiggy, yaya and now Ibra, we may very well have made defending set pieces a new challenge for the new season

    Long live Rosell.

    Agree with kxevin Pep needs to produce some definite answers, i dont want anything along the lines of the player lacks ‘ the feeling’
    PLAIN. CLEAN. DEFENITE ANS.

  32. Diego S.
    August 27, 2010

    **http://www.goal.com/en/news/10/italy/2010/08/27/2091410/breaking-news-milan-and-barcelona-finalise-zlatan**

    **http://www.goal.com/en/news/9/england/2010/08/27/2091419/breaking-news-liverpool-complete-107m-deal-for-portos-raul**

    L’Pool already spent 10m of Our money to buy Raul Meireles

  33. Euler
    August 27, 2010

    Weve acted like total amatuers in this deal. ACmilan have jus waited till the final hour, bent us over and had their way.

    We’re not going to know the extent of what this is going to look like financially until we see the exit bonus that Ibra gets out of this.

    Remember – Barca is asking him to subsidize his own transfer. I can’t see him or Raiola being too keen on doing that.

    The exit bonus is where Ibra is going to try to make the money he’s losing in lost wages back.

    And he knows Barca is setting this deal up so that it looks better on their books than it otherwise would if a sale happened know. There’s value to be pocketed there for Ibra.

    We’ll have to wait and see.

  34. flyzowee
    August 27, 2010

    If were honestly not going to get a CF replacement, then y dnt we get one of Milans players
    Huntelaar is decent talent for squad depth, i mean its better than nothing.
    Since when is barca a business b4 a football club.

  35. Joseph
    August 29, 2010

    Am not a fan of Rosell, but he needs time to settle and advance his ideas. Raola has become a pest and we would be better off not having to deal with him.

    In football terms, we will not miss Ibra.

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