Buyout clauses are funny. It is one of the most significant yet most non-significant part that a player can have in his contract. What is funnier? Whether it is significant or not depends on his performance.
For understanding this, the first thing we should understand is the buy-out clause. It is different from a release clause. Generally, a football transfer involves an initial agreement between two teams and then comes the other negotiations between the player and the buying club. But the buyout clause is far more complex and demands a larger role of the player himself.
Well, first things first – Buyout clauses are mandatorily inserted in a player’s contract in Spain due to legal reasons. It is not so prevalent in England where Release clause is the real deal.
Buy-out clause means that a player must buy out the predetermined value of his contract. If the buyout is activated, the player himself (and not the buying club) must transfer the amount to the selling club. This is the biggest difference between transfers through buy-out clause and normal transfers. And this is where things start getting really complex for the player and the Buying club.
In general, it is the buying club who provides the money to the player for buying out his contract. Basically, the player purchases himself or frees himself from the contract through the buying club’s money so that he can sign for the buying club. As soon as the player accepts money from the buying club, it is subjected to tax, the rate in Spain being from 20 to 47 percent. So, in essence, the required transfer fee of the player increases significantly. For example, a transfer of 50 million, when done via a buyout clause can cost anywhere between 60 million to 73.5 million now.
Now, let’s look at the benefits a selling club can have from such a clause.
Situation where the Club does not want to sell –
1) So, if you are a club having a player with a release clause of 50 million and you don’t want him to leave the club, you have the option to cost the buying club 73.5 million, which will surely discourage them unless they are really really desperate for him. So, it is a win for the selling club that does not want to sell.
2) Suppose the club has a player who the club believes will turn into a great asset. The best way of keeping him in the club is to insert abnormally high buy-out clause in his contract to discourage other clubs from moving for him. In 2015, the three largest buyout clauses were those of the Real Madrid players Gareth Bale (1.2 billion euros ), Cristiano Ronaldo (1 billion euros) and James Rodríguez (500 million euros).
Situation where the club is ready to sell –
In this case, they can work out a deal somewhere between the value of the buyout clause and the amount that would have to be paid if the taxes payable on the buyout clause were also due. And as this transaction can happen as a direct transfer between the two clubs, it is a win-win situation for both the clubs, the only loser being the Tax authority.
In Neymar’s case, there is no prize for guessing that Barcelona does not want him to leave and it has given rise to a curious case of situation 1).
For now, La Liga and Barcelona are trying to flex their muscles by raising queries about the origin of money and the Financial Fair Play. They have also informed that the Buyout clause payment can be activated by only Spanish clubs. But if Neymar himself turns up for the payment, there is really very little that Barcelona and la Liga can do to withhold the transfer. Whether the deal finally gets completed or hits another roadblock remains to be seen but PSG and Neymar will surely try to avoid an embarrassing situation by finalizing the minute details as soon as possible.
Either way, football fans are in for an exciting couple of days as the off-pitch battle between Javier Tebas and Nasser Al-Khelaifi intensifies and in the end, the Man of the Match will definitely go to “Buyout Clause” regardless of the result. Now, all that remains to be seen is on which side the Man of the Match decides to play.