How Are Football Players' Contracts Evolving in Today’s Transfer Market?

By Maxwell Kablan

With Reference to ‘Done Deal’ by Daniel Geey

The summer transfer window is in full swing, as clubs look to strengthen their squads ahead of the new season. Premier League spending has already hit an all-time record of £2.6bn, with transfer deadline day still yet to take place on September 1st.

While transfer values have increased, player contract clauses have also adapted, as clubs, agents and lawyers look for ways of ensuring their players’ values are accounted for in their contracts. So how have football players’ contract terms evolved in recent times?

Longer contracts for elite players

One emerging trend in football contracts is clubs beginning to offer longer term contracts for their elite players. From a club’s perspective, this will ensure the player has a larger market value due to having more years on their contract, so clubs will have to pay a higher amount to secure them. 

FIFA’s Regulations on the Status and Transfers of Players state that the maximum length of a contract should be five years (Article 18), but the rule allows for longer contracts if a club gets permission to from their national football governing body.

In bids to tie down their most valuable players, clubs are increasingly taking to these long-term contracts. In January this year, Manchester City offered Erling Haaland the longest contract in Premier League history, as he signed a 10-year deal where he will earn over £500,000 a week. The deal will ensure the striker will stay at the Etihad Stadium until the summer of 2034.

Similarly, in July Athletic Bilbao gave winger Nico Williams an eight-year contract extension, which will keep him at the club until 2035. Amid interest for a range of top clubs, the Spanish club will hope the long-term contract alongside a greater release clause will result in the winger remaining at the club for the prime years of his career.

While these examples show clubs giving their existing players long-term contracts, some clubs have taken to signing players for long durations.

Chelsea were the pioneers of signing players on extended contracts. In August 2024, they secured Cole Palmer’s services for nine years, as they extended his initial seven-year contract by 2 further years. This was after signing Moisés Caicedo, Enzo Fernández and Mykhailo Mudryk on eight- year contracts.

The London club’s strategy was to spread the cost of the transfers over a long period of time to save money long term in what is known as amortisation.  However, clubs will no longer be able to practice this method as in December 2023, the Premier League ruled on a five-year limit on spreading transfer costs.

Nevertheless, clubs will still be able to offer long-term contracts to their elite players if they see fit. Many will favour these contracts for their trusted assets compared to risking them on newly signed players. It means they can reduce the cost of having to renegotiate players’ wages, which would come from contract extensions. By having more fixed long-term contracts, there will be fewer of these negotiations that would come with having to play players’ higher salaries.

In a way, longer-term contracts swing power back to clubs in a market where player power is higher than ever before. Players now are a lot more open to running down their contracts, so they can leave on a free transfer and negotiate higher wages. Both Kylian Mbappé and Trent Alexander-Arnold took to this method to leave to Real Madrid. For clubs, longer-term contracts greatly reduce the possibility of losing valuable assets for nothing.

More variable bonuses paid to players

Another emerging trend in football players’ contracts is the bonus payments they receive when they meet specific achievements while playing at their club. Premier League footballers have their base fixed salaries which are reported as weekly but are generally paid on a monthly basis. In addition to this, they will receive additional variable payments based on their individual performance, appearances, as well as how their team does in a season.

For instance, attackers could have bonuses if they score a certain amount of goals in a season, playmakers could have assist bonuses, while defenders and goalkeepers could have clean sheet bonuses. Players could also be paid bonuses if they reach a threshold for certain amount of appearances, (the contracts will determine if substitutes appearances count or if appearances have to be starts).

Additionally, players can receive bonus in relation to winning the league, a cup qualifying for Europe or surviving relegation, depending on the club’s status.

Player bonus structures are generally kept secret by clubs and vary on a deal-by-deal basis. By clubs ensuring a proportion of players’ income will be variable and dependent on performance, it is thought that it will incentivise the players to perform well and have something to prove. There is, however, a risk for players of their salary being significantly reduced if they face injuries or unprecedented spells away from playing. Therefore, agents of players may bargain for a higher amount of a fixed salary, which will be more guaranteed.

By using more variable bonus structures, clubs can soften the financial blow of not meeting their season targets, by saving money on their players’ wages. As a result, they are an attractive proposition to clubs.

Players can also be rewarded financially for committing to another season at a club, which are known as loyalty bonuses. From a club’s perspective, they might see this as a way of encouraging a player to stay at their club. In similar fashion, signing-on fees reward players who have signed with payments each year they remain at the club.

All of these reflect a trend of clubs resorting to ways of rewarding players that protect clubs financially while also incentivising players.

Greater add-on values in player transfers

An interesting development in transfers is that the value of add-on clauses in transfer fees is increasing. Add-On clauses relate to payments a buying club pays to the selling club based on a player’s performance whether individual or team-based. Unlike variable bonuses where players financially benefit, here the selling club will benefit from a sum.

These payments come under the term contingency clauses, and they now make up 15% of total transfer values, which is five times the value they covered in 2015. They are seen as attractive by both the buying and selling clubs. The selling club will benefit financially if the player in question goes on to be a success, while the buying club will not have to pay as much in total if the transfer does not succeed.

Interestingly, add-ons can be achieved more easily or with difficulty, depending on the specific clauses. For instance, add-ons that relate to a player’s number of appearances and starts may generally be easier to achieve than add-ons for winning team trophies or individual achievements. As a result, achievement based add-ons would likely be worth more than appearance based ones.

Greater add-on values in player transfers is something we have already seen in recent elite transfers. For instance, in Jude Bellingham’s transfer from Borussia Dortmund to Real Madrid in 2023, the base fee was €103m but with add-ons, it could potentially rise to €133.9m, which is a sizeable chunk in add-ons. Similarly, in Florian Wirtz’ British record transfer from Bayer Leverkusen to Liverpool, the basic fee was £100m with up to £116m in add-ons.

Again, just as with player bonuses, the nature of the add-on clauses will be kept secret between the clubs involved. Nevertheless, it is clear that they are becoming a lot more popular, and are increasing in value in elite transfers.

What are the legal implications of these changes?

As the nature of player contracts continues to change, there are legal implications that need to be considered for each of these changes. Lawyers will need to carefully negotiate and structure clauses, that satisfy either the club or the player (depending on who they represent).

In regard to long term contracts for players, some may be hesitant to agree to these  due to the element of risk and the lack of flexibility this offers. Therefore, it is important that lawyers draft provision to allow for flexibility in these long term contracts, such as clear release clauses and possible grounds for termination. This way, players can still exercise bargaining power and have the option to part ways with their club during the contract period.

Additionally, when it comes to extending player contracts, clauses should clearly state if an extension will be automatic or subject to mutual agreement.  It is crucial that players have full transparency on whether their contract will be extended or not, so lawyers should ensure this is accounted for.

When it comes to clubs, they also face a risk with a long-term contract of a player not living up to their potential or having long spells away from the game. Therefore, clubs will want to ensure this is considered with clear provisions.

With contingency bonuses, players and their agents may be reluctant to a lack of a fixed wage, which offers a guaranteed salary. Therefore, as noted earlier they may wish to bargain for more of a fixed wage, and lawyers who represent players will need to negotiate these clauses carefully, to allow provisions for this. Nevertheless, as contingency clauses are becoming the norm at a rapid rate, clubs also have bargaining power when it comes to inserting variable pay.

Moreover, when drafting these clauses for players bonuses as well as add-ons, lawyers must also ensure there is a good balance between individual bonuses and team success bonuses, and they should also be realistic for the player and their team to achieve.

Additionally, clauses should also be clearly defined to avoid potential misunderstandings. For instance, when it comes to appearances, there needs to be clarity over whether an appearance is a start or a substitute appearance. Lawyers should also ensure that clauses are not too restrictive on players’ termination rights, as well as their ability to engage with brands and boost their image rights.

What can we expect in the future?

As the transfer market continues to evolve, player power looks like it is only on the rise. The current transfer window has seen numerous examples of players going on strike to force moves away from their clubs. Players’ agents and their lawyers could leverage the player power they have to negotiate deals that benefit them. The recent Diarra ruling, which gives greater scope for players to terminate their contract and freely move to another club, will also strengthen player power.

Clubs, on the other hand,  will be aware of these changes, and will want to ensure they draft these clauses so their hold over their own players is not significantly weakened themselves. For instance, they may wish to take up a much stricter approach to punish players who do not adhere to their contract terms.

Nevertheless, it will be interesting to see how the nature of player contracts will develop in the coming years.