RvP: Good value for £180k a week?

As you’ll have noticed, Robin van Persie, Arsenal captain, is currently sidestepping any questions about a new contract. He says he’s happy, fully committed, and also far too busy with these two 90 minute matches every seven days to be even thinking about a new contract, this just wouldn’t be the right time. All the usual guff.

With just under two years left on his current deal, the club is following the usual script and trying to get him to sign an extension. Without this, in nine months we’ll be in another Nasri situation: a major player with one year left on his deal. Then we have the usual options:

  • he gets offered a fortune to stay and accepts
  • another club offers him a fortune and he leaves
  • he says he’s happy to stay, but won’t sign an extension, so the club either push him out or accept he goes on a Bosman at the end of the contract
  • or lastly, he says he loves Arsenal so much he’d happily play for nothing – forget the wage increase, he’ll stay for the same money for as long as he’s wanted! (I’m going to rule this one out on the basis that his agent is Darren Dein.)

None of the first three is great from the supporters’ point of view, and all have a cost of one sort or another. For top players these days the costs are measured in millions or tens of millions. Nigel Phillips, financial guru of the AST, likes to quantify these questions, and he came up with a thought about whether Van Persie was worth holding on to. Twitter is rightly beneath Nigel, though, so he just raised it with a few of us on old-fashioned email, leaving me free to put it to a wider audience.

So I put this question out on Twitter:

If Van Persie signs a 4-year deal at £180k a week, his salary payments over the term of that contract total just under £37.5 million.Given that he will be 32 by the end of it, which for a forward is pretty much the end of a top level career, his resale value will be negligible. So is he worth the £37.5m?

 

Overall the majority of answers back said, Yes, he’s worth it.

Some said: For someone of his age, no it’s not worth it.

Others said Arsenal will never pay that much so it’s a pointless question.

One or two pointed out that RvP staying could persuade others to stay, so pay it on that basis.

And quite a few said if he gives £37m of value in trophies then it’s worth it, particularly as a replacement would probably cost more.

Someone did dispute my ‘worthless at 32’ valuation, but if anyone can tell me a striker of that age who has been sold for more than a couple of million I’d be very surprised.

I’ll come back to those last two points.

 

So how do you judge the value? You can make a general comparison with other players, but essentially there are so many different factors of age, experience, perceived quality, fitness, desire and ambition, etc, that each player’s case can only be taken individually.

So in RvP’s case the factors in no particular order are:

The sheer amount of money – first you have to get past what a huge sum £37.5m is for four years running around a football pitch. Nobody needs that amount of money. Some will always think it’s an obscene wage when even in the UK pensioners freeze to death in winter because they can’t afford both food and heating. But if you can get past that, then the questions are: how does that compare to his peers and can the club afford it.

The fact is the richest clubs now pay those levels, and Van Persie is currently ranked high in the top 10 of the Castrol Rankings of all players in Europe’s top five leagues. On that basis it’s worth paying him that money.

Can Arsenal afford it? Yes, if they want to. They can’t afford to pay everyone that amount, but they could pay it to their biggest earner. It would mean a change to Arsène’s pay structure (ie stopping the practice of paying for potential or paying for squad harmony and moving to saving money on the youngsters and water carriers), but it could be done.

Age – four years is standard when renewing contracts, though (pre-Arteta) Arsène has always done things differently with players in their late twenties, of course. But I’d bet that RvP is being offered four years, which is of course only two extra years at the moment. By the end of that time he’s not going to go to another top club and win trophies or get the same money. This is his last big contract in every respect. On the club’s side, they will not be making much from a sale at the age of 32. Essentially they are writing their asset value down to zero over the next four years. Is it worth close to £10m a year to fill one place in the team?

Injuries – I believe that injury-prone players will always be injury-prone. I’m also pretty sure that the minute RvP signed a new contract he would injure himself – probably by accidentally jabbing himself in the cruciate ligament with the pen he’d signed with. However expensive you consider wages of £9m a year, they’re a damn sight more expensive if you’re getting nothing in return. If clubs had any power at all they would insist on pay as you play contracts for the terminally injury-prone, but it won’t happen anytime soon. Still, Arsenal can point out the potential problem during negotiations – at which point RvP’s agent will point out that Man City couldn’t give a crap, they probably don’t even bother checking that a player has the standard number of functioning limbs any more, as long as they can hold a pen to sign. So is it worth paying a huge sum to someone who traditionally misses half your team’s matches with injuries?

Replacement – if your top striker leaves, you need a new striker. In RvP’s case, you can buy one of similar age and experience, buy a younger one, or just promote from within. Suppose RvP is sold for £30m next summer – a realistic maximum valuation for someone who will be 29 as next season starts. If he’s replaced with someone of the same age, then as with Arteta the contract goes until the replacement is 33. It would be stupid to spend more than £15m on such a player, if the same level of wages are on offer – and if they’re not, then we won’t be attracting a player of similar quality.

Buying someone younger of the same quality would cost at least £30m, and again equivalent wages, but this is offset by resale value three years later. So probably increased outlay, but less write-off than retaining RvP.

But we know Arsène: he would prefer to buy someone unproven, or promote someone from the youth team. Much more cost effective.

Reputation – Arsenal’s reputation is now as a selling club. When you’re winning trophies the manager can do what he likes, but when the cabinet is empty everything is questioned. It’s got very hard to convince anyone that players have been adequately replaced since 2005.

Arsène’s ‘big club’ comments and hopeless misjudgement of the Cesc/Nasri situations have already come back to haunt him. Whether he’d get caught out again in the same way is only relevant from the point of view of having adequate time to get a replacement. What’s more important is whether the Board would let it happen, which will be governed by their perception of the consequences. If they think – as most fans do – that letting your best player go each year is ultimately bad for business because it affects retaining or attracting others, and thus in the end matches won and seats sold, then they should make damn sure that RvP either re-signs or they are prepared to pay big to really replace like with like.

Loyalty and desire – Cesc wanted to go home, but does RvP have the same desire to try his luck at a particular club? No. Does he want some medals to show for his career? I hope so. Will he get them if he stays? Right now it looks doubtful Arsenal can win one of the two big prizes in the next three years.

How strong is RvP’s loyalty to Arsenal or to his manager? Strong enough to override the desire for more money? Maybe. Strong enough to override the desire for more money and a better chance of medals? Less likely. Plus he has Darren Dein in his ear. Personally I don’t think you can begrudge someone entering the last phase of their top level career the chance to win trophies. This is less about what the club should do than the player, though as we’ve seen with Cesc it can affect valuations.

 

So where does all that leave us? It leaves me scratching my head, so here’s a little table of how costs could work out depending on any of 10 options. I’m obviously making estimates and assumptions on all these, such as how much replacements would cost and be paid, but I think it’s all reasonable, within a million or five.

With wages, I’m assuming that if we pay Van Persie the market rate, to get someone of the same quality we’d have to pay the same money, otherwise they’d go to Man U, City, Chelsea, Barca or Madrid.

(NB: Figures don’t take into account Darren Dein ripping the club off. Let’s not overlook that whether RvP is sold, goes on a Bosman or signs a better contract at Arsenal, his agent is likely to pocket roughly the same amount as was raised this season by increased ticket prices. For me, the Dein family have made enough money out of Arsenal.)

So in purely financial terms the obvious thing to do is what Wenger probably would do if forced to sell: replace RvP with someone unproven. But as usual with Arsène that is not replacing like with like, so a backlash would follow.

Most expensive is letting the player go on a Bosman and buying the same quality to replace, which is clearly why the manager’s arm was twisted over Nasri.

What is most interesting is the comparison of the two rows in bold: we can sell RvP next year, buy a younger more expensive player to replace him, and still be quids in after another four years because of resale value.

So should we give RvP a huge pay rise and hold on to him till he retires? No. Even ignoring the large chance of further injuries, we should sell him next year and buy the world’s best 23 or 24-year old. Everyone’s a winner – RvP, the Board, Arsène, Darren Dein – even you and me for once.

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5 thoughts on “RvP: Good value for £180k a week?

  1. I think the issue of resale value is a red herring – and not because of RvP’s age. Nobody has any resale value at the end of their contract – even if we sold RvP and bought (say) Aguero (ha!), the latter would have no residual value in 4-5 years time.

    If you take the residual values out of those equations, it starts to make a lot more sense to extend his contract.

    The wages and resale values in 2016 for RvP vs a top quality replacement are the same (i.e. £37.5m and £0). There is a potential £ difference on transfer fees (where we might make a profit or a loss); and there is a risk on whether the new player would “fit” with Arsenal like RvP does (he may be less injury prone, but may not gel with our team – so overall maybe there is a “better the devil you know” argument).

    • Better the devil you know is a good argument, but disagree about residual values – okay, anyone is worthless to the club if the contract has actually ended, but a 25 year old with one year left is worth a hell of a lot more than the same guy 5 years later with one year left. Clubs have to look at that. Apart from City, of course.

  2. The big assumption you make is that if you bring in somebody, that the player will be successful. Let p be the probability of success. Success here means an additional striker doesn’t need to be bought. Thus 1-p is the probability that an additional striker needs to be bought. If p = 70%, and a new striker with the same ability of RVP costs £40m, then your costs when buying a new hotshot RVP replacement need to adjusted by .3 times £40m or £12m. In that case the two bolded cases represent about the same cost outlay. I think this fundamental uncertainty is why virtually everybody wants Arsenal to keep RVP.

    PS: Your treatment of the residual value of a hotshot RVP replacement needs to also include the possibility of failure and spectacular success. Say there is a 30% chance of failure and the residual value is £15m. Say there is a 40% chance of fine performance and that your £25m residual value is correct. Then say that there is a 30% chance of great success, in which case the residual value is £40m. Then the expected residual value is £26.5m.

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