Counting the Cost: The Hidden Impact of Foreign Exchange on Player Salaries
As the mid-season January transfer window comes to a close and clubs revamp their squads for a final second half push; players who have moved across borders to play in foreign leagues are expected to hit the ground running. Sometimes, in very unusual and high-pressured situations. As loan contracts are hurriedly signed and players are thrust into action to make their mark; one thing that is consistently overlooked, is how foreign players are actually paid when playing abroad.
The thought of going out on loan to a foreign club can be daunting in itself, with players being unfamiliar with club cultures, the language and managing expectation – the one thing most would overlook would be their contracted pay arrangements. Whilst player agents and clubs will certainly outline how much is set to be earnt, or paid for by the foreign club, the amount will always be finalised in the incoming domestic leagues currency.
For example, our trusted partners Argentex recently assisted an English Premier League footballer with a loan transfer to the German Bundesliga. The English team pays the player’s contract weekly in Pounds; however, the German club pays the loan player’s contract contribution in Euros. Whilst this is regularly seen as a minor administrative point, or even totally ignored by players and agents, it has a major hidden impact on how much the player is actually earning. In this instance, the player in question was earning a salary of £60,000 per week; yet, when he moved to the Bundesliga, the wage contribution paid by the German club was being paid in Euro to his usual British pound account. Herein lies the stealth penalty banks place on receiving foreign currencies into domestic accounts – the losses can be eye-watering.
When foreign currency salaries are debited to domestic bank accounts, the usual bank charge on the transfers can be as high as 4.5% or more*, in comparison to an expert brokerage which would be a fraction of the price. For a player earning say €60,000 a week on a foreign loan deal, they are losing £2,700 a time on the foreign exchange costs alone. Across a summer year loan deal, this would represent some £102,600 in lost earnings that a player would never see – all because payment is being made into a domestic account.
By failing to set up a Euro receiving account, the player was left exposed to the foreign exchange market, which moves twice a second every day. Not something players should have to be thinking about when they have more than enough on their plates on the pitch.
By working alongside player liaison and player care teams, slowly, the value of using a sports focused brokerage such as Argentex is being realised. From setting up the related bank accounts, through to moving the funds back home at a fraction of the cost, brokers can assist players with not only the execution of transfers, but also the timing. Whilst most clubs will pay directly into domestic accounts as mentioned before; if a player has no immediate need of the funds, they can also deposit them into their brokerage account and form a longer-term strategy based on their risk appetite. Simply put, banks are not interested in assisting with foreign exchange transfers, unless they are a large multinational company.
Finances aside, there is a question over fairness within the foreign payments made to players when out on loan, aside from general naivety stemming through rushing transfers. At a base level, it is vital that players know how much they are being paid, no-one would disagree with that at a domestic level – it should too be the case that the same applies when playing abroad. Whilst banks are the institution who actually take the punitive fees, an argument can certainly be made that clubs need to do more to promote foreign exchange understanding to players when sending them out on loan. Likewise, clubs who are receiving foreign players in on loan should also be looking to add foreign exchange information and assistance to their player care offerings, along with the usual resources made available when integrating new players.
To that end, Argentex have worked alongside PSN for a number of years to ensure that players and clubs are fully informed on the importance of foreign exchange on salaries. By working with both youth and senior teams, players can be sure that their focus is fully on hitting the ground running at their host sides, instead of worrying over losing out on their true wages unnecessarily. From international captains to breakthrough academy talents – all players deserve to know how much they are earning, at all times.
About Argentex
Argentex is a foreign exchange specialist providing bespoke advisory and execution services to corporates, institutions, government agencies and not-for-profit organisations.
Argentex differentiates itself through the quality of its offering. The executive team have over 70 years’ experience in financial markets and have provided foreign exchange services to corporate and institutional clients across EMEA, Australasia and the Americas.
The advisory board members each have a long and distinguished track record of running and advising successful businesses, including numerous successful ventures within the Pacific Group. This experience and expertise enables Argentex to provide its clients with an unrivalled service and a dealing experience beyond the capabilities of a traditional retail broker.
Argentex is focused on ensuring its interests are aligned with those of its clients – security of funds, functional efficiency and commercial competitiveness.
Argentex LLP is Authorised and Regulated by the Financial Conduct Authority (FCA) for the provision of investment services, FRN 781077, and as an Authorised Electronic Money Institution, FRN 900671.
For more information, visit www.argentex.com