Loan Pathways: What Did We Learn?

At Analytics FC, we recently concluded a series of case studies focusing on Loan Pathways as a means for young players to embark on their careers in professional football. Each case study distinguished a different model of player development before exploring how the loan system was used to aid this development.

In the series, we looked at:

  • The Academy Model taking Chelsea as our test case club, we looked at the way they use loans within their academy system to bring players through.
  • The Portfolio Model – using Manchester City as the example here. We found that City Football Group treat their young talents like assets, bringing them in near the end of their development and moving them around to make profits. 
  • The Multi-Club Model – the Red Bull Group were our inspiration here. With a number of clubs around the world, they are able to progress youngsters through their system without ever have them leaving the Red Bull Group.
  • The Buy-to-Loan Model – in this piece, we looked at how Brighton & Hove Albion are looking to find value in the market by buying senior players before they have shown themselves ready for elite football, then loaning them out to complete their development.

At the end of our study, we wanted to highlight five areas that we felt represented the most important things we learned from our investigations:

The bigger the club, the bigger the economies of scale

The stark reality for modern football clubs is: the bigger you are, the easier it is to succeed with player development.

This starts right at the bottom of the player development pathway. It should come as little surprise that an elite club like Chelsea would end up with the most prestigious academy in English football. Faced with a decision about where to send your child to develop, the Chelsea brand will undoubtedly trump that of smaller local clubs for many parents.

On top of this, the ability to build bigger and better facilities, and hire increasingly talented staff, puts the bigger teams ahead of the rest of the pack from the outset. This only increases the attractiveness of the proposition for youngsters.

And then, there is the capacity to recoup costs. Clubs like Chelsea and Manchester City can make huge fees from players they have developed precisely because of their reputation. If a player is deemed good enough for City or Chelsea, then they must be good, right? 

This inflates the value of the players and makes them easier to move on. In our article looking at Chelsea’s loan system, we showed that Chelsea made over £59m from players they had out on loan in the 17/18 season. 

For any club outside of the elite, the decisions they make regarding the loan pathways that they will go on to use will have to be informed by the fact that they are already behind in the race to develop youngsters. 

For smaller clubs to get value in the market, they have to take risks

Given the reality of the elite clubs’ economies of scale, it is clear that smaller clubs will only get value in the market by taking risks.

In our most recent article—looking at Brighton’s Buy-to-Loan Model—we showed how the Seagulls add value through the loan system. As a club with a fraction of the budget of a Chelsea or Manchester City, they identify players having breakout seasons in more obscure markets and gamble on the player’s talent by buying them early. However, rather than bringing them straight into their first team, they look to loan the player out immediately to continue their development. 

A good example of this is the recent deal for Abdallah Sima. Brighton paid almost £10m for the forward after he had an excellent season in the Czech Fortuna Liga with Slavia Prague. This fee is just shy of a place in Brighton’s ten most expensive transfers ever. Considering Sima is only just 20 years old and has yet to play in an elite league—being loaned to the Championship due to him being regarded as not ready for the Premier League—Brighton are clearly betting big on his potential. 

If they had waited for more evidence of his ability to cope at a higher level, they would likely have found themselves outbid as teams with far higher budgets would have been chasing Sima. Instead, they move early and trust that they know the best way to develop the player in order to prepare him for their first team.

Of course, the fact that Brighton are taking risks in their approach doesn’t mean that they can’t be successful. In fact, they have a better record at utilising their loanees into their first-team squad than the elite clubs do, although there is obviously a far lower bar in terms of talent required to make it into Brighton’s squad than there is for a side competing for the Premier League and Champions League titles. 

Nevertheless, should a player not progress through this development pathway at Brighton, then the club may not recoup the costs, and if they have a few flops, then they could start incurring losses. That is the risk that smaller clubs take.

The bigger clubs may start to lose talent if they can’t prove that there is a pathway

This isn’t to say that the bigger clubs don’t also face risks of their own. One of these risks bubbled to the surface this summer. Chelsea saw several of their highest-rated young players move on from the club when they felt a pathway to the first team wasn’t going to materialise for them. This trend is only going to continue in the future. 

Teenagers Tino Livramento, Lewis Bate and Myles Peart-Harris all departed to fellow Premier League clubs, moving to Southampton, Leeds United and Brentford respectively. Whilst Bate and Peart-Harris have yet to be involved in a Premier League squad for their new clubs, Livramento has started at right back in every game of the season thus far for Southampton. 

Livramento is having a similar start to his first-team career as ex-Chelsea youngster Tariq Lamptey, who moved on from Chelsea in order to immediately establish himself as one of the best players at his new team, Brighton. 

These examples are only likely to encourage other players at top clubs that being afforded regular minutes in a settled environment at the highest possible level they are ready for is better for their development. If Bate and Peart-Harris get chances this season as well, then the evidence is strengthened even further. 

Young players can take the risk of being loaned from club to club season after season, never really knowing if they will get their big break at a Champions League level club. Or they can gamble on their ability by making a permanent move for first-team football. It isn’t hard to see which way this one is going.  

We will likely see smaller clubs rethinking their approach to player development

In light of the fact that the risk factors for smaller clubs are so high when it comes to player development, it shouldn’t be a surprise to see some clubs completely overhaul their approach to player development and the loan system.

The club who are often held up as the example here are Brentford who, in 2016, closed down their academy and instead instituted a B team. This B team, comprised of players aged from 17 to 21, plays friendlies against other under 23 sides and in cup competitions with the idea that Brentford only bring in players who they believe have the ability to make it into their senior squad.

Unsurprisingly, we are seeing other clubs following suit and closing their own academies, taking the position that they can wait for players to come out at the other end of the development processes before acquiring them. The argument is that the high cost of running an academy, the bigger clubs hoovering up talent early, and the risk that academies might not make a good Return on Investment, create a rationale for not running one at all. 

There are legitimate counter-arguments, however, especially in Brentford’s case. Being based in London, Brentford are right in the middle of one of the best catchment areas in world football bar perhaps Paris. It seems unlikely that the talent pool had completely dried up. Indeed, legacy Academy players still make up the majority of successful graduates to the professional ranks since the 2016 shutdown: Chris Mepham, Ian Poveda, Tyrick Mitchell and Ellery Balcombe, to name a few. It would be hard to argue that the talent wasn’t there. There is also little evidence of players being taken from them by bigger clubs whilst the academy was open.

Whether or not there is any merit to it, though, the argument is being used by clubs to shut their academies. The fact of the matter is, it is a convenient rationale to cut back on the expenditure and effort of running an academy where the risk factors for success can be high. Undoubtedly, smaller clubs can run a successful academy. But for many, the risk factors are not outweighed by the potential rewards.

This raises a more fundamental point… 

Whatever your club, you need to commit to a loan strategy for it to work

In spite of the negative approach some clubs are taking to player development, there is still a lot of value to be found in loaning players out. As we saw with Brighton, the issue is finding a system that works for you and then committing to it fully.

For Brighton, their commitment to the Buy-to-Loan Model has led to them employing David Weir to the position of Pathway Development Manager. In this way, they are able to carefully monitor the players they have out on loans to ensure that the development process is managed as effectively as possible.

The thing that unites all of the successful models we considered in this series is that each club has thought carefully about their approach and then committed fully to it. Unless you do so, it is unlikely that you will see any success through the loan system.

And this commitment is an ongoing thing. Clubs need to be constantly at the cutting edge to rethink how they can make the system work for themselves. The introduction of the GBE points system for non-UK player transfers is a good example of how clubs can be reassessing the loan system. With the criteria changing around one part of the market, there will be areas which are now opening to allow clubs to benefit elsewhere. Having a dedicated loan manager will allow clubs to exploit these sorts of changes to the market.

The world of football is in constant flux. Because of this, the loan strategies in place at clubs that were fit for purpose a couple of decades ago are now looking out-dated and in need of overhaul. There are clubs who are making these changes with a mind to the long-term benefits available to them. These are the clubs who are succeeding in their player development.

At Analytics FC, we provide software and data services to entities within football looking to realise the gains possible from analytical thinking.

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