Jack Grealish has become the first £100 million footballer in Premier League history with his move from Aston Villa to Manchester City. This record for an English club transfer may not last long, though, because Manchester City are reportedly willing to pay a lot more than £100 million to secure Harry Kane from Tottenham Hotspur.
Yet the Kane situation has become messy. The striker put on record earlier in the summer that he wanted to leave Spurs, and talked of a “gentlemen’s agreement” with chairman Daniel Levy that would allow this. Spurs, though, are holding firm and in recent days accused Kane of failing to turn up for training, which he denied.
A crucial difference between the Grealish and Kane transfer negotiations has been the existence of a release clause in Grealish’s contract. Such clauses appear to be relatively unusual in England, but they are common in other European countries. So why the difference, and what is the case for the Premier League doing things differently?
The Aston Villa chief executive, Christian Purslow, explained to fans that Grealish’s contract allowed him to leave to play Champions League Football and if there was an offer of £100 million. Purslow said: “We set the value at a level we hoped would not be met but which would reflect his truly unique value to Aston Villa.”
This release clause created a very clear relationship between both sides. Aston Villa were able to reject any offer below £100 million. And the moment Manchester City expressed a willingness to pay £100 million, it was Grealish’s decision whether to accept.
Harry Kane seems to have no such clause in his Spurs contract, which is presumably why he has been talking about the “gentlemen’s agreement”. It has resulted in a familiar bargaining impasse of offer, counter-offer, accusations and media speculation. History would suggest that players in such situations ultimately move on and often for a sizeable fee, but it is still adding unwanted uncertainty and negativity for Kane and Spurs in pre-season.
This is a fairly familiar stand-off in the Premier League. It is therefore surprising that release clauses are not more common. The Grealish transfer joins only a handful of transfers within England based on release clauses, such as Swansea midfielder Joe Allen moving to Liverpool for £15 million in 2012. More common are English clubs having to pay release clauses to attract players from the continent. For example, Chelsea paid a then record £71.6 million in 2018 to trigger Kepa Arrizabalaga’s move from Athletic Bilbao.
The contrast with the continent is interesting. In Spanish football, there are a lot of buy-out clauses, which are similar to release clauses. Release clauses are also relatively standard in Germany and Italy (indeed Spurs are reportedly interested in buying Fiorentina striker Dušan Vlahović, who has an estimated €60 million to €70 million (£51 million to £59 million) release clause).
The value of release contracts
Research on bargaining from economists and game theorists certainly helps to make the case for release clauses. It is almost always advantageous to avoid uncertainty and ambiguity, which makes it important to pre-empt possible scenarios and write them into the contract. Grealish’s £100 million release clause would be an example of good practice.
It can also be advantageous to pre-commit and “tie one’s hands” before entering a negotiation – as powerfully outlined by Nobel prize winner Thomas Schelling in his 1960 book The Strategy of Conflict. This may seem counter-intuitive, but it gives first-mover advantage in a subsequent negotiation. Aston Villa could reject lower offers for Grealish because of his £100 million clause. Tottenham have indicated they want £150 million for Kane but the lack of a contractual agreement renders that more of an aspiration than a level Manchester City have to meet.
Finally, research has shown that a party to a negotiation is put at significant disadvantage if there is a chance that they will be “weak” – in other words, if their negotiating position could lack credibility. So a club may claim they will only sell a player for a particular price, but the player may publicly request a transfer and maybe even stay away from training on the basis that this might damage the club enough that it backs down.
There are also caveats about release clauses. In particular, you have to set the clause at the right level. Set it too high and it risks lacking credibility and weakening your bargaining power. Set it too low and you may have shot yourself in the foot – in a football situation, this could make fans angry and potentially even cost the chairman their job. This is not the situation at Aston Villa over Grealish, but in hindsight they maybe could have set the release clause higher. But either way, all of this is to argue that release clauses are difficult, not that they are the wrong choice.
So why are these clauses not more common in England? It may come from a sense that it is disloyal to the club for a player to insist on one. For instance, Steven Gerrard reportedly asked for a release clause to be taken out of his contract to show his commitment to Liverpool.
But while this thought process is understandable, the Grealish transfer shows it is misplaced. His release clause put Aston Villa in a stronger position to bargain and so benefited the club. It also clearly benefited him.
Clubs may also be reluctant to set a release clause for fear it is set at too low a level. The experience from the continent, however, would suggest this fear is also misplaced. Instead, it offers clubs a chance to reduce uncertainty about future transfers and guarantee a minimum fee for talent.
In future it wouldn’t surprise me if we see more pressure from players to write release clauses into their contracts, and more acceptance from clubs and fans that the economic logic holds true. If so, perhaps the Grealish transfer could become a watershed moment in English football.
by : Edward Cartwright, Professor of Economics, De Montfort University