Van Hees Strategic Advisory
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Football clubs and youth players: the youth academy is the ultimate money printer.
Investors are always searching for the fastest route to value creation, preferably with minimal investment costs. There is virtually no market where an asset—in this case, a footballer—can increase in value so explosively. It is not for nothing that the football economy is becoming increasingly crowded with billionaires. Even companies like Red Bull acquire entire football organizations, investing heavily in youth academies and player guidance. However, the major football clubs in the market buy up talents for tens of millions of euros and develop them further. These types of clubs play European football, which puts their players in the spotlight. A few strong matches and the multi-million investment is doubled, if not more. Yan Diomandé is a case in point. I assume you have followed Yan's rise, especially the timeframe in which it occurred. Red Bull bought Diomandé for around €20 million and sold him in less than a year—ten months to be exact—for €135 million to Real Madrid. Before Yan moved to Red Bull, the then 19-year-old played for the Spanish side CD Leganés. See how quickly it can go for a footballer. Yan is an ultimate example of value creation at its best. I must admit that Yan's story does not end there, as his narrative is deep and even painful on several levels. Let's leave it at this: a footballer can be seen as a commodity at a very young age, and without parental supervision, a child turns into a bargaining chip.
Aside from the traditional top three of Dutch and Belgian football organizations, the other clubs are, with all due respect, the CD Leganés in the story of Diomandé. The difference in size matters little in this case. I am of the opinion that youth academies in both countries can be significantly improved. And that is where the focus should be. Youth players generally join a football club for free. From an accounting perspective, this asset—which is what a player is on a club's balance sheet—costs nothing. You have a free asset with the potential to be worth millions. Of course, not every player makes it to professional football, but those who sign their first youth contracts immediately start to increase in value. As soon as such a player reaches the first team and begins to clock up minutes, his value rises by tens of thousands, or even hundreds of thousands. From that moment on, football becomes a profession for the youth player, requiring high-quality guidance. I believe the academies in the Netherlands and Belgium are, on average, fair to good. But if you look at player development at a club like Barcelona, there is still much to learn. Clubs like Barcelona, Madrid, and Liverpool, to name a few, should be the benchmark for our clubs. I understand it is expensive, which is why I advise developing a solid strategic plan of action in that area. Subsequently, ensure there is an annual budget available to invest in the academy. If necessary, try to attract external partners and sponsors for your youth development plans. The youth academy is a massive money printer if utilized in the correct way.
As a football organization, aim to make progress in this area every year. Leagues are distinct markets within the global football economy. If all clubs make annual progress with their youth academies, the average quality of training improves, as does the quality and value of the youth players. The clubs and the leagues themselves also grow in quality and value as a result. This makes it more logical for the top three in our leagues to scout within their own competitions and eventually purchase players. The result is that more capital remains within our leagues, and those receiving transfer fees can reinvest them. If organizations outside the top three have excellent academies, it also becomes easier for the top three to loan youth players to clubs within our leagues. I believe the top three keep their top talents playing in "Jong" or the reserves for too long. I can imagine the reason: clubs in our leagues are not professional enough to work with the top talents from the top three. However, it is not motivating for a youth player from a top club to spend too much time in the reserves. It benefits neither motivation nor development. I think it is actually beneficial for these youth players to play elsewhere as soon as possible to develop and gain experience. A different environment and less pressure force a player to be more independent. I do not see a loan as a form of demotion. Playing in the reserves for too long—that is a form of demotion.
In the past, we have often seen that when footballers from the middle bracket of our leagues transfer to top-tier clubs, they frequently fail to deliver on their promise. This is primarily due to a difference in quality. I highlight this to strengthen my point regarding youth academies. Such issues are rarely discussed because everyone is each other's competitor. I believe football history teaches us that this type of competition is stagnant and paralyzing. I do not understand why clubs do not have mutual discussions about this. The KNVB and KBVB should hold annual meetings on these topics. A great example of this is Formula 1. Teams know almost everything about each other, mainly through open observation. Almost all teams employ photographers to capture cars and workflows on image and video. Those images are later analyzed, and lessons are learned. They also know a lot about each other's budgets, etc. This ultimately benefits the competition and the sport of Formula 1. The "worst" team is now worth at least $1 billion.
That is why I advocate for events, meetings, and conferences organized by the football associations. It benefits the leagues if there is more transparency between the clubs. Transparency brings clarity and understanding. If the Netherlands and Belgium want to reconnect with the European elite, it starts with taking a critical look at ourselves. Together, both countries account for a maximum of 30 million inhabitants. We speak the same language, have similar cultures and outlooks on life, and face the same problems when it comes to football. I am not advocating for merging the leagues—absolutely not. That would shrink the market instead of expanding it. However, it is high time we start the conversation to bring the associations, leagues, and clubs to a higher level. On a chessboard, you see every move of your opponent, don't you?
If we want to grow economically as football organizations and leagues, it must come from the clubs themselves. We are never going to receive billions in TV rights. In my opinion, we don't have to. No one claims we must be the leading leagues, as that would be difficult. But there is plenty of room for growth, and that starts with the youth academy. The top three clubs in both leagues can stimulate the other clubs by letting them share in the profit. Once the top tier loans a player to a club in the league, it should be entirely free of charge. This should be accompanied by a bonus if the player in question reaches the first team of the lending club in the future. Additionally, there should be a clause in the agreement for a percentage of a potential future transfer of, say, 10%. The top clubs have plenty of talent that needs to clock up playing hours. In this way, you ensure the majority of those players gain experience in our own leagues, even playing against their "parent club" during the season. This also makes it easier to arrange longer-term loans, which benefits the player.
If we put our proverbial heads together, I am certain it is possible to count on a global level once again in terms of talent development. If we want to close the gap with the top, we must ensure that talents from all over the world prefer to come to the Netherlands or Belgium for their first step into professional football. That only happens if we put our youth first.
If you, as a football organization, have been inspired by this blog and would like to know more, please get in touch.