Exploring Eathelete Loans: A Soccer Norm?

Distinguishing Between Player Loan and Transfer

Difference Between Player Loan and Player Transfer

There are various business models for designing talent trading. The most common are player loans and player transfers. A player transfer is when a contracted athlete changes clubs because he is “released” from an ongoing contract due to the payment of a transfer fee.

Player loan differs in that the contracted athlete is not “released” from his club, but simply loaned to another club.

The Intricacies and Mechanics of Player Loans

Depending on the sport, the design of the loan contracts is complex and imaginative. However, it is generally the case that there are three actors – the athlete; the club with which the athlete is under contract and which lends the athlete (“lender”); the club that borrows the athlete (“borrower”). During the player loan, the employment relationship with the lender is suspended and a temporary employment relationship is concluded with the borrower. As a rule, the loaned player must be under contract with the transferring club for at least one calendar year beyond the agreed loan period so that he does not become “clubless”.

Real-World Application: A Case Study

A prominent example is defender Achraf Hakim, who was loaned to Borussia Dortmund 09 by Real Madrid for two years in the summer of 2018. His loan period ends at the end of June 2020. Much to his regret, because at BVB, the Moroccan national player was even a regular player and was allowed to play all competitive games. At his parent club Real Madrid, he enjoyed youth training but only warmed the substitute bench in the adult sector.

Weighing the Pros: Advantages of Player Loan

Advantages of Player Loan

Advantages for the lender:

• does not have to pay a salary while players are on loan
• additional source of income through loan fee
• player gains playing practice and returns “stronger”
• flexibility in occupation

Advantages for the athlete:

• playing experience and playing practice
• “self-promotion” and attention
• generally higher salary payment

Advantages for the borrower:

• meeting needs
• no obligation after the end of the contract term (unless agreed)
• financial savings as no new players have to be “bought”

Esports Enters the Arena: Player Agencies and Licensing

Player Agencies and Licensing Agreements in Esports

The business model of player loans has also arrived in esports. However, it has established itself somewhat differently from the “classic” design. Because in esports, it is the case that the esports player is not already under contract with a club or team during his loan, but only with a player agency (in the classic player loan it would be the role of the “lender”). This agency acquires his personality and marketing rights through an employment contract with the player. By instruction, it can then determine for which club or which team the esports player should now play. A license agreement for the player arises between the agency and the contractual partner (here the “borrower”), who himself has no say in the design because the agency continues to pay him his salary.

Marketing and Esports: A Symbiotic Relationship?

Player Loan in Esports Serves Marketing Purposes

This model initially established itself in esports because the clubs or borrowers first want to “test” esports per se. Because they do not employ and hire their own players, they also bear no risk. They usually pay the license fee from the marketing budget, so esports only serve marketing and public relations.

Conclusion: Adapting and Innovating in Esports

Of course, esports also knows the concept of player loans. He has only adapted it to his own needs. Therefore, the esports player should by no means directly draw parallels to the classic player loan in soccer. The business model is just establishing itself in the ecosystem, so great caution is also required when designing contracts at this point.”

Image source: Valo2Asia