Is the loan market an unexploited inefficiency - how a good loan can make millions.

As a former Economics student I can't help but look for inefficient markets. The loan market looks to me like an unexploited inefficiency, where smartly run clubs could prosper; by increasing the market value of underused players.

There are 3 categories of players to consider; young players under contract but not playing, young players of obvious high potential but not first team ready, and senior professionals not under first team consideration.

Underused yougsters

Premier League squads are big - really big - in terms of paid professionals on the books most clubs average between 50-70.

This is made up of up to 25 senior professionals and up to 50 players between 17-21.

Why so many players between 17-21?

It is incredibly difficult to judge talent and final physical form. The difference between being in the top 0.001% of ability and the top 0.0001% can be the difference between being a multi millionaire footballer and not being paid to play football at all. A late growth spurt can take you into or out of the range of body types suitable for a 90 minute running game.

For every Rooney who was physically and technically ready at 16 there will be a late developer who doesn't break through until their early 20s. You don't want to get rid of Luca Modric (on loan at Inter Zapresic at 20) because they haven't matured yet.

But the vast majority of those 17-21 year olds will disappear out of the game very quickly. One of the main problems is a lack of game time in the crucial development period. Even with an U23 and U18 game each week that means a maximum of 33 starters and 9 subs getting any game time during a week.

So potentially up to 30 paid professional players won't actual get any competitive football. And the club will be paying the wages whether the player plays or not.

Meanwhile down the road at the lower league club players who, up until this point of their career, were deemed as worse players are playing regular football.

Which begs the question (to which I don't have a stats based answer) is it better to play regular competitive football at a lower level than to train regularly at a big club?

So how can analytics data help? Well players who aren't playing will lack any form of commercial data. What clubs would have, I assume, are internal reports and knowledge of the players attributes.

They should also have, or be able to obtain, data analytics on the playing styles of every potential club this player could join. They should use this to pursue suitable opportunities for their players.

We need clubs to get away from the "My old teammate works in the academy and told us we should have a look at this lad" to "We researched the best opportunity for our player and once we had found a suitable team and coach allowed the loan to go ahead"



Even when a player doesn't make the first team a good loan spell can be critical in securing a transfer fee. Liam Walsh, a player many clubs would have had concerns about for height reasons, absolutely thrived at Yeovil. He dominated Leauge 2 at 18 years old, and whilst he couldn't get in the Everton midfield he ended up moving to Bristol City for around £1m. Had he not faced "real men" it is conceivable he would have ended up leaving Everton for a nominal fee at the end of his contract. Sometimes you just have to play regardless of the level.

As we will see in the next section choosing where to loan a player is arguably a decision that could add, or destroy, millions in value.


High potential but not yet first team ready and the importance of the right loan.

Harvey Barnes, Harry Wilson, Reece James, Mason Mount. So many exciting British talents who are featuring in the Championship on loan from Premier League clubs and flourishing.

But what happens next season? As good as Mason Mount is who does he displace at Chelsea?

Look at Kieran Dowell. In the first half of last season at Nottingham Forest he scored 10 goals, almost all of them beautiful strikes, after a preseason of wonder goals for Everton.

He returned to Everton to find yet another change of manager and has to fight it out for his preferred place with Sigurdsson, Bernard, Lookman and Vlasic.

It is currently December and he has more England appearances than Everton games under his belt. Not even on the bench recently.

But Keiran Dowell is an excellent player, who has just signed a new 3 year deal, so what do you do?



What type of league?

Do you go back into the Championship and hope he has a Maddison like season?

Vlasic and Henry Onyekuru have been loaned to strong teams in weak leagues, and Vlasic particularly is flourishing.

But Dowell has already proven he can play well in a weaker league. He also needs game time.

However, unlike the unproven youngsters we have data on Dowell from his loan spell at Forest.

But choosing the right loan is vital. Not just for the player's development, but for protecting the value of your club's asset.

Ademola Lookman, an Everton teammate with similar issues on breaking through, approximately doubled in value after a 4 month spell in the Bundesliga playing for an aggressive, attack minded team.

Imagine that rather than RB Leipzig he had joined a team that played dour defensive football, with the ball pumped up to his head, he might well have been written off as useless. That loan spell took him from a £12m youngster to a £25m player who had proven they could cope in topflight football.



Reiss Nelson is having the same sort of season, he could easily have gone to somewhere like Ipswich and been stifled.

This is where I feel strongly the clubs should be marketing the player to find the right loan, rather than waiting for an approach.

Who would Dowell thrive at? What sort of coach would he do well under?

Proven players who need to be moved on.

Sometimes signings don't work out. Managers change, systems change, players get injured, rival players for the position thrive.

Sometimes an expensive contract makes a player hard to sell, sometimes there are doubts over fitness or attitude.

It is always in the interests of both parties for loan deals to work out. You want the player to do well, as the lending club, to increase the value of your asset. And as the borrowing club you want the player you are paying for to be useful to you.

This is where analytics can help. The club who owns the asset has a huge incentive for the loan to work, as does the borrowing club. In order to maximise the value they need to share everything they can to help the player thrive. A handbook that details exactly what you have learned about that player and the type of game that suits them.



Now, as I was writing this I was listening to an excellent podcast where Dan Altman of NorthYard analytics, and formerly of Swansea City, described how he created "user manuals" for loan players.

This either proves Dan is some sort of time traveller who has taken my completely original suggestion and gone back to implement it, or that some clubs are already taking this sort of thing seriously.

It also means that both parties in the transaction have to have coaches who will actually take analytics seriously. No good putting in all the work if it is ignored. This is where I feel the next big step will be networks of smart clubs working together to maximise value.
















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