FanPost

Neymar Transfer Saga - A Paper on Competitive Negotiation

The piece below was written for my competitive negotiations class during my MBA in 2012.

I would like to discuss a very interesting competitive negotiation scenario that is folding out currently in the world of soccer. In fact, this "transfer saga" has been developing for three years now, and seems unlikely to sort itself out for another couple of years.

I am a big fan of Spanish soccer, and have been a diehard fan of FC Barcelona for well over 20 years now. In Spanish soccer, there are two major teams – FC Barcelona and Real Madrid. There is a fierce, long-lasting and bitter rivalry between these two teams. Watching them battle on the field is one of the most enthralling experiences in soccer. What then, would happen when both teams are interested in signing a young soccer prodigy from Brazil who goes by the name "Neymar"?

Neymar has shown exemplary talent for the last 3 years, and he is still only 19 years of age. It all began around 6 years ago, when a young Neymar was brought to Real Madrid for a trial and possible transfer to the club’s youth system. Real Madrid was really impressed, but due to certain red tape (and rumors that his current Brazilian team, Santos, paid him 1 Million reals to stay at the club), were unable to sign the kid then and there. A few years later, Neymar began displaying his awesome skill at Santos, and was quickly gaining attention from the big clubs around the world. Real Madrid started ruing there missed opportunity and began to call Neymar’s agent incessantly. Sure enough, Real Madrid organized a conference call with representatives of Santos, Neymar, his agent and his father. During the meeting, Real Madrid felt they were being made to work too hard to negotiate a deal, and insulted Neymar and his father for not realizing the potential of moving to Spain and playing top-flight soccer. Real Madrid were shocked that Neymar was not showing eagerness to join "the best club in the world". This upset Neymar and his father, and the negotiations fell through. Neymar felt that his place was in Brazil (where the quality of soccer is not as high as in Spain), and Santos extended his contract till 2014. A proud and hurt Real Madrid returned, licking their wounds.

Neymar still wanted a future in Spain, but the door to Real Madrid had been shut. FC Barcelona, on hearing about the failed negotiations, stepped in. The Barcelona President flew all the way to Brazil to meet Neymar and his father, and reassured them that not all clubs are so cut and dry. He peacefully and tactfully explained that Barcelona would be interested in developing Neymar’s talent and that he belonged in Spain. He said that there was no hurry in transferring him across to Spain, and that he could come whenever he felt he was ready. These words really comforted Neymar. FC Barcelona basically played a smart move by being patient and not pressing the youngster, and it seemed to have worked. Ever since, Neymar has been praising FC Barcelona in the media, and about how much he would love to play soccer there. Although his contract with Santos extends till 2014, there are rumors that he might make the switch as early as 2013. There has been no word of Real Madrid ever since.

Neymar has since become a superstar. The transfer saga has made him an international celebrity, and he has also been playing amazing soccer. The timing of his transfer also becomes interesting. If Neymar leaves for Barcelona in 2014, when his contract with Santos is up, then Santos gets nothing out of the deal (an inefficient free transfer). The only way Santos can make any money is by selling him while he is still under contract. And Neymar would fetch over 60 Million Euros! Imagine letting that go to waste by letting him go on a free transfer to FC Barcelona. However, Neymar is the sole reason why Santos is winning the Brazilian league, and his popularity has brought in millions in advertising. It would be wrong to deny Neymar the club he desires after all the hard work and dedication he’s put into Santos. It is an interesting dilemma. What makes it all the more challenging is that FC Barcelona, while clearly Neymar’s favorite, would never be able to secure his services if it came to a 2013 transfer involving money, as there were richer clubs in Europe (Chelsea, Manchester City, and Paris), who could outbid and win the negotiations easily (FC Barcelona would be able afford around 40 million Euros). Neymar’s love for Barcelona has so far kept him from accepting any other deal, while in the end it would be Santos’ decision where he ends up, if the price is right.

Another interesting aspect to the negotiation is a rumor that FC Barcelona paid Santos and Neymar a deposit fee that was intended to be an offer of good faith, that if and when Neymar decides he should shift clubs, FC Barcelona has priority to place the first offer/bid. This has sparked enrage among other clubs, namely Real Madrid, who are crying foul. During this period we have seen offers of 20 Million Euros and up from Chelsea, that have not led anywhere (they also have several of Neymar’s Brazilian teammates, who have vocally tried to persuade him to join them).

In the near future, I expect Neymar to stay true to his word about staying with Santos till 2014. The next world cup is in Brazil in 2014, and it will be a marquee event, one where hopefully, Neymar sets the world ablaze with his skill. To make the move honorably after serving out his contract, and moving to one of the best clubs in the world would make him one of the greatest footballers ever seen. It may be an inefficient move that does not maximize the value of the deal, but that is my prediction. One way to create value for Santos, would be for Neymar to sign an extended contract with the club till 2016. This way, Neymar can be "bought" off his contract in 2014, and not move on a free transfer – thus gaining value for Santos, Neymar and Barcelona.

Timeline

2006

Neymar tries out for Real Madrid youth team and passes the test. Santos gives him 1 Million reals to stay at Santos. No deal happens

2009

Real Madrid tries to get Neymar back, but negotiations fall through in a heated argument.

2010

West Ham United offers 12M euros, which is promptly rejected. Chelsea offers 20M euros, which is also rejected. FC Barcelona show interest, but let Neymar take his time.

2011

FC Barcelona continues to show interest. Rumors are cropping about a reservation fee/deposit. Neymar talks about his love for European football and his desire to improve his game in better leagues.

2012

Rumors escalate about a private deal with FC Barcelona. Chelsea tries to lure him, while Real Madrid cries foul. Neymar commits to media that he will stay till 2014 and then move to Europe. He expresses his love for FC Barcelona.


<em>This does not represent the views of Barca Blaugranes or SBNation</em>