Financial fair play – moving large sums of money across the globe
With the ceaseless march of globalisation and the significance of overseas markets for businesses of all sizes, making international payments and transferring large sums of money into different currencies has become increasingly important in recent decades.
And it is not just businesses that need to make foreign transfers – individual customers often make use of these services for purposes ranging from buying a foreign property to sending money to a loved one living abroad.
The fact that moving large amounts of money across borders is an intricate process that must be handled carefully becomes clear if we look at the example of football, which regularly involves huge sums being transferred between different countries.
Football transfers – financial fair play?
There is no doubt that football has grown into a global, multi-billion pound industry. It is not uncommon for the world’s biggest clubs – the likes of Real Madrid, Barcelona, Manchester United and Bayern Munich – to spend hundreds of millions of euros or pounds on new players in a single transfer window.
Transfer fees have been inflated to eye-watering levels, much like the salaries paid to the sports superstars commanding these astronomical prices.
The summer of 2013 provided a perfect example, with Real Madrid spending an unprecedented £85 million on Gareth Bale. The Spanish giants broke their own transfer world record, having paid Manchester United £80 million to sign Cristiano Ronaldo four years earlier.
A recent report on the economic and legal aspects of transferring players pointed out that professional sport is currently facing a number of new challenges, such as the debt crisis, which could threaten financial and contractual stability.
The study, which was published by research and advisory company KEA and the Centre for the Law and Economics of Sport, highlighted the growth of the transfer market over the last decade.
More than 18,300 transfers were made with a total value of over €3 billion (£2.5 billion) in 2010-11, compared to 5,735 transfers worth €402.9 million in 1994-95.
The report also highlighted some key challenges that sports authorities need to address, including the need to increase transparency in transactions in order to prevent fraudulent activities and support better governance and regulatory action.
Lessons to be learned for consumers
While football is a somewhat extreme example in terms of the huge amounts of money being transferred between different countries, it does highlight some important issues that consumers should consider.
A key consideration for clubs and players involved in transfer talks is contractual stability. In a recent article exploring the complexities of modern-day transactions in football, BBC Sport pointed out that negotiations can often be “fraught and fragile”, with just a minor hitch often enough to derail the whole deal.
The same principle effectively applies to consumers making personal currency transfers – it is important to make sure every aspect of the agreement is watertight and crystal clear before proceeding. The last thing you want is for any confusion or problems to arise after the deal has received the green light.
Another important factor to bear in mind is timing. If you make your currency transfer at the wrong time, an unfavourable exchange rate could have a nasty impact on your finances. Round-the-clock monitoring of exchange rates is one of the benefits of using a dedicated currency dealer to execute your transfer.
The significance of timing in the world of football deals was recently highlighted by Manchester United, whose only big move in the 2013 summer transfer window was to sign Marouane Fellaini from Everton.
New manager David Moyes paid £27.5 million to bring the Belgian to Old Trafford, but reports suggested that United could have saved £4 million if they had acted earlier.