Daryl Dike has had an incredible professional career. One that has lasted less than a year and a half. After being drafted 5th overall in the 2020 MLS SuperDraft, Dike had a standout MLS performance for Orlando City SC in his first professional season. This rookie performance caught the eyes of Championship club Barnsley who offered him a loan in February of 2021. Scoring nine goals since February, and averaging a goal every 129 minutes in the Championship so far, Dike is now one of the top strikers in the USMNT player pool, has had his loan extended until the end of the championship season, and is reportedly turning heads at Premier League clubs like Everton and Leeds.
Reports have hinted that Barnsley and Orlando agreed on a $20M purchase option, with a 20% sell-on fee. [1] At the time, many considered such an impossible value for Dike to reach.[2] Now, with the way he is playing in the championship, that number is starting to sound more realistic.
With Dike shining in the Championship, it seems time to talk about his purchase option, assessing his value, and how it might affect his move up the football ladder.
Contractual Formation of Purchase Options
To start, let’s talk about what a purchase option looks like in a loan. Generally, purchase options give a loanee club (here, Barnsley) the exclusive right to exercise a permanent transfer for the loaned player on or before a specific date (the “Exclusive Period”).[3]
So, when a report says Dike’s loan has a $20M purchase option, it means that between now, and some point (likely a bit before the end of the loan), Barnsley is the only club that can transfer the player permanently, and that that transfer fee is set at $20M.[4]
What that means for Barnsley is that is that they get to lock in the transfer price of the player at a specific number, regardless of what his true value on the transfer market might be by the end of the Exclusive Period. However, if they do not value the player at the option number, they can try to negotiate a new, lower, transfer fee. However, in doing so, they could potentially lose the player to a higher bidder after the Exclusive Period.
For Orlando, the permanent option caps the transfer fee that they might receive for the player from Barnsley (excluding any sell-on revenue). While it doesn’t guarantee a purchase at that number (the loaning club can always attempt to negotiate a cheaper purchase price), it does provide a strong hook for the club to exercise the option at that specific number, puts the player in a shop window for clubs that might be able to afford the $20M number, and (to an extent) sets the price tag for the player.
For Dike, it gives him a chance to show off his skills on a new (possibly bigger) stage. It also means that Barnsley is the only club that can permanently acquire his playing rights before the end of the exclusive period. While FIFA requires players to agree to all transfers and loans, Dike has likely agreed to the potential future permanent transfer and employment terms with Barnsley at the outset of his loan, either by way of an option to Barnsley in his employment agreement to extend his employment in the event they exercise the purchase option, or some sort of acknowledgement of the exclusive transfer right in the loan agreement.
The True Transfer Option
Barnsley officials have stated publicly that a $20M buy fee is “not realistic.”[5] However, there are still two possibilities that could allow for both Barnsley’s statements, and the purchase option price to be true:
- The transfer option was set at an unrealistically high number to give Barnsley an exclusive period to negotiate something better, and give Orlando a shop window for Premier League Clubs; or
- The transfer option includes certain add-on bonuses for performance related outcomes that could add up to $20M.
So, for example, the agreement could include bonuses if the club:
- secures promotion;[6]
- advances through, or wins certain competitions;
- qualifies for European tournaments, etc…
Those sorts of triggers could all add up to a potential $20M payday should Barnsley exercise the permanent option. [7]
Assessing Dike’s Transfer Value
One of the key factors in assessing whether Barnsley will exercise Dike’s purchase option is whether his value to Barnsley meets or exceeds the purchase option’s cost. A player’s transfer value is not an exact science, and depends on numerous factors outside of the player’s performance like: the buying club’s needs and financial situation, the selling club’s financial situation, “similar” players’ market value, and just the current state of the player transfer market generally.
Transfermarkt Valuation
As of April 2021, Transfermarkt lists Dike’s transfer value at $5.5M, about $14.5M less than Daryl’s reported transfer option.[8] However, while Transfermarkt is the best public resource for player transactions, its valuations are not gospel, and do not consider individualized issues like Orland or Barnsley’s financial situation. In practice, their transfer valuations are a good place to start with setting a framework, and comparing players, but should not be taken as gospel.
MLS Transfers
2021 was a banner year for outgoing transfers of young MLS transfers. RB Salzburg acquired Brenden Aaronson for a reported $6M with $3M in performance bonuses. KRC Genk acquired Brenden’s teammate Mark McKenzie for a similar number. FC Dallas also sold Chris Richards to Roma for a reported €7M.
One thing to note: unlike Dike, none of these players are strikers, and none of these players are scoring goals for fun for their new European clubs to like Dike is at Barnsley. All had a much higher risk signings; there was simply not as many data points to project performance in their future team thus keeping the value low.
Championship Transfers
If the reports on the permanent option is correct, and Barnsley does not secure promotion, exercising a $20M transfer option would break records in the Championship. As of writing this piece, according to Transfermarkt, the highest transfer fee paid by a Championship club is Wolverhampton’s $19.7M fee for a 20-year-old Ruben Neves from FC Porto.[9] The highest fee for a striker: $18.18M for a 24-year-old Britt Assombalonga paid by Middlesbrough to Nottingham Forrest.[10]
Interestingly, Assombalonga’s transfermarkt valuation at the time of his transfer was the same to Dike’s: $5.5M. Notably, Assombalonga had a slightly lower goals per-minute quotient (133.8 PG to Dike’s 129) in the season prior to his transfer.[11] However, unlike Barnsley, Boro had just been relegated from the Premier League, and benefitted from significant parachute payments paid to recently relegated PL clubs.
MLS Valuation
For their part, MLS is bullish on the $20M price tag. MLS Commissioner Don Garber has even weighed in referring to Dike as a $20M player in his pre-season press conference, with commentators agreeing his value is getting in that neighborhood.[12] Orlando also reportedly turned down offers in the $10M neighborhood from PL clubs in March 2021.[13]
Barnsley Transfer History
According to Transfermarkt, from the summer of 2016 to the winter of 2021, Barnsley has not paid a reported transfer fee over $2M.[14] Also, notably, the largest fee received by Barnsley from a player sale in that time was Alfie Mawson’s transfer to Swansea for $6.49M.[15]
Premier League Interest
One large factor in Dike’s valuation is the potential Premier League interest in the player. Both Everton and Leeds are reportedly following Dike’s progress.
Everton has paid two of the top 5 transfer fees for championship players moving to the premiership, both reportedly fees over $30M.[16] Leeds, also knows the value of MLS Generation Adidas players like Dike, as they have a $10M purchase option for former Generation Adidas Player Jack Harrison who is on loan to Leeds from Manchester City until the Summer of 2021 transfer window.[17]
If, for example, Everton indicates they are willing to pay a near $30M price tag they have on previous big Championship transfers for Dike, Barnsley, they would basically make a record transfer profit from exercising the “excessive” and “unrealistic” $20M option. Likewise, Leeds’s and Everton’s interest serve to push the price point up, even if the consensus is that Dike’s final valuation at the end of his loan less than the reported $20M price tag.[18]
Valuation Near the Purchase Option: The Agent’s Sunken Place
If Barnsley, Leeds, Everton, or other Premier League suitors all value Dike at or slightly above to the permanent option (whether the option is $20M or $10M or $5M), his agent is in a difficult position.
An agent’s job is to maximize their client’s income. Premier League stalwarts like Everton will likely offer Dike significantly higher wages than Barnsley, and playing for a club like Everton provide significantly more opportunities for other revenue streams through sponsorships and endorsements.
However, given the purported purchase option, Dike has already likely agreed to the terms of his employment with Barnsley should the championship club exercise the purchase option. If the player already agreed to a salary for his permanent option in February, it is likely is much lower than what Dike’s agent could have bargained if they had the leverage 9 championship goals can provide.
The real difficulty arises in the fact that Barnsley will likely not sell Dike on to a club like Everton unless Everton’s transfer offer provides Barnsley with a reasonable profit over what they paid to Orlando to exercise his permanent option. If Dike’s Agent wants to push a move to a club like Everton this summer the player either needs to exceed the transfer value in the purchase option in a significant way, or not meet the requirements of Barnsley to exercise the option. However, if Dike does not meet Barnsley’s expectations, he likely also will not meet Everton’s.
This type of situation is where an agent provides value to the client.
Considering the above and assuming Barnsley misses promotion[19], Dike’s agent could try convince Orlando to take a smaller cut in the purchase price, to help Barnsley make a profit off of selling the player on to a potential PL suitor, in exchange for Orlando having their former player play on one of the biggest stages in world soccer, which will attract more scouts to them, which can facilitate future sales. In a similar vein, the agent could try to convince Barnsley to not exercise the purchase option, although that seems more difficult considering they have extended his loan, and how well he has performed in his first half-season in the championship.
Another approach would be to convince the PL suitor to increase their valuation based on the marketing and business benefits of having a top American at their club to secure the player. While this would be a difficult sell even with how well Dike has played, Everton is well-aware of how having top Americans in their XI can grow their global brand, and the financial benefit of such an opportunity.
All these options require Dike’s agent to convince clubs to do things they should not: either agree to receive less money, or pay more. However, one thing that might make convincing clubs to pay more easier is if Dike continues banging in goals on a regular basis for Barnsley. The better he plays, and the more goals he scores, the more clubs will be willing to pay.
Orlando, MLS, and US Player Development Win
At the end of the day, the true winners are MLS, Orlando City, and the market for American players. From Dike’s loan, MLS gets to put one of its top young players in the shop window to show what its players can do in competitions where scouts can start to build true comparisons for this league and these player’s level of play. Dike’s performance, like McKennie’s at Juventus, only serves to increase interest in players developed in the United States, and young players playing in MLS. This boosts the ROI for MLS investments in academies, its new MLS Next youth player platform, scouting domestic players, and MLS’s new U-22 player initiative.
For Orlando, even if the purchase option is half of what is reported, it would still be one of the biggest fees for a US-developed MLS player.[20] Only Alfonso Davies’s transfer would be higher if we broaden that definition to “Domestic-developed” players. Unlike Davies, Aaronson, and McKenzie, however, Orlando acquired the player for free, in the Superdraft, with zero spend on his underlying development, and only a year’s worth of him holding a supplemental roster slot or receiving a salary.
Dike’s training clubs will also benefit from his sale. If Barnsley exercises the permanent option at that $20M number, any club under USSF’s umbrella that took part in Dike’s development would be entitled to a pro-rated portion of the $1M that would be set aside for distribution per FIFA’s Solidarity Mechanism. That means that second division US OKC Energy could be entitled to about $25K for Dike’s stint with their U-23 side in the summer of 2018. That would be a record transfer revenue for that club.
At the end of the day, Dike scoring bunches the Championship is a net benefit for everyone on this side of the pond.
[1] See, Sigal, Jonathan, What Awaits Daryl Dike at Orlando City SC After His Loan to Barnsley?, Extra Time, February 17, 2021, at https://www.mlssoccer.com/news/what-awaits-daryl-dike-orlando-city-sc-after-his-loan-barnsley-extratime; Poe, Julia, Orlando City Loans Striker Daryl Dike to Barnsley With Option to uy, Orlando Sentinel, February 1, 2020, at https://www.orlandosentinel.com/sports/orlando-city-soccer/os-sp-orlando-city-daryl-dike-loan-20210201-j6puqljgebcvhne5ocgtcgnhhq-story.html
[2] Sigal, What Awaits Daryl Dike at Orlando City SC After His Loan to Barnsley?, Extra Time. “And then reports emerged that Dike’s move came with a $20 million purchase option, a steep price for a once-capped US men’s national team striker who’s only completed one professional season.”
[3] Almost always, this date is prior to the end of the loan period of the player to the loanee club.
[4] If the payments are split into installments, such a payment plan is usually outlined in the agreement.
[5] See, O’Kane, Doug, Buy Option was Key to Dike Deal, Insists Reds Chief Executive, Barnsley Chronicle, February 5, 2021, at https://www.barnsleychronicle.com/article/20341/buy-option-was-key-to-dike-deal-insists-reds-chief-executive
[6] My money is on a promotion bonus if the number is as high as reported.
[7] These purchase options can also include automatic triggers based on similar performance milestones. Dike’s employment contract also likely has promotion and performance bonuses and salary increases to a similar financial tune.
[8] See, Daryl Dike, Transfermarkt, at https://www.transfermarkt.us/daryl-dike/profil/spieler/638741
[9] See, Championship Incoming Transfer Records, Transfermarkt, at https://www.transfermarkt.us/championship/transferrekorde/wettbewerb/GB2/plus//galerie/0?saison_id=alle&land_id=alle&ausrichtung=&spielerposition_id=alle&altersklasse=&leihe=&w_s=&zuab=zu
[10] Id.
[11] See, Britt Assombalonga, Transfermarkt, https://www.transfermarkt.us/britt-assombalonga/profil/spieler/186172
[12] See, Stejskal, Sam, Twitter, https://twitter.com/samstejskal/status/1381652058663743493?s=20
[13]Poe, Julia, Orlando City holds out for $20 million as Daryl Dike continues to receive Premier League interest, Orlando Sentinel, April 1, 2021 at https://www.orlandosentinel.com/sports/orlando-city-soccer/os-sp-orlando-city-daryl-dike-20210401-pmcwzzst5jbstls7653kyprjg4-story.html
[14] See, Barnsley FC Transfers, Transfermarkt, https://www.transfermarkt.us/barnsley-fc/transfers/verein/349/plus/1?saison_id=2020&pos=&detailpos=&w_s=
[15] Id.
[16] See, Championship Outgoing Transfer Records, Transfermarkt, https://www.transfermarkt.us/championship/transferrekorde/wettbewerb/GB2/plus//galerie/0?saison_id=alle&land_id=alle&ausrichtung=&spielerposition_id=alle&altersklasse=&leihe=&w_s=&zuab=ab. Everton reportedly paid $31.35M to recently relegated Sunderland for Jordan Pickford in July 2017, and $30.25M to Norwich for Ben Godfrey in October 2020.
[17] See, Nash, Mathew, Jack Harrison will be a bargain deal for Leeds United at £10 million next summer, The Boot Room, October 25, 2020, at https://tbrfootball.com/402502-2/.
[18] Of course, always a likelihood that the player’s agent fabricated the reports of PL to improve their leverage in their negotiations with Barnsley.
[19] Don’t count them out!
[20] See, MLS Outgoing Transfer Records, Transfermarkt, https://www.transfermarkt.us/major-league-soccer/transferrekorde/wettbewerb/MLS1/plus//galerie/0?saison_id=alle&land_id=alle&ausrichtung=&spielerposition_id=alle&altersklasse=&leihe=&w_s=&zuab=ab
Andrew Visnovsky 