Tag Archives: Lucas Torreira

How do football clubs use factoring to gain instant access to transfer fees?

Invoice financing, or factoring as it is often referred to, is commonly used by businesses to improve their cash flow. With invoice financing, rather than waiting for an invoice to be settled, a proportion of cash tied up in the invoice can be released by a factoring company as soon as the invoice is issued.

Say a company sells cars on finance. They sell you a BMW 3 Series. It is a £27,000 motor, but you pay a deposit of £5,000 and drive it away same day. You then agree to 48 monthly payments of £269 and a final an optional final payment of £12,088.

The dealership will end up earning receiving £30,000 for you, the buyer. But at this moment in time they only have £5,000 in their pocket. No where near enough for them to replace the car you have just bought from them, which would enable them to make the next sale.

So what the dealership will do is contact a factoring company. They will explain that they have £12,912 in monthly payments set to come from a buyer.

The factoring company will buy the debt off the dealership, minus a small percentage – say 10%.

So the dealership receives £22,500 (£25,000 minus the 10%) from the factoring company, as well as the £5,000 deposit from yourself – £27,500 in total.

As you make your £269 payments to the dealership, they in turn make the same payments to the factoring company. At the end of the finance deal, a final payment is made, or the car is returned to the dealership who then sell it on.

You get a car that you can afford upfront, by agreeing to pay on finance.
The dealership receives £27,500 (a little over the original asking price).
A factoring company makes £2,500.

Whilst the dealership might have “lost out” on £2,500 additional profit, using the factoring company meant that they got the on the road price of the car upfront, rather than waiting for 48 months.

This enables them to buy more cars. And in turn to sell more cars.

Without the factoring company, the dealership would not have the cash to purchase new cars, and continue running their business.

Say Arsenal are demanding £20m upfront for Lucas Torreira. Torino want to pay Arsenal £10m now, £5m next summer and £5m the summer after.

Arsenal can not complete a deal for Thomas Partey with £10m. They need the full £20m. So they enter into negotiations with Torino.

Instead of the deal being for £20m upfront, the two clubs agree that Torino pay £10m upfront, £6m in a year, and another £6m in 2 years. Torino paying an extra £2m to spread the fee over 3 summers.

“But Arsenal are still only receiving £10m this summer” you cry.

No. What Arsenal then do is contact a factoring company.

They inform the factoring company that they are owed £6m next on 31st July 2021 and another £6m on 31st July 2022.

The factoring company then buy the £12m debt for £10m.

Arsenal receive their £20m this summer (£10m from Torino, £10m from the factoring company) and then next summer, Torino pay Arsenal £6m, Arsenal in turn pay £6m to the factoring company.

And the process is repeated in 2022.

So Torino pay an extra £22m total to spread the transfer fee over 3 summer windows
Arsenal still receive 100% of what they wanted, allowing them to go and purchase Thomas Partey.
And the factoring company make a cool £2m.

Everyone is happy!

Ultimately, this means that if Arsenal sell players this summer, with fees paid in instalments, it is unlikely they will have to wait until next summer, or the summer after to access the agreement payments.

They will use a factoring company, which frees the money up straight away, allowing Arsenal to reinvest straight away.

Note: Often the factoring company will also collect the debt direct from the debtor. So Torino would pay the factoring company direct, rather than pay Arsenal who then pay the factoring company

Keenos

Arsenal set for busy week of sales

This could be the week we start to see Arsenal make big moves in the transfer market.

So far, the business Arsenal have done has been quietly efficient.

Cedric Soares and Pablo Mari have both had their loan deals made permanent, whilst Willian was also recruited on a free – 3 experienced campaigners.

The club also re-loaned Dani Ceballos and signed Gabriel Magalhaes.

On first impressions, Willian has added some busyness and creativity in the final 3rd, whilst Gabriel put in a commanding performance at centre back.

But Arsenal need to sell.

We still have 18 non-home grown players in the first team squad – and 32 players in it.

This means Arsenal need to sell before they buy, both to bring down the non-home grown quota and to reduce the squad size generally.

Emiliano Martinez will be the first out of the door. His transfer to Aston Villa is all but done (and will probably be completed by the time we hit publish!).

Martinez does not solve the squad problems however, before:

  • He will need to be replaced and;
  • He is home grown

Arsenal have been linked with both David Raya of Brentford and Runar Alex Runarsson from Dijon. Interestingly both keepers have previously worked with Inaki Cana; Arsenal’s goalkeeping coach.

Raya would be the preference as he is home grown having joined Blackburn at 17. Having a non-home grown 2nd choice goalkeeper feels like a waste of a slot, especially as we already have one too many.

This week should also be the week when Lucas Torreira and Sokratis make their moves to Italy.

The 3 players (Torreira, Martinez & Sokratis) should raise close to £50million between them. By the time Arsenal use some of the money to buy a new keeper, it should leave the club with at least £40million cash surplus to make moves.

Sokratis and Torreira leaving will also give Arsenal 1 non-home grown slot – although this could get taken up by Runarsson if he joins.

If we do see a home grown keeper join, expect Arsenal to quickly reinvest those funds into a new midfielder – my gut says Houssem Aouar rather than Thomas Partey.

Further signings will then depend on further departures.

Talk about Edouard from Celtic intensified over the weekend, but you can only see him coming in if Alex Lacazette is sold.

Likewise Thomas Partey.

With Matteo Guendouzi back in first team training, there is a school of thought that he will return to Mikel Arteta’s plans.

He has a friendship with Aouar which could be good for both players, and he would play a similar role to Partey on the right side of a midfield 3 – given the role to drive the ball forward at his feet.

With Granit Xhaka, Dani Ceballos, Guendouzi, Aouar (potentially), Elneny and Joe Willock, it makes most sense that Partey would replace Matteo.

The 3 likely out this week will not be the only ones to leave Arsenal.

That will still leave Arsenal with a 30 man first team squad once we have signed a replacement goal keeper.

The club will still expect to move on Sead Kolasinac, Shkodran Mustafi and Calum Chambers. That would drop us down to a 27 man squad, and also get us within the non-home grown player limit. 27 is a number Arteta could cope with.

It is going to be a busy week…

Keenos

Why is Arsenal “midfield saviour” now at a career crossroads?

Upon arriving from Sampdoria two summers ago, Lucas Torreira was heralded as the man to fill the void in Arsenal’s midfield as a tough tackling, tenacious ball-winner. He was the midfield saviour.

For a while, he was exactly that, excelling with five consecutive Man of the Match performances during the Gunners’ 22-game unbeaten run at the start of the 2018-19 season.

Sadly, Torreira struggled to replicate those consistent, high-quality displays after being shifted inexplicably into a more advanced role under Unai Emery. The endless tactical tinkering of Torreira’s position knocked the Uruguayan’s confidence, which he is yet to regain. 

Read on below for our breakdown of what Mikel Arteta should do with Torreira as he embarks on a rigorous rebuild at Arsenal.

Initially a regular feature in Arteta’s starting XI after the Spaniard took over at Arsenal in December, Torreira was used more and more sparingly as the season progressed. An ankle injury suffered at Portsmouth in March saw him sidelined for four months but, after working his way back to full fitness, Torreira started only one of six possible Premier League matches. 

His absence can be explained by the emergence of Dani Ceballos and Granit Xhaka as a central midfield pairing in a 3-4-3, Arteta’s preferred system throughout Project Restart. 

Ceballos, who initially struggled to settle on loan from Real Madrid, put in some instrumental performances as a deep-lying playmaker. These were most notable in the FA Cup, where he scored the winner in the quarter-final and was one of Arsenal’s key players in the final, helping the Gunners to lift the trophy for a record 14th time. 

Xhaka, after the ugly incident that saw him booed off the pitch against Crystal Palace in October, has been a revelation under Arteta. Able to control games with his accurate range of passing, the Swiss international has enjoyed a renaissance at Arsenal when it previously looked like he would never play another game for the club. 

This leaves Torreira as the lone jazz record in a collection otherwise full of opera. 

Arteta has attempted to restructure a midfield that was left in ruins following Emery’s chaotic attempt at implementing a gegenpress. This fits Xhaka and Ceballos perfectly. Both are very functional players who can be reliable and dependable in 

Arteta’s 3-4-3. 

Torreira however, is more of a wild card who can win tackles, harass opponents and shuttle energetically from box to box. This explains his aforementioned success under Emery, where Arsenal looked to counter-press opponents far more regularly. Playing in a high-tempo system, Torreira was far more effective. 

The 24-year-old would not be the ideal player to fulfil a holding role in the variant of the 

4-3-3 that Arteta oversaw with Pep Guardiola at Manchester City. His lack of positional awareness as he seeks to win back possession leaves him vulnerable at times, meaning he would be useful next to Xhaka, who could sit in front of the back four, in a 4-2-3-1. Should Arteta be willing to give this shape another chance, then Torreira could play a pivotal role in that system. 

Presently, Torreira’s chances of being a regular starter at Arsenal are slim, and he has attracted interest from multiple clubs in Italy. Arteta used a three-man defence in the recent friendly against MK Dons, and is thought to favour that system moving forward, leaving no space for the diminutive midfielder. 

However, the unfruitful attempts to secure the services of Ceballos from Real Madrid, as well as Thomas Partey from neighbours Atletico, mean that Arsenal should hold fire before sanctioning the sale of Torreira.

Zac Campbell