Celtic forward Jota has joined to Al-Ittihad in Saudi Arabia.

The Gulf State is the new disruptor in world football with government-sponsored investment in turning the local league into a world-leading enterprise. The salaries on offer to even English Premier League (EPL) players are eye-watering. Jota is reckoned to be moving for up £190,000 a week. That is not just life-changing for the young Portuguese but provides his family and inheritors with inter-generational wealth.

He joins N’Golo Kante and Karim Benzema – world-class operators – in that squad. This is market disruption at scale. For Premier League clubs looking to accrue the best talent on the planet, this is serious competition. But for clubs like Celtic, in relatively impoverished leagues, an opportunity.

If English clubs come calling for Celtic’s players, there is now another league that can potentially blow their bids away.

Jota

Jota has 54 goal contributions in two seasons at the Hoops and he was the one player who got closest to reproducing his SPFL form at Champions League level. He is also one year into a five-year contract. 

Benfica are known to have a sell-on agreement with Celtic – it is reported as between 25 per cent and 30 per cent of any profit Celtic make on selling him.

For example, if Al-Ittihad pays Celtic £25m, then the profit for Celtic is £18.5m. 30 per cebt of that is £5.5m. Celtic would therefore realise £19.5m gain on player trading.

There are, of course, complications. Celtic are likely paying Benfica in instalments as is common in football – usually 40 per cent/30 per cent/30 per cent across transfer windows. There will be agent’s fees and other add-ons.

The subject of this article, however, is not the merits or otherwise of Jota and his leaving. It is in relation to Celtic and their aspirations to have an effective player trading model.

Player Trading Model

What does it mean? At the simplest level, Celtic need to use player trading to increase revenues. Celtic’s domestic television income is pitiful by EPL standards, and SPFL sponsorship/prize money is similarly penny-ante.

Progression in Europe and access to income from the Champions League and Europa League is dependent on performance and, therefore, highly variable. With an underpinning desire to grow as a club to attract better and better talent, the global transfer market needs to be cranked to increase the revenue streams. How does that work? It is easy to say, "buy low, sell high" but in essence, that is the goal.

But at scale, hence Postecoglou’s comments.  Within the context of Scottish football, Celtic have been highly successful in player trading this century. Notable players such as Victor Wanyama, Virgil van Dijk, Ki Sung-yueng, Stuart Armstrong, Moussa Dembele, Odsonne Edouard, and Kristoffer Ajer have been bought and sold for considerable profits.

But this is not trading at scale so that the club is growing its asset pool such that it is better equipped to compete at a European level.

Transfer Turnover

The following is the summary of transfer spend and income each season, showing the net profit or loss for that season and the overall turnover (sales + income). 

The key here is to follow the trends and patterns and not get too hung up on the specific numbers. The transfer values represented above were taken from media sources at the time. Transfer fees are complex and not necessarily paid-up front (rarely). There is accounting treatment (amortisation) and a whole host of other factors. Inflation is not factored into this analysis. Again, trying to keep it simple.

You can see that Celtic broadly spent £10m and brought in £10m over the 2007-08 to 2016-17 period. Since then, things have accelerated slightly.

This is the turnover element, the churn of value. From £10m - £25m worth of churn we are now seeing £35m – 65m levels of churn. The blip is the season ravaged by coronavirus when the transfer market effectively stopped.

Again, why is it important? Increased volume means more sales means more revenue means more buying of higher quality players.  There isn’t another club in Scotland with this profile of transfer business. If Scotland was used as the benchmark, we could conclude Celtic is fabulously well run and all pat ourselves on the back and retreat to our heated driveways.

Benchmark

Performance and results in Europe suggest such limited horizons are misguided. We need to look to Europe to benchmark.

When you build a strategy, you need to know what you are aiming for so you model. Models are over-simplistic and indicate the extremes. With that in mind, it is worth going back to Benfica and last season. In some respects, there are similarities. Similar-sized clubs by average attendance and status. Both exist in impoverished leagues relative to their neighbours. Both aspire in Europe.

READ MORE: Celtic fans shouldn't despair - Jota transfer proves model works

There are significant differences. Benfica has a history of access to South American markets. The Portuguese youth development system is far superior to Scotland. But this is an extreme example of what Celtic should move closer to than where they are today.

In 2022-23, Benfica spent 87.7m Euros on recruitment and brought in 259.8m Euros in sales. This is a different plant to how Celtic operate.

Here is the five-year picture:

This is significantly more churn and Benfica are often buying players for between five and 15 million Euros. There are good reasons above why Celtic may never achieve this level of trading, but it illustrates where we are today and what we should aspire to.

What would be a more realistic initial target to aim towards? Here are a couple of clubs Celtic have recently played with a good reputation for innovation, buying young players and selling them on high.

Midtjylland of Denmark is part of Matthew Benham’s data-driven football stable. Known for innovation around use of set pieces, they are also a skilful trader in the transfer markets. In the last two seasons, they have turned over between 40 and 50 million Euros of talent, well above Celtic historically despite being a significantly smaller club (highest attendance last season under 11,000). They eliminated Celtic from the Champions League two years ago.

READ MORE: Greg Taylor: Playoff drama, beating Brazil and starring for Celtic

In that same campaign, Celtic struggled to overcome AZ Alkmaar of the Netherlands to get into the Europa League. Not one of the Dutch super clubs, they nevertheless have developed a healthy player trading model.

Again, Celtic are achieving these churn numbers now, but AZ are a significantly smaller football club – their highest league attendance last season was less than 20,000.

Conclusion

Jota's transfer to Saudi Arabia is significant as it represents a leap forward for Celtic to grow and accelerate their player trading model. A player acquired for a significant fee around £6.5m, sold for significantly more (£25m) after two years, one on loan. 

Much smaller clubs in Europe are achieving equivalent or more revenue growth through accelerated player churn. For Celtic to get near transfer market leaders such as Benfica and Porto, this needs to continue. It is the only way to significantly grow revenues thus attracting better players thus doing better in Europe.