The Monopsony You Never Knew Existed

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This story, just like any good story, starts with President Xi Jinping of China. In 2015 he implemented a strategy for China to become an international soccer powerhouse. He heavily induced businesses to go out and invest into teams in Europe, which is the hotbed of modern soccer. One of these business being Fosun International, a Chinese international conglomerate and investment company. They are spearheaded by Guo Guangchang, known as “the Chinese Warren Buffett”, Co Founder and chairman of Fosun International. In 2016 they delved into the European market and bought out 100% of a club called Wolverhampton Wanderers “Wolves”, located in the West Midlands of England for 45 Million Pounds.

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If this were hollywood, this is where the villainous music score plays. I introduce, Jorge Mendes, a Portuguese superagent who is known as, “The most powerful man in soccer.” In the world of soccer, there are two financial spheres when it comes to player value, Transfer Fees and Wages. Transfer fees are what club pay each other for the rights of a player. Wages are what the club pays the player on a weekly basis. Throughout this process, players have agents that represent them, brokering deals, in order to amass the highest transfer fees and wages. Along the way, agents like Jorge Mendes take a chunk of the dealings as payment. Jorge Mendes has mastered this, heading the Portuguese soccer agency: Gestifute. He has many high value clients that make him as powerful and rich as he is. As one club owner stated, he “Sets soccer up like a chess board, controlling not only the pieces but the players as well.”


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Here is where the two worlds collide. Six months prior to Fosun Internationals takeover of Wolves, Guo Guangchang, purchased a 15% stake in Gestifute’s parent company Start SGPS. It is also alleged that Mendes is the one that actually decided on the purchase of Wolves. This was the beginning of a suspect relationship between Jorge Mendes and Fosun.

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It starts with the hiring of the Wolves coach: Nuno Espirito Santo, who just happens to be a Jorge Mendes client. In fact, Nuno was actually Mendes’ first ever client, dating back to when Mendes was a nightclub owner. Nuno turned down offers from some of the elite teams in europe in order to take over Wolves, who, at the time, were sitting in the 2nd division in England (not great). This made it clear that the move was orchestrated by Mendes. immediately after, Wolves broke their transfer record by signing Ivan Cavaleiro, surprise surprise, anther Jorge Mendes client. Boom! Wolves break their transfer record again signing another Jorge Mendes client for 13 million pounds. Now, there are 16 players at Wolves that are either Jorge Mendes clients or have ties to Gestifute.


The beauty of this system is that now, when Wolves pay a million pound fee to Jorge Mendes, it goes to Gestifute, of which Fosun holds a 15% stake in. Fosun are now paying knockdown transfer fees while securing high value players that they wouldn't been able to acquire without the presence of Jorge Mendes. Herein is where the Monopsony lies. With the relationship between Fosun and Mendes, Fosun have created a bubble they now control. They own the club of Wolves as well as a chunk of the player wages and transfer fees through Gestifute. Just like in a monposony, it is benificial for the employer, but leads to economic ineffciencies. This exact scenario of owners having stakes in soccer agencies is banned for this very reason. Through various hoopholes Fosun and Mendes have gotten away with it, lets see how much longer before they get caught out.





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