Loan Transfers in Football/Soccer – What are they? How do they Work? Who is Involved?

Sign up for the newsletter and get the ebook for free!


In the previous blog, we looked at the winter transfer window through the lens of an agent and the role we have during this period in different global football markets. One of the key themes of the winter transfer window, as we identified, is the high proportion and volume of loan deals during this time for various reasons.

Understanding what loan deals actually entail and how they work is a necessity. It is also a topic that has become more spoken about over the past year due to some changes that FIFA and the UEFA confederation have made regarding the quantity of loan deals that any single club can engage in. I would categorise loan deals into three different categories or ‘types’ of loans; the standard loan, loan with an option-to-buy and loan with an obligation-to-buy. I will cover each of these within this blog. We will endeavour to develop upon the previous blog, going deeper into the sphere of all different types of loan deals in order to explain everything you need to know and to answer the most important questions regarding this unique form of transfer.

What are Loans and Why are They Relevant?

To start with the most basic fundamental point to understand; a standard loan is the temporary transfer of a player from one club to another. Such deals are so popular, particularly during the winter window, that some clubs have their own loan department where people are employed just to look after the loaned players and visit them during the season in order to check their development. For example, Chelsea are among a handful of clubs that are world-renowned for the stature of their loan departments. Similarly, lots of teams have a ‘feeder club’ in another country to which they loan younger or unused players to. Well-known cases of this include Chelsea’s former relationship with Vitesse as the owners were close friends; the common ownership connection and loan links between Watford and Udinese; and Manchester City’s relationship with other members of the ‘City Football Group’.

Loans are very common. Although they may not be spoken about in as much detail as major transfers with significant sums of money being exchanged, they are an integral part of the football transfer market and can involve high value players. This is shown in the graphic below which shows the value of loaned players by club currently:

(Source: TransferMarkt)

Loans can be incredibly useful to clubs for many reasons, whether it is loaning a player into the squad or sending an individual out on loan elsewhere. The most common reasons are outlined below:

  1. Loaning out an individual to allow inexperienced players to move elsewhere to gain valuable game time which they otherwise would not be able to be given at the current club. This means the club can then make a judgement as to whether they are ready to step up into the first team upon their return if they have developed as a result of the loan.
  2. To replace glaring gaps in a squad midway through the season. In some cases, clubs may have had an unfortunate run of injuries that have depleted the availability and strength of their first team and temporary loan moves can help to mitigate the consequences of this. Alternatively, there may be a clear weakness in one area of the field with the club’s current squad and a loan deal can strengthen this area until a permanent solution can be found.
  3. Clubs that are fighting for promotion, a trophy, qualification or are battling in a relegation scrap can use loan deals to bring in players temporarily to bolster their chances of their relevant aim. The advantage of using a loan in this scenario is that it is not a major financial commitment but a temporary attempt to enhance the probability of success. This means that should the club fail in something like a relegation battle, they have not taken on long-term and expensive financial obligations by bringing in a top player on a permanent deal.
  4. Initially assessing a player before signing a permanent contract. I will explain this in more detail in a later section regarding two different types of loan deals which include obligations and options to buy.

A loan can vary in length as long as they comply with FIFA regulations as outlined below, and usually depends on what the two clubs agree on. Normally, loan contracts are for the duration of the season or for the second half of a season. It is very common for the ‘parent club’ to ask for either a contribution of or all of the wages of the player. Alternatively, the releasing club will be given a sum of money upfront for the duration of the loan period. Performance based clauses can also be included in loan contracts to determine the remuneration that the origin club is owed. In some instances, depending on the contract which is in place, clubs may be able to recall players from their loans before its completion. Clauses in the agreement may allow for this under certain circumstances such as injury problems at the origin club.

Rules and Regulations

There are specific rules and regulations around loans in different national associations and across wider jurisdictions by FIFA or other governing bodies. For example, recently UEFA have implemented measures which restrict the number of loaned players a club can sign and loan out at any one time. This has been devised to try and prevent the wealthier clubs hoarding players although it has affected the structure and transfer system which clubs had previously relied upon. As an agent, it is important to be aware of any regulations regarding loans and any changes that occur. Below, the most important new FIFA loan regulations are outlined:

  1. A loan can only be for a maximum of one year as must be fully defined and agreed upon within a written contract regarding the duration of the loan and the financial conditions.
  2. The loan must however be for a minimum of at least the period between two transfer windows and no shorter.
  3. Sub-loaning is now prohibited. This is where a player is already loaned to a club and is then loaned out again. This avoids complex situations and contractual difficulties.
  4. Under the new regulations, clubs are prevented from loaning in more than three players from a single origin club and consequently, can also not loan out more than three players to one club. For example, if two clubs have a particularly strong relationship and there is a common pattern of loan moves between them, this new rule stipulates that only three players can now move in one direction and no more.
  5. During the 2022/23 season, a club can loan out a maximum of eight players and this number will be reduced further by one player each season. Put simply, FIFA have set this regulation so that a maximum of six players will be allowed out on loan in the 2024/25 season. The aim of this is to promote competitiveness, youth player development and prevent player hoarding by certain clubs that have a reputation of having a large squad and are loaning out players year after year. For example, Chelsea are the most publicised example of this; often loaning out around 20 players every season so this may have a substantial effect on such clubs.
  6. The only players that are exempt from these new regulations are players aged 21 and younger and those that have been trained through the youth academy system at the club. The limitations do not apply to them to prevent restriction of free movement.

Specific Advantages of Loans for the Player and the Agent

From the perspective of a player and agent, loans can be of great use and benefit:

  1. Playing time: if an agent’s client is given more playing time at another club, it could showcase their potential worth for the ‘parent club’ in the future, or increase their transfer value if you are looking for a permanent move elsewhere. It is a way of getting noticed and gaining match experience.
  1. International fixture lists: using the USA’s MLS (Major League Soccer) as an example, the season starts at completely different times to that of Europe, and therefore players can be loaned from the USA to Europe during their ‘off-season’. A well-known example of this is Landon Donovan who, whilst at the LA Galaxy, was loaned to Bayern Munich and Everton whilst the MLS was inactive. This was beneficial for both LA Galaxy as it meant he stayed fit as well as Bayern Munich and Everton as he was a good on-pitch option to have. Moreover, for the player (and thus agent) it meant that Donovan became more a household name across Europe, increasing not only his footballing value and experiences, but in addition the scope for commercial deals too given his more global notability.

The graphic below shows how important loans can be for the development of a player and their exposure in the footballing market and that loans can lead to permanent deals. It shows the top 10 players according to the increase in their market value as a result of a loan period:

(Source: Transfermarkt)

Options and Obligations to buy

There are two slightly different types of loan deal which you may have heard being spoken about on various football news and information platforms; namely, “loan with an option-to-buy” or “loan with obligation-to-buy”. Both of these are used in football in negotiations between clubs as part of a loan agreement made for a particular player.

The supposed middle ground between a loan and permanent deal is often deemed to be the ‘option-to-buy clause’. This involves a club agreeing to loan a player for a certain amount of time, with an agreement also being in place for a full transfer, including the transfer fee which will also be negotiated in advance. This strategy is becoming more common for clubs as they can test the player out, without having the obligation of a permanent deal and the player can judge if it is the right environment for themselves. Recent examples of this can be found with top European players, such as James Rodríguez (Real Madrid and Bayern Munich), Philippe Coutinho (Barcelona and Bayern Munich) and Douglas Costa (Bayern Munich and Juventus). Once the loan period has expired, the clubs already have the agreement in place and if they are willing to make it into a permanent deal, the terms will be concluded and put into a permanent employment and transfer contract. Sometimes whether or not the full transfer takes place is down to appearance and performance-based clauses that were initially agreed. These clauses would have been made clear during negotiations and included in the loan contract.

This type of loan deal has also been adapted in recent transfer windows too. The agreement between Monaco and Paris Saint-Germain for Kylian Mbappé was labelled as an ‘loan with an obligation-to-buy’ rather than an ‘option’, with the latter club contractually required to follow through with the deal after the loan period has come to an end. The transfer fee is agreed prior to the loan and then the player becomes a permanent member of the club once the loan expires. Another example of this is Danny Ings’ move from Liverpool to Southampton. Southampton agreed to a year long loan with an obligation-to-buy and hence finalised the transfer at the end of the 2019 season for €25million.

There are many reasons behind such a loan deal which often relate to factors such as cash problems, financial fair play and transfer limitations. Put simply, a club may not be able to afford to pay for the transfer fee or the player’s salary at that moment in time due to financial fair play but are adamant that they will be a good signing for them. The loan with obligation-to-buy agreement allows the club to buy themselves some time in the knowledge that the transfer is secured once they are able to afford it the following year. This type of loan makes sense in order to keep the financial books balanced and in adherence with financial fair play.


The majority of football fans will have a good understanding of permanent transfers of players between clubs. Loans are often far less spoken of and far less understood despite being such a norm in the modern football market. This blog has explained that loans are valuable to clubs for many reasons and can materialise in many different ways. These kinds of deals can provide opportunities to players, clubs, managers, agents and more and hence, they are important to understand and be aware of when monitoring the football market.

If you have found this blog interesting and you wish to learn more on this topic, watch this video on my YouTube channel, where I go into further detail about loan transfers:

by Dr. Erkut Sogut & Jamie Khan


Leave a Reply

Your email address will not be published. Required fields are marked *