In economic terms, a loan is given out in the hope of a return on investment (ROI), most probably in the form of monetary compensation. In football as well, the loan system has a similar intent.
Football teams loan out players in hope of an ROI in the form of player development. The system has become so popular that there is a specific loan window every season where teams can sign players only on loan.
While loans are not permanent solutions, when utilized properly, they can yield significant benefits for a team. For example, Joe Hart was just a talent with promise but it was only after his loan to Birmingham City that he became the goalkeeper he is today. Similarly, Kyle Walker was only able to stake a permanent place in the Tottenham team after performing well on loan at Aston Villa.
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However, when a loan goes wrong, the effect can prove harmful for both the player and team. A loan can signal a lack of direction or purpose for players as they may not know where future lies. Sometimes, players end up becoming “loan specialists” consistently loaned out to different teams without any progress in their respective careers.
A perfect example of this application to Liverpool is the case of Dani Pacheco, who had great hopes at Liverpool only to be squashed by the loan system. Pacheco was poised to break out a few years back after impressing in the academy. He was loaned out to Norwich City in the hope of gaining “first team experience”. Despite performing well at Carrow Road and guiding the Canaries to promotion in the Premier League, Pacheco was sent out on loan again.
This eventually became a cycle as Pacheco went out on loan to a different club each season. In the span of four seasons, the Spaniard played for four different loan clubs without anything to show for it. Eventually he faded out, became an afterthought, and left on a free transfer. What was a hugely promising career, was squashed and tarnished by the loan system.
Liverpool have been major proponents of the loan system in the recent past and especially under the current tenure of Brendan Rodgers. But, as the example of Pacheco and many others in the past suggests, this loan system is not as beneficial as it should be in theory. While a legal binding loan contract almost always guarantees you a ROI, the same case does not seem to apply to Liverpool. Are Liverpool using this system to its fullest advantage? This article delves into this issue.
Liverpool have had countless failures on the loan market and this has to be reviewed. Numerous promising players like Pacheco have gone on loan only to inevitably lose their path due to lack of structure and guidance. Most players coming from the academy are sent on a loan spell in the hope of gaining the ROI.
Indeed, Liverpool have sent out 12 players on loan this season and they had 17 last season. In fact, in the past three seasons under the Rodgers era, Liverpool have sent 56 players out on loan and out of those deals, only one player has been able to stake a place in the first team and that is Jordon Ibe.
Chelsea have been criticised and derided for their use of the loan system having 33 players on loan at a point. But, it cannot be doubted that they are incredibly efficient in the way they use the system. Kevin De Bruyne and Lukaku have already bought Chelsea more money in loans than Liverpool have gained from productive loans in the past five years. But, even if we do not consider those two players, Chelsea have made substantial profits on other players that never even had the chance of breaking through for the Blues.
For example, Oriol Romeu, a player stuck in “loan hell” like Dani Pacheco, was still sold off for a substantial profit. In four seasons, Romeu made only 22 appearances for the Blues but was still sold for a 150% return. When people try to defend Liverpool’s use of the loan system, they always point to Chelsea but as the figures show, Liverpool are nowhere close to emulating Chelsea’s model. Liverpool is second behind Chelsea in the number of players loaned out and have yet received nowhere near the ROI Chelsea have.
So, what exactly are the problems with Liverpool’s approach to the loan system. The first and foremost thing to consider is which teams are Liverpool loaning their players out to. While Chelsea have a “feeder club” like Vitesse Arnheim to bank on to develop players, Liverpool does not have that luxury.
Most of Liverpool’s academy players are sent out to mid level Championship or League One teams. This means that most of these teams view loan players as a burden rather than a necessity. They are not prepared to give young players the game time that they need to develop as they are normally fighting to keep a place in their respective leagues.
Examples of this scenario include Sheyi Ojo and Jerome Sinclair. Both were loaned out to then Championship side Wigan. As Wigan were battling relegation, neither got the game time they so dearly require. Ojo only started four games for Wigan whereas Sinclair only made a single appearance. As a result, Ojo has been farmed out on loan again (which in turn could start the loan cycle) whereas Sinclair has been shunted back to the youth teams.
Let’s take a closer look at the only success in the recent past for Liverpool in the loan system, which is Jordon Ibe. Ibe was loaned out to Derby County, a high flying Championship team that were playing the best football in the Championship at the time and had a philosophy of giving chances to young players. As a result, he thrived as he got the game time and freedom he deserved and eventually made it into the first team. Others did not get the same conditions that Ibe got and therefore, they did not receive the same results.
Sometimes, the problem lies in the fact that it does not appear the Liverpool management actually think before loaning their players out. They just think a loan is a loan and the receiving team does not actually matter in their scheme of things.
For example, Ryan McLaughlin was loaned out two seasons ago to a poor Barnsley team that was last in the Championship at the time. He is a marauding right back who thrives on attacking influence and the Barnsley style was the total antithesis to his way of playing. Inevitably, the loan did not yield any results as McLaughlin did not develop and Barnsley were relegated. Now, McLaughlin, who was poised to be the star right back for Liverpool, is floundering in the reserves and will probably be sold off in the coming future.
Additionally, another problem is that Liverpool just do not seem able to keep track of their players once they are sent out on loan. An example of this from last year is that of Andre Wisdom. Wisdom was loaned out to West Brom (another struggling team). When Tony Pulis became manager, it was clear that he did not favour Wisdom as he did not start many games in the second half of the season. Instead of calling him back and letting him develop in Liverpool, Wisdom was left to warm the bench at the Hawthorns and inevitably, he has been loaned out to another struggling team in Norwich.
An even bigger question that should be posed now is whether a loan means a one-way ticket out of the club. Even players like Fabio Borini and Jonjo Shelvey, who performed well in the loan system, were sold off without much fanfare or thought. The main excuses are always that they were never good enough or they were sold for a profit. But, as the figures have shown, Liverpool only make an average of £1-2 million profit on players, which in the grand scheme of things is absolutely nothing.
Compared to Chelsea and Man City, the clubs which Liverpool look to as benchmarks, Liverpool have received absolutely nothing. Even Jordon Ibe was brought back into the club based on injuries. His call back was more of a necessity than design and was a lucky coincidence.
It is also worth noting that the Derby County spell was his second loan spell (after one at Birmingham) and if not for the circumstances, he could inevitably have ended up like Dani Pacheco. All these case studies show that Liverpool are not placing enough emphasis on the loan system and too many players are wasting their potential with unnecessary loans.
In conclusion, Liverpool are clearly not utilising the loan system properly. This club is based on values of giving deserving talent opportunity. Loans have always been viewed as a key tool for development, but too many players are being wasted with unnecessary loans.
As the example of Raheem Sterling shows, if players are given a chance at the club, they can succeed. And the massive fee of £49 million Liverpool made on Raheem shows that Liverpool can make more profit by developing players themselves than they may ever make by loaning players out. Loans should either be meaningful or not used at all. In the end, a loan should not be used just for the sake of it as it ends up being a waste of human and economic resources.