Hidden Economy: How Nigerian clubs nurture players, miss out on transfer fees

…millions go to foreign leagues

Nigerian football clubs are struggling to capture the financial value of players who move abroad, as private academies play an increasingly important role in developing young talent and negotiating arrangements that shape future transfer earnings.

Despite providing players with a platform to compete professionally, clubs in the Nigeria Premier Football League (NPFL) often receive little from their subsequent moves to Europe and Asia.

The problem stems from a combination of player ownership arrangements, short-term contracts, limited commercial revenue and weak transfer negotiation structures, leaving clubs poorly positioned to secure substantial fees or a share of future transfers.

Biola Kazeem, chief executive officer of Sports Derivatives and a sports media and marketing professional, said the problem reflects structural weaknesses in how NPFL clubs recruit players, develop talent and balance sporting ambitions with commercial objectives.

According to Kazeem, many players in the domestic league were developed by smaller private academies before joining professional clubs, sometimes through loan arrangements that allow the academies to retain a financial interest in their future careers.

“The way NPFL clubs are set up, they are hardly able to incubate and develop talent,” Kazeem told BusinessDay. “Most of the players that we see in the NPFL now were incubated and developed at smaller academies.

“When NPFL clubs want those players, these smaller clubs typically insist that they are not selling the players to them but would rather loan them, so they can protect the upside when the players move abroad.”

Such arrangements can give NPFL clubs access to players without securing full ownership of their registration or the right to negotiate a subsequent transfer.

While the professional club provides competitive exposure, the academy may retain greater leverage over the player’s longer-term prospects, depending on the agreement.

Kazeem said the pattern had persisted for about a decade, making it difficult for clubs to build sustainable revenue streams through player trading.

“Player sales are one of the key components of how clubs make money. NPFL clubs do not make money from television, and they barely make money from commercial partnerships. Player sales therefore become very important for them to operate as sustainable businesses,” he said.

He argued that clubs must invest more deliberately in youth development if they want to benefit from the international market for Nigerian talent.

“If they do not invest in incubating and developing talent, they will not produce players who are sellable,” he added.

Winning matches versus building commercial value

Beyond academy arrangements, Kazeem identified the emphasis on immediate sporting results as another obstacle to the commercial development of NPFL clubs.

Club administrators, he said, often prioritise league positions and qualification for continental competitions, sometimes at the expense of sustained investment in youth development and player trading.

General managers and executives are frequently judged by their teams’ results, he argued, rather than their ability to develop valuable players and generate revenue from transfers.

“Most NPFL clubs do not optimise for commercial returns. Most of them optimise for results,” Kazeem said.

The pursuit of immediate success can encourage clubs to accept loan arrangements or transfer terms that help strengthen their squads but offer limited long-term financial benefits.

That approach can become costly when a player later moves abroad, and the Nigerian club that helped him gain professional experience has little or no contractual entitlement to the transfer proceeds.

Kazeem questioned whether qualifying for continental competitions should always be treated as the clearest measure of progress, particularly when Nigerian clubs struggle to advance beyond the early rounds.

“If you are able to develop a player and sell him to Europe for $5 million, is that not a clearer sign of success and progress than qualifying for the CAF Confederation Cup, where you are going to get knocked out because you do not have quality across your team?” he asked.

His argument is that developing and selling players can provide a more sustainable business model than relying on sporting results alone, although clubs must still balance transfer income against the costs of building competitive teams.

Commercial expertise needed in transfer negotiations

Kazeem also questioned the level of commercial expertise involved in negotiating player contracts and transfer agreements.

In more established football markets, clubs may draw on lawyers, agents and specialist advisers to assess contracts, negotiate transfer fees and protect their financial interests. Kazeem argued that some Nigerian negotiations are instead dominated by administrators whose primary focus is sporting performance.

“Sports has two sides to it: the sporting side and the commercial side. Where you over-index on the sporting side, you are bound to lose sight of commercial opportunities,” he said.

Stronger commercial management could help Nigerian clubs negotiate longer contracts where appropriate, include sell-on clauses and establish clear agreements with academies that develop players before they join professional teams.

These measures would not guarantee large transfer fees, but they could reduce the risk of clubs losing out when players attract international interest.

League value shapes transfer earnings

Ayodeji Adegbenro, chief executive officer of Stars Builders Academy, said the financial returns Nigerian clubs receive from overseas transfers are closely linked to the overall value of the domestic football ecosystem.

“The reason Nigerian clubs don’t get paid a lot of money from transfers is the value of our entire league,” he said.

Adegbenro explained that relatively low player salaries in the NPFL, compared with those available in some foreign leagues, can make overseas offers attractive even when they come from clubs outside Europe’s leading competitions.

“A player who earns N1.1 million monthly in the NPFL earns less than $1,000 when converted to US dollars. Then a club from Tanzania can come and say, ‘Come and play for Azam, we’ll pay you $5,000 a month,’” he said.

The comparison illustrates how differences in clubs’ financial capacity can influence recruitment and players’ decisions. However, salary levels alone do not determine transfer valuations, which also depend on factors such as a player’s age, performance, contract duration, position, demand and the selling club’s bargaining power.

Adegbenro also identified short contracts and loan arrangements as constraints on clubs’ ability to earn transfer income.

“Most of the time, NPFL clubs don’t even own the players. Maybe the player is on loan or on a one-year contract. By the time the contract ends, the player is a free agent, so the club doesn’t earn anything,” he said.

How transfer fees are shared

Transfer proceeds may be distributed among clubs and other parties according to the terms of the transaction. An academy that developed a player, for example, may have negotiated a sell-on clause or another contractual entitlement when the player joined a professional club.

Adegbenro illustrated the financial implications with a hypothetical transfer worth €100,000.

If an agent were entitled to a 10 per cent commission, that payment would amount to €10,000, leaving €90,000 before other contractual obligations. If another club were entitled to 20 per cent of the transfer proceeds, the amount retained by the selling club would depend on the agreement’s wording and how the commission and other payments were calculated.

The example is illustrative rather than a fixed formula for transfer transactions. Agent commissions, sell-on payments and other deductions depend on the relevant contracts and applicable rules; they should not be assumed to apply automatically to every deal.

For Nigerian clubs, the lesson is the importance of establishing contractual rights before a player attracts overseas interest. Where an academy has contributed to a player’s development, the professional club and academy need clear terms on ownership, future transfers and any agreed share of proceeds.

Private academies fill a development gap

Adegbenro described independent academies as an important part of Nigeria’s football development system, arguing that many professional and lower-division clubs rely on them to identify, train and prepare young players.

“The role of independent academies is actually very important in the ecosystem because they are everywhere. They are the ones who scout these players, train them and develop them,” he said.

Where clubs lack established youth teams, academies can shoulder much of the early work of scouting and player development. Their contribution may give them a basis to negotiate future financial benefits when a player progresses to professional football.

Adegbenro likened the relationship between smaller academies and larger professional clubs to “the big fish taking from the small fish”, pointing to the imbalance in bargaining power between organisations with different resources.

What FIFA’s solidarity mechanism means for Nigerian clubs

FIFA’s solidarity mechanism provides a separate route through which eligible training clubs can receive a share of qualifying international transfer compensation. Under the existing Regulations on the Status and Transfer of Players (RSTP), 5 percent of relevant transfer compensation is set aside for clubs involved in a player’s training and development, subject to the regulations’ conditions.

The allocation depends on the player’s registration history during the eligible training years, generally covering the calendar years of the player’s 12th to 23rd birthdays. It is not an automatic 5 per cent payment to every club that has featured a player, nor is the solidarity contribution a mandatory share for the player.

An NPFL club or private academy may qualify for a portion of the solidarity contribution if it meets the applicable requirements. The amount depends on the player’s registration history and the relevant rules, rather than simply the number of seasons the club fielded him.

A separate provision on player participation in transfer fees appears in FIFA’s revised RSTP, approved in 2026 and scheduled to take effect on 1 January 2027. Under Article 21bis, a mandatory 5 percent share of fixed transfer compensation is provided for certain players earning less than €150,000 in annual fixed remuneration in the context of permanent international transfers. The new provision is subject to its effective-date and transitional rules and should not be confused with the existing solidarity mechanism for training clubs.

This means that for Nigerian clubs seeking to improve their financial position, the priority is to strengthen youth-development structures, manage player contracts more effectively, maintain accurate registration records and bring greater commercial expertise into transfer negotiations.

The wider challenge for the domestic game is to ensure that clubs and academies investing in Nigerian talent can turn that investment into sustainable income when players secure opportunities abroad. Without stronger commercial structures, the NPFL risks continuing to develop players whose biggest financial rewards accrue elsewhere.

Sporting Lagos offers a different model

Kazeem cited Sporting Lagos as an example of a club seeking to combine competitive ambitions with investment in youth development.

He said the club’s focus on developing players illustrated the potential for Nigerian teams to build value through their own systems rather than relying heavily on recruitment from external academies.

For such a model to deliver lasting financial benefits, clubs need to document their role in a player’s development, secure appropriate contractual rights and negotiate clear terms governing future transfers.

The wider challenge is to persuade NPFL clubs to view youth development as a commercial investment as well as a sporting responsibility. Developing players can strengthen a squad, but it can also create assets that generate income through transfers when the contractual arrangements support that outcome.