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Rational Dave stays – here’s why

September 13, 2015 Tags: Opinion 13 comments
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Reporting on speculation that David De Gea could sign a new deal at Manchester United, the Telegraph’s Mark Ogden noted “any move to extend De Gea’s contract would be a surprise.” Given De Gea’s failed transfer to Real Madrid this summer, this weekend’s announcement that the Spaniard has signed on for a further four years at Old Trafford, with an optional fifth, should come as no surprise at all. After all, De Gea – and perhaps more importantly his agent, Jorge Mendes – had no option but to seek a new contract at Old Trafford – if they are rational.

Game theory has been under attack for the assumption of rationality, but in negotiations that involve a significant sum of money, however, rationality can safely be assumed. After all, people tend to be very thorough when there is a significant sum of money on the table. Here, we apply basic game theory to show that De Gea had to sign a new contract at United.

United’s position was simple. It was absolutely critical for the club to tie De Gea to a new deal lest he leave on a free transfer come next summer. On the other hand, the goalkeeper was faced two options: negotiate a new new deal or leave on a free transfer, with the presumption that he would be able to negotiate a higher wage than he would have been able to otherwise.

Critical to De Gea’s thinking is the lack of guarantee that Real Madrid would sign the stopper next summer. It may appear likely, given the player’s desire to move and Madrid’s summer-long chase, but after Los Merengues‘ behaviour in recent weeks, it was never a foregone conclusion. Keylor Navas or Kiki Casilla might have a terrific season, while the Madrid club has typically focused on recruiting the best player from each international tournament as a marquee signing. It is not inconceivable that Real will focus entirely on the stars of Euro 2016 next summer, although acquiring a goalkeeper of De Gea’s quality for free might be hard to resist

De Gea’s options were limited to two given that few clubs in Europe can match the package on offer at United or Madrid. In essence, De Gea would be putting all his eggs in the Real’s basket if he did not extend his contract at United. So this contact “game” is entirely between De Gea and Real Madrid, with the ‘keeper proceeding with Madrid’s possible action in firmly mind.

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By signing the reported £200,000-per-week deal, De Gea is set to earn roughly £6 million more per annum over his current £80,000-per-week contact. This new deal has reportedly been backdated to the start of negotiations in 2014 – a sum that runs into the millions. By refusing to sign, De Gea would have lost out on a huge amount of money.

No matter what Real Madrid’s action, the rational De Gea prefers to sign a new contact. This is because Madrid might still make a big-money move for the Spaniard – after all, the Spanish side has already displayed willingness to invest a significant sum in a player with only one year left on his contact.

To put this another way, Madrid has everything to gain by signing De Gea on a free, but since there is a realistic chance of Madrid buying De Gea for a fee anyway, the player has a financial incentive to sign a new contact. Indeed, it is no surprise that De Gea was amenable towards a new deal for this very reason. Moreover, in many jurisdictions, Mendes could be sued for professional negligence if he did not negotiate that new contract with United given the risks to De Gea’s career

United’s executive vice chairman Ed Woodward had a critical role in this game. Given De Gea’s rational need for a new contract, the executive could have, conceivably, driven down the proposed wage since, post 2 September, the Spaniard benefits by any offer that is greater his current deal.

Still, awarding De Gea a huge contract has its benefits too since the deal places De Gea beyond the reach of most, if not all, clubs in Europe. No matter how much De Gea wants to go to Madrid, his tenure at Old Trafford is now secure if the Spaniards fail to make an offer.

Arguably De Gea deserves that huge new deal having been the Reds’ standout player for past two seasons. The fact that he is a goalkeeper should not preclude him earning the kind of wage on offer to star outfield players. In addition, a high wage serves as a useful deterrent against future Madrid medling. United could have exploited that fact by offering De Gea a higher wage still; creating a permanent barrier any future move.

13 comments

Don Reid - September 13, 2015 Reply

Just hope there’s no release clause

Subterranean Steve - September 14, 2015 Reply

30 million according to ‘reports’.

wailoz10 - September 13, 2015 Reply

lol hope it’s not all doom and gloom on this one. No Rooney bashing either he didn’t play

Abdu AH M ED - September 13, 2015 Reply

Hero.de gea

James Kenny - September 13, 2015 Reply

I am really happy that Dave signed a new contract but the cynic in me says that Jorge Mendes has made this happen so that he can get his cut on the large pay increase and his bit of the transfer to Madrid.

If it turns out that there is a buyout clause for £35m or less it will convince me that I was right, if there isn’t a clause then I take it all back as that can be considered as great business for the club.

Either way it is good to see Dave between the sticks again as with Romero in goal I had the feeling that a mistake is waiting to happen.

Opti - September 13, 2015 Reply

“This new deal has reportedly been backdated to the start of negotiations in 2014 – a sum that runs into the millions.”
— WOW! Is that paid as a sign-on bonus? I did not see this detail mentioned anywhere…

denton davey - September 14, 2015 Reply

It was rumoured that back-dating was a part of the deal that was on offer before this summer’s shenanigans.

UTD provided both the paint and the brushes, letting DDG/Mendes paint themselves in one corner while RM/Florentino painted themselves into the opposite corner. Then, Vicente del Bosque subtly (or, given his distaste for Perez/RM, schadenfreude-ishly) closed them in the room with his statement that DDG had to be playing regularly IF he was going to be considered for the national team at the 2016 EuroFootie tournament.

bobbynoble - September 14, 2015 Reply

Meanwhile in the same room, Eddie the Eagle and Louis the Lip painted themselves into another corner by ensuring that the Pieman was the only no.9 left at the club.

denton davey - September 14, 2015 Reply

It’s too soon to tell.

My own opinion is that LvG’s primary aim was to speed-up the attack although It’s hard to know what to make of either Anthony Martial or KidWilson – too soon to tell but my gut feeling is that speed/instincts – as opposed to experience – are the key factors in judging strikers who usually “come good” and tend to lose their mojo at a younger age than defenders/midfielders whose ability to read the game is very important. Ironically, Chicharito got victimized by this strategy and Juan Mata who is slow but very crafty gets a starting role.

That said, it’s hard to feel that jettisoning RvP was a bad move – he’s injury-prone, slow, and got paid a ton/week. OK, he would be a good insurance policy but, really, 250K/wk for an insurance policy ?

bobbynoble - September 15, 2015

Too soon to tell that Rooney is the only recognised no.9? Ballocks.

We’re so thin on the ground, fucking Fellaini gets a start up front against the scousers. Kids might come on and do well but it’s risky as far as the level of experience that’s available – right now.

One crocked no. 9 and four goalkeepers. So much for van Gaal’s balance.

Opti - September 14, 2015 Reply

Rationality is a tough assumption. Müller would get paid more at United, but chose to stay, but I think there is a level of sensitivity to financial objectives that diminishes when weekly salaries go much beyond $50,000… either way footballers become rich and a couple millions either way does not change their lifestyles or retirement funds.

Jay Shon - September 14, 2015 Reply

thanks for the reply.

In this specific circumstances rationality may easily be assumed.

As you point out with Muller, probly not so in other cases though rationality is mathematically defined to be knowing what you like rather than intelligence.

Disagree about your sensitivity theory. Remember footballers essentially have to earn their lifetime income in fifteen years.

DayusDred. - September 14, 2015 Reply

How come no Media or the so called experts had a clue this will happen. They all swore he will go for free. As usual no credit was given to the doggedness of Woodward and Lvg in seing off the Virus called Perez. To me it was the stick and carrot approach adopted by the club that boxed De gea into a corner. Sign and get your place back or refuse and stay on the bench. He had no choice really bearing in mind he has been warned he risked not going to Euro2016 if he is not playing regular football. So all credit to the club.

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