How do soccer loans work?

Anyone who is new to how European soccer (association football) works may be curious about what soccer loans are and how they work, especially considering that this is unique to European soccer only. We’re here to help you to better understand soccer loans, the process, and what it entails.

Soccer loans work by moving a player from the team they’re contracted with to another team temporarily for a variety of reasons. It works similarly to how one might loan a car, and the club that the player was loaned to will pay that player’s wages for the time they’ve played for the team.

There’s a lot more than just this to learn about loaning players, so keep reading to find out what more there is to know and to better understand the loaning process.

What is a loan in soccer?

A soccer loan is the act of a soccer club sending one of their players, who is contracted to them, to play for a different club for a temporary amount of time. Sometimes this amount of time is just for a few weeks to a season, or it could even be several seasons in a row until either the contracted team takes the player back or the loaned team decides to and is permitted to sign that player on permanently. (Reference)

There are many reasons why a player may want to play for a different team than they’re contracted to or a club might decide to loan out one of their players to another team temporarily, but the main reason is to allow young or new players the opportunity to develop their skills and provide them with real soccer-team experience which will benefit them as they play for their contractual team as well in their future if they end up playing for an entry-level soccer division, after which they can work their way up the league pyramid.

How loaning a soccer player works

When a loan is agreed upon by both the providing team and the receiving team (the original contractual team and the team that is being loaned to), the two teams will sign and abide by a contract between each other so that a soccer player from the contractual team may be loaned to the other team for a set or estimated period of time. (Reference)

That player will then play for the team they’ve been loaned to for the set amount of time, then once that time is up, the player will either return back to playing for their original team or extend the duration of the contract if both teams agree to it. Sometimes, the team loaning the player will see that the player is a good fit for their team and sign that player onto their team permanently if the player’s original club agrees to it.

Sometimes soccer clubs will get a player on a loan for this reason in particular, as a way to “test drive” a player to see if they will be a good fit for their needs. Usually, the club that is being loaned to will let the contractual club know of this and come to an agreement that if they find the player a good fit, they will ask the player to sign a new contract with them so they can play for them permanently.

If that player is then sold to that club, then the club must pay the player’s original club a fee. If they come to find out that the player doesn’t complement the team well enough, then the club will send the player back to his or her original club upon the end of the contract.

Why don’t American soccer teams loan players?

American soccer teams don’t loan players because leagues are organized on a different system than in Europe. In Europe, there are over a hundred different leagues which are then divided into 11 different divisions, the 11th being the lowest. If someone wants to make their way up this pyramid because they dream of playing for a team in the Premier League, they must first work their way up the pyramid, starting with the bottom division. (Reference)

Players who have not yet even made it to Division 11 will have a better chance of getting into it if they have the experience to back it, hence why teams will often loan their players for a time to play for a team in the 11th division.

This is especially true because playing for a team in a league will be much more demanding of the players than simply playing for a college or community team that is not part of a league. In other situations, loaning will help a player gain more experience simply by playing for different teams more frequently than just by the season, and thus they have more experience with adapting to a new team and how that team works best together.

When might a club loan a player?

There are many reasons why a club might loan a player to another team. Often it’s for the benefit of players, while other times it’s for the benefit of the club. (Reference)

Players, especially young and inexperienced players can take advantage of the loan by gaining valuable experience playing in a lower division league, especially given that teams in these leagues play much more frequently than players on teams outside this hierarchy.

Clubs may choose to loan out a player because they either could benefit from developing their skills a bit more or they have a lot of potentials to make it far in the soccer hierarchy of leagues. There are some clubs, both inside and outside the hierarchy pyramid that specifically look for young players to develop.

Loaning out players can also help the club out by freeing up space on the team so that they can sign on to a new player. This is especially useful if a player isn’t doing well for a team, they can just loan that player out and then have more room to sign on a player who is going to help their team level up.

Players that are loaned out can then be sold to the team they were loaned out to if that player’s skills impress and complement the team. A club may also want to free up space if they have too many players on their team because teams can only have a maximum number of players.

If a club loans out a player to another club, it may be because they’re tight on money. Loaning players out helps them to raise money because the club they loaned that player out to has to pay that player’s wages. This lets the original club off the hook, and plus they’ll be earning the money that the other club pays them for the player.

So, if a club is in some sort of financial trouble, they can make some extra earnings very quickly by letting one of their players go (especially if they have more than 11 players) and receiving the wage from the club they are loaning to.