We know that different football players have different transfer values, which vary with skill, value, worth and time. The money value of these football players is not the real value but just the monetary value. This is so because such a value has not been adjusted for inflation over the time. So, it is important to deflate these values to convert them into monetary values so that the real worth of all the football players can be calculated. This would help in determining the real value of each player regardless of the time he played and the nominal transfer value.

METHODOLOGY:

In order to calculate the inflation rate at which these football players transfer value should be deflated, we should formulate a logical method to calculate the world inflation rate over the time period. The methodology that I would present is based on using the inflation rates of all countries and weighing these against their corresponding GDP s. In order to make it clear lets consider the hypothetical example given below:

We assume that there are just 3 countries in the world, namely A, B and C. The data for each country is given in the table below, corresponding to each countries name.

Country	G.D.P	Weight	Inflation Rate ( Year 1)	Weighted Inflation Rate
A	50	0.1	5%	0.5%
B	100	0.2	2%	0.4%
C	350	0.7	8%	5.6%
World (Total)	500	1	Average : 5 %	6.5%

So we have calculated the world inflation rate as 6.5%. This is a weighted inflation rate as opposed to the 5% non-weighted inflation rate. It is important to weigh these rates as countries are not homogeneous and the spending of the consumers varies. Now we can use the above rate to deflate the value of different football players and determine their real worth. The example presented below is another hypothetical example, which takes into consideration 3 football players. Year “0” has been taken as the base year where as Year “1” is the following year for which we have calculated an inflation rate of 6.5%.

Player	Nominal Value	Real Value	Year
1	6 million	6 million	0
2	6.2 million	5.82 million	1
3	7 million	6.57 million	1

In the above table the formula used for deflation is:

Real Value: [Nominal Value/(100 + 6.5)] * 100

Moving on, we consider a case where player 4 was valued in year 2 and player 5 in year 3. In order to calculate their real value; let’s consider the example below.

Country	G.D.P	Weight	Inflation Rate (Year 2)	Weighted Inflation rate
A	250	0.333	6%	2%
B	400	0.534	5%	2.66%
C	100	0.133	10%	1.34%
World (Total)	750	1	Average: 7%	6%

So, the inflation rate for year 2 is 6%.

Now lets consider Year 3:

Country	G.D.P	Weight	Inflation Rate (Year 3)	Weighted Inflation rate
A	400	0.4	2%	0.8%
B	350	0.35	6%	2.1%
C	250	0.25	4%	1%
World (Total)			4%	3.9%

So, the inflation rate for year 3 is 3.9%.

Now we move on to compare the real worth of 5 players over different years.

Player	Nominal Value	Real Value	Year
1	6 million	6 million	0
2	6.2 million	5.82 million	1
3	7 million	6.57 million	1
4	7 million	6.22 million	2
5	7 million	6.02 million	3

Calculation of real value for year 2:

Real Value: [Nominal Value/(100 + 6.5+ 6)] * 100

Calculation of real value for year 3:

Real Value: [Nominal Value/(100 + 6.5+ 6+3.9)] * 100

Thus, we have calculated the real values of different players over different time periods. Now, in the last example we will go the other way around, turning real values into monetary values according to current prices. A hypothetical example of 3 players is given below:

Player	Nominal Value	Real Value	Year
6	6.39 million	6 million	1
7	6.75 million	6 million	2
8	6.984 million	6 million	3

Formulas used for converting Real Values in to nominal values:

Year 1: [Real value * (100+6.5)]/100

Year 2: [Real value * (100+6.5+6)]/100

Year 3: Real value * (100+6.5+6+3.9)]/100