Explained: Why Wolves would loan out players this summer

The news of Tolu Arokodare’s likely loan away from Wolves split opinion among fans.

It was revealed this week that the striker is expected to depart this summer, most likely on loan, with Turkish side Trabzonspor already making a loan offer that was being discussed.

The revelation that a loan was the most likely outcome for the striker caused a stir on social media with many fans questioning what the benefit is for Wolves and why they cannot target a permanent deal.

The first thing to consider is whether there is a desire from all parties for the player to stay with Wolves next season - and considering his dressing room bust-up with Mateus Mane last season and former head coach Rob Edwards’ desire to move him on, it is no surprise that Arokodare’s exit is still the direction of travel.

Next, Wolves have to consider their options based on the financial reality of the deal they did last summer and the fact they overpaid for a below par player means they have few options to choose from.

Arokodare was bought for the best part of £24million, including add-ons, and signed a four year contract with the option to extend it by a further 12 months.

If he was to make a permanent move just one year after signing, Wolves would require a hefty transfer fee for a player that scored just three Premier League goals, unless they agree to make a considerable loss on him.

It is easy from the outside to suggest Wolves should cut their losses and sell him cheaply, but in reality the club cannot risk taking a big loss on a player just after being relegated, when they are keen to pump resources into a promotion push.

Secondly, from a business perspective, footballers are assets to clubs.

When a football clubs signs a player, in accounting terms their transfer fee is spread over the length of their contract via a process called amortisation.

As every year passes, a player’s book value depreciates depending on what they were signed for and the length of their contract.

To simplify the explanation, Arokodare’s book value this summer is likely in the region of £18million and that is roughly the fee Wolves would need to ensure they do not make a loss on their accounts.

Receiving that fee this summer and moving him on permanently may be a preference, but Wolves would do well to get that kind of money for him after last season.

In addition, Arokodare’s long-term future could also depend on Wolves’ managerial situation and any contrasting opinions on the player - stranger comebacks have happened, even if it is unlikely at this stage.

Who knows where Wolves will be in a year’s time and if they need a striker, a rejuvenated Arokodare who has had a solid season could be an option they look to.

But if he is loaned out, as is expected, the benefit for Wolves is that if he performs well and scores goals at his new club, his market value will increase and he can eventually be sold for a good price if his future lies away from the club.

If he does leave for Turkey, there is also a good chance he will perform better, as players in a similar situation to him have done in the past.

Bear in mind also that if Arokodare is loaned out and does well, by next summer his book value at Wolves will be even lower and the club could even make a profit on him compared to his book value.

That does not mean making more than the £24million already paid for him, but it means bringing in more money than his value on the balance sheet, which in turn provides a profit for the club’s accounts in that financial year.

Arokodare is still under contract for another three years, and potentially an additional year on top of that, and Wolves are in a strong position to eventually get some value out of the deal, especially if his full wages are covered by his loan club, which is often the case.

A great recent example is Fabio Silva’s Wolves career.

Signed for £35million in 2020 he eventually left on his first of four loan moves in 2022 and when he signed for Anderlecht, he also signed a one-year contract extension to allow Wolves to protect their financial asset.

It never worked out at Wolves, but over the years he eventually did well enough on loan to get a permanent move to Borussia Dortmund in a deal worth up to £23million including add-ons.

Although that is below what Wolves bought him for five years prior, in accounting terms it would have been recorded as a fairly substantial profit for that financial year due to the player’s low book value at the time of selling him.

This should not excuse Wolves’ poor recruitment in recent years and the Silva and Arokodare deals have proved to be bad business, but in the club’s attempt to salvage some value from them, a loan for Arokodare is likely to be the best outcome.

The change in financial rules from Profit and Sustainability to Squad Cost Rules for the Championship next season places less focus on profit and loss and instead limits clubs to spending a percentage of their income.

Despite that, it remains unlikely that Wolves would take a big hit on Arokodare so soon after signing him when there is potential value further down the line.