solution

A football club (A) will lend (paid loan), for one year, a young striker to another club (B). The young striker, at that time, is still under contract with club A for a residual term of four years. During the term of the loan, the striker’s salary would be paid 50-50 by the two clubs. If club B wanted to benefit from a purchase option after one year to obtain the final transfer of the player, what changes to the loan contract would be possible? Consider different strike prices? Make the link with elements of finance seen in class. What are the factors that would cause the option to be exercised (or not) after one year?