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There are a few different situations when you will need to offer a contract:
Hiring Coaching Staff: Usually there will be no transfer fee involved for hiring staff, although the Assistant Manager, Coach or whoever’s previous club may require compensation. A player-coach may have a transfer fee.
Retaining your own player: If you’re either promoting the player from the Youth Team or trying to keep hold of a prized player, you’ll need to offer a new contract that reflects your belief in the player.
Signing a new player: With a fee agreed with the selling club, you can proceed to offering your targeted player a new contract.
We’ll focus on the scenario of signing a new player, although the principle is the same for each type of contract.