Of course that's what some players do, I'm not disputing that and that has nothing to do with my point. You still have to pay the £2000 signing on fee is my point. Say the contract at the council is for 1 year then you could just as easily offer a pay rise to £538 per week for the year with no signing on fee and you are paying the same amount as £500 with a £2000 signing on fee. You still have to pay whatever the person wants to be paid, it's still in your accounts as wages, it's just a different method of the money being paid out. I can only guess there's some tax benefit to a signing on fee otherwise it makes absolutely no difference at all.
Let me break this down for you in normal people's wages terms :
say you earn £500 a week working for Middlesbrough council but Hartlepool council offers you the same £500 a week but a signing on fee of say £2,000 then you wouldn't say you are better off? That's exactly what some players do