Advertisement

European Journal of Law and Economics

, Volume 26, Issue 2, pp 129–151 | Cite as

Why football players may benefit from the ‘shadow of the transfer system’

  • Helmut M. Dietl
  • Egon Franck
  • Markus Lang
Article

Abstract

Transfer restrictions have a long tradition in professional sports but came under heavy attack in recent years (e.g. Bosman ruling, Monti system). Based on a bargaining model with stochastic player productivity, we show that less restrictive transfer rules reallocate ex post bargaining power from players to clubs. This reallocation is efficient and in the ex ante self-interest of players. The right to charge transfer fees enables clubs to insure their players. The players, in turn, benefit by converting risky future income into riskless current income. Overall, player utility is higher under more than under less restrictive transfer rules.

JEL Classifications

D86 J49 L83 

Keywords

Labour contracts Transfer restrictions Transfer fees Bosman and Monti transfer system FIFA regulations 

References

  1. Antonioni, P., & Cubbin, J. (2000). The Bosman ruling and the emergence of a single market in soccer talent. European Journal of Law and Economics, 9, 157–173.CrossRefGoogle Scholar
  2. Burguet, R., Caminal, R., & Matutes, C. (2002). Golden cages for showy birds: Optimal switching costs in labour markets. European Economic Review, 46, 1153–1185.CrossRefGoogle Scholar
  3. Carbonell-Nicolau, O., & Comin, D. (2005). Testing out contractual incompleteness: Evidence from soccer. NBER Working Paper No. W11110. Available at SSRN: http://ssrn.com/abstract=663503.
  4. Demmert, H. G. (1973). The economics of professional team sports. Lexington: Lexington Books.Google Scholar
  5. Feess, E., Frick, B., & Muehlheusser, G. (2004). Legal restrictions on buyout fees: Theory and evidence from German soccer. IZA Discussion Paper No. 1180. Available at SSRN: http://ssrn.com/abstract=562445.
  6. Feess, E., & Muehlheusser, G. (2002). Economic consequences of transfer fee regulations in European football. European Journal of Law and Economics, 13, 221–237.CrossRefGoogle Scholar
  7. Feess, E., & Muehlheusser, G. (2003). Transfer fee regulations in European football. European Economic Review, 47, 645–668.CrossRefGoogle Scholar
  8. Frick, B., Pietzner, G., & Prinz, J. (2007). Career duration a competitive environment: The labor market for soccer players in Germany. Eastern Economic Journal, 33, 429–442.CrossRefGoogle Scholar
  9. Neale, W. (1964). The peculiar economics of professional sports: A contribution to the theory of the firm in sporting competition and in market competition. Quarterly Journal of Economics, 78, 1–14.CrossRefGoogle Scholar
  10. Rottenberg, S. (1956). The baseball players’ labor market. Journal of Political Economy, 64, 242–258.CrossRefGoogle Scholar
  11. Scully, G. W. (1974). Pay and performance in major league baseball. American Economic Review, 64, 915–930.Google Scholar
  12. Williamson, O. (1985). The economic institutions of capitalism: Firms, markets, relational contracting. New York: The Free Press.Google Scholar
  13. Williamson, O. (1996). The mechanisms of governance. New York: Oxford University Press.Google Scholar
  14. Williamson, O. (2003). Examining economic organization through the lens of contract. Industrial and Corporate Change, 12, 917–942.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2008

Authors and Affiliations

  1. 1.Institute for Strategy and Business Economics (ISU)University of ZurichZurichSwitzerland

Personalised recommendations