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

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Author Info

  • Helmut Dietl

    ()

  • Egon Franck

    ()

  • Markus Lang

    ()

Abstract

The transfer system imposed by the football governing bodies on employment relations made sure that a player could not leave his current club and sign with another club without the current club's explicit consent. The 1995 Bosman judgement of the European Court of Justice declaring football players to free agents after expiration of their contracts and the 2001 intervention of the European Commission, which, among other things, limited contract durations in football, can be interpreted as the two major steps towards restricting the application of the transfer system. This paper provides a theoretical model to analyze whether professional football players in the European football leagues benefit from transfer restrictions. It shows that under a restrictive transfer system, clubs can partially insure their players against income uncertainty by transforming a part of the player's risky future salary into risk-free current income. As a result, a risk-averse player benefits from the 'shadow of the transfer system'.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10657-008-9059-5
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Bibliographic Info

Article provided by Springer in its journal European Journal of Law and Economics.

Volume (Year): 26 (2008)
Issue (Month): 2 (October)
Pages: 129-151

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Handle: RePEc:kap:ejlwec:v:26:y:2008:i:2:p:129-151

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Web page: http://www.springerlink.com/link.asp?id=100264

Related research

Keywords: Labour contracts; Transfer restrictions; Transfer fees; Bosman and Monti transfer system; FIFA regulations; D86; J49; L83;

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References

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  1. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-30, December.
  2. Feess, Eberhard & Muehlheusser, Gerd, 2003. "Transfer fee regulations in European football," European Economic Review, Elsevier, vol. 47(4), pages 645-668, August.
  3. Oliver E. Williamson, 2003. "Examining economic organization through the lens of contract," Industrial and Corporate Change, Oxford University Press, vol. 12(4), pages 917-942, August.
  4. Burguet, Roberto & Caminal, Ramón & Matutes, Carmen, 1999. "Golden Cages for Showy Birds: Optimal Switching Costs in Labour Markets," CEPR Discussion Papers 2070, C.E.P.R. Discussion Papers.
  5. Feess, Eberhard & Frick, Bernd & Muehlheusser, Gerd, 2004. "Legal Restrictions on Buyout Fees: Theory and Evidence from German Soccer," IZA Discussion Papers 1180, Institute for the Study of Labor (IZA).
  6. Oriol Carbonell-Nicolau & Diego Comin, 2005. "Testing Out Contractual Incompleteness: Evidence from Soccer," Departmental Working Papers 200501, Rutgers University, Department of Economics.
  7. Peter Antonioni & John Cubbin, 2000. "The Bosman Ruling and the Emergence of a Single Market in Soccer Talent," European Journal of Law and Economics, Springer, vol. 9(2), pages 157-173, March.
  8. Eberhard Feess & Gerd Mühlheußer, 2002. "Economic Consequences of Transfer Fee Regulations in European Football," European Journal of Law and Economics, Springer, vol. 13(3), pages 221-237, May.
  9. Bernd Frick & Gunnar Pietzner & Joachim Prinz, 2007. "Career Duration a Competitive Environment: The Labor Market for Soccer Players in Germany," Eastern Economic Journal, Eastern Economic Association, vol. 33(3), pages 429-442, Summer.
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Citations

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Cited by:
  1. Markus Lang & Alexander Rathke & Marco Runkel, 2009. "The Economic Consequences of Foreigner Rules in National Sports Leagues," Working Papers 0103, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Jul 2009.
  2. Helmut Dietl & Egon Franck & Martin Grossmann & Markus Lang, 2009. "Contest Theory and its Applications in Sports," Working Papers 0913, International Association of Sports Economists;North American Association of Sports Economists, revised Mar 2011.
  3. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2008. "Revenue Sharing, Reserve Clause and Salary Caps in Professional Team Sports Leagues," Working Papers 0026, University of Zurich, Center for Research in Sports Administration (CRSA), revised 2009.
  4. Helmut M. Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2012. "Salary Cap Regulation In Professional Team Sports," Contemporary Economic Policy, Western Economic Association International, vol. 30(3), pages 307-319, 07.
  5. Helmut Dietl & Rodney Fort & Markus Lang, 2011. "International Sports League Comparisons," Working Papers 0144, University of Zurich, Institute for Strategy and Business Economics (ISU).
  6. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2010. "Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps," Working Papers 0035, University of Zurich, Center for Research in Sports Administration (CRSA).
  7. Helmut Dietl, 2010. "Besonderheiten des Sports ‐ Was rechtfertigt eine "eigene Ökonomik"?," Working Papers 0137, University of Zurich, Institute for Strategy and Business Economics (ISU).

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