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Quantifying speculative-bubble effects in major European soccer leagues

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  • Fry, John
  • Binner, Jane M.

Abstract

We apply the theory of super-exponential rational bubbles to football transfer data. Refining previous qualitative approaches we model the aggregate transfer spend as a fraction of the TV income. Evidence of substantial bubble effects is found across the English, French, German and Italian leagues. This suggests long-term reductions in transfer spending relative to TV receipts. Our model predicts the existence of other signs of soccer bubbles beyond over-pricing. These include differences in the market for star players and the market for regular players and other signs of illiquidity.

Suggested Citation

  • Fry, John & Binner, Jane M., 2025. "Quantifying speculative-bubble effects in major European soccer leagues," Economics Letters, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:ecolet:v:248:y:2025:i:c:s016517652500045x
    DOI: 10.1016/j.econlet.2025.112208
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    References listed on IDEAS

    as
    1. Coates, Dennis & Parshakov, Petr, 2022. "The wisdom of crowds and transfer market values," European Journal of Operational Research, Elsevier, vol. 301(2), pages 523-534.
    2. Francesca Pancotto & Giorgio Addessi & Nicola Auteri, 2024. "Soccer Bubble: Is There a Speculative Bubble in the Price of International Soccer Players?," Journal of Sports Economics, , vol. 25(5), pages 535-556, June.
    3. Lukas Richau & Florian Follert & Monika Frenger & Eike Emrich, 2021. "The sky is the limit?! Evaluating the existence of a speculative bubble in European football," Journal of Business Economics, Springer, vol. 91(6), pages 765-796, August.
    4. Anders Johansen & Olivier Ledoit & Didier Sornette, 2000. "Crashes As Critical Points," International Journal of Theoretical and Applied Finance (IJTAF), World Scientific Publishing Co. Pte. Ltd., vol. 3(02), pages 219-255.
    5. Fry, John & Serbera, Jean-Philippe & Wilson, Rob, 2021. "Managing performance expectations in association football," Journal of Business Research, Elsevier, vol. 135(C), pages 445-453.
    6. Fry, John & Cheah, Eng-Tuck, 2016. "Negative bubbles and shocks in cryptocurrency markets," International Review of Financial Analysis, Elsevier, vol. 47(C), pages 343-352.
    7. Emilios Galariotis & Christophe Germain & Constantin Zopounidis, 2018. "A combined methodology for the concurrent evaluation of the business, financial and sports performance of football clubs: the case of France," Annals of Operations Research, Springer, vol. 266(1), pages 589-612, July.
    8. Cheah, Eng-Tuck & Fry, John, 2015. "Speculative bubbles in Bitcoin markets? An empirical investigation into the fundamental value of Bitcoin," Economics Letters, Elsevier, vol. 130(C), pages 32-36.
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    More about this item

    Keywords

    Behavioural economics; Econophysics; Finance; Speculative bubbles; Sports;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • G1 - Financial Economics - - General Financial Markets
    • Z2 - Other Special Topics - - Sports Economics

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