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Transfer fee regulations in European football

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  • Feess, Eberhard
  • Muehlheusser, Gerd

Abstract

We analyze the impact of three different transfer fee systems on payoffs, contract lengths, training and effort incentives in European football. The different regimes, being used until 1995 (”Pre-Bosman” or P), currently in use (”Bosman” or B), and recently approved (”Monti” or M) differ with respect to the transfer fee an initial club must accept in case of a transfer depending on whether a player has a valid contract or not. We show that the different systems differ only with respect to the contract length if the contract which maximizes the expected joint surplus of the initial club and the player is feasible under each system. Otherwise, regime P is strictly dominated by regime B in terms of expected social welfare. Regime M leads to higher effort but lower incentives to invest in training compared to system B.
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Suggested Citation

  • Feess, Eberhard & Muehlheusser, Gerd, 2003. "Transfer fee regulations in European football," European Economic Review, Elsevier, vol. 47(4), pages 645-668, August.
  • Handle: RePEc:eee:eecrev:v:47:y:2003:i:4:p:645-668
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    References listed on IDEAS

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    1. Burguet, Roberto & Caminal, Ramon & Matutes, Carmen, 2002. "Golden cages for showy birds: Optimal switching costs in labor contracts," European Economic Review, Elsevier, vol. 46(7), pages 1153-1185, July.
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    Cited by:

    1. Markus LANG & Alexander RATHKE & Marco RUNKEL, 2010. "The Economic Consequences Of Foreigner Rules In National Sports Leagues," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 31, pages 47-64.
    2. Eberhard Feess & Michael Gerfin & Gerd Muehlheusser, 2015. "Contracts As Rent-Seeking Devices: Evidence From German Soccer," Economic Inquiry, Western Economic Association International, vol. 53(1), pages 714-730, January.
    3. Giacomo De Luca & Jeroen Schokkaert & Jo Swinnen, 2011. "Cultural Differences, Assimilation and Behavior: Player Nationality and Penalties in Football," LICOS Discussion Papers 29711, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    4. Benno Torgler, 2004. "The Determinants of Women?s International Soccer Performances," CREMA Working Paper Series 2004-19, Center for Research in Economics, Management and the Arts (CREMA).
    5. Helmut Dietl, 2010. "Besonderheiten des Sports ‐ Was rechtfertigt eine "eigene Ökonomik"?," Working Papers 0137, University of Zurich, Institute for Strategy and Business Economics (ISU).
    6. Jue-Shyan Wang & Wei-Hsin Wang & Yen-Chun Liao, 2014. "The Impact of Free Agency on Players¡¯ Compensation," Research in World Economy, Research in World Economy, Sciedu Press, vol. 5(1), pages 1-12, March.
    7. 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).
    8. Oliver Gürtler, 2012. "A Strategic Rationale for the Use of Sell–On Fees in European Sports," Journal of Sports Economics, , vol. 13(1), pages 76-84, February.
    9. Helmut Dietl & Egon Franck & Markus Lang, 2008. "Why football players may benefit from the ‘shadow of the transfer system’," European Journal of Law and Economics, Springer, vol. 26(3), pages 419-419, December.
    10. Benno Torgler, 2004. "?La Grande Boucle?: Determinants of Success at the Tour de France," CREMA Working Paper Series 2004-22, Center for Research in Economics, Management and the Arts (CREMA), revised May 2005.
    11. Henrik Jacobsen Kleven & Camille Landais & Emmanuel Saez, 2013. "Taxation and International Migration of Superstars: Evidence from the European Football Market," American Economic Review, American Economic Association, vol. 103(5), pages 1892-1924, August.
    12. Berlinschi, Ruxanda & Schokkaert, Jeroen & Swinnen, Johan, 2013. "When drains and gains coincide: Migration and international football performance," Labour Economics, Elsevier, vol. 21(C), pages 1-14.
    13. Paul Downward, 2014. "English professional football," Chapters,in: Handbook on the Economics of Professional Football, chapter 17, pages 277-297 Edward Elgar Publishing.
    14. Barajas, Angel, 2004. "Modelo de valoración de clubes de fútbol basado en los factores clave de su negocio
      [Valuation model for football clubs based on the key factors of their business]
      ," MPRA Paper 13158, University Library of Munich, Germany.
    15. Harrie A. A Verbon, 2007. "Migrating Football Players, Transfer Fees and Migration Controls," CESifo Working Paper Series 2004, CESifo Group Munich.
    16. Fella, Giulio, 2005. "Termination restrictions and investment in general training," European Economic Review, Elsevier, vol. 49(6), pages 1479-1499, August.
    17. Bernd Frick & Rob Simmons, 2014. "The footballers’ labour market after the Bosman ruling," Chapters,in: Handbook on the Economics of Professional Football, chapter 13, pages 203-226 Edward Elgar Publishing.
    18. Branko Milnaovic, 2003. "GLOBALIZATION AND GOALS: Does soccer show the way?," Labor and Demography 0312001, EconWPA.
    19. Haan Marco & Koning Ruud & Witteloostuijn Arjen van, 2012. "The Effects of Institutional Change in European Soccer," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(3), pages 318-335, June.
    20. 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.
    21. Muehlheusser, Gerd, 2006. "Regulating Damage Clauses in (Labor) Contracts," IZA Discussion Papers 2367, Institute for the Study of Labor (IZA).

    More about this item

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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