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The transfer system in European football: A pro-competitive no-poaching agreement?

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  • Hoey, Sam
  • Peeters, Thomas
  • Principe, Francesco

Abstract

We assess the proclaimed pro-competitive effects of the “transfer system”, the no-poaching agreement governing the European football (soccer) labor market. A major argument to legitimize this system is that transfer fees, which hiring clubs pay to release players from their current clubs, redistribute revenues from large market to small market clubs. This would strengthen small clubs’ financial clout and their ability to compete in sporting terms. Player transfer fees represent over 10 billion Euros in asset value in the financial statements of the 202 clubs we analyze. Still, small market clubs rarely obtain substantial revenues from the transfer market. The main beneficiaries are clubs around the middle of the market size distribution. A select group of large market clubs makes significant transfer losses, but this does not undo their initial financial advantage. Overall, the transfer system therefore leads to a very minor reduction in revenue inequality.

Suggested Citation

  • Hoey, Sam & Peeters, Thomas & Principe, Francesco, 2021. "The transfer system in European football: A pro-competitive no-poaching agreement?," International Journal of Industrial Organization, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:indorg:v:75:y:2021:i:c:s0167718720301181
    DOI: 10.1016/j.ijindorg.2020.102695
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    Cited by:

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    2. Donato Masciandaro & Ariela Caglio & Sébastien Laffitte & Gianmarco Ottaviano, 2022. "Has Financial Fair Play Changed European Football?," BAFFI CAREFIN Working Papers 22189, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    3. Antoine Feuillet & Loris Terrettaz & Mickaël Terrien, 2023. "Farmers league: squad structure and resource dependency The case of French Ligue1," Post-Print hal-04323874, HAL.

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    More about this item

    Keywords

    No-poaching; Antitrust; Revenue redistribution; Transfer system; European football;
    All these keywords.

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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