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Why football players may benefit from the "shadow of the transfer system"

Author

Listed:
  • Helmut Dietl
  • Egon Franck
  • Markus Lang

    (Institute for Strategy and Business Economics, University of Zurich
    Institute for Strategy and Business Economics, University of Zurich
    Institute for Strategy and Business Economics, University of Zurich)

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'.

Suggested Citation

  • Helmut Dietl & Egon Franck & Markus Lang, 2006. "Why football players may benefit from the "shadow of the transfer system"," Working Papers 0062, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2007.
    • Handle: RePEc:iso:wpaper:0062
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2008. "Revenue Sharing, Reserve Clause and Salary Caps in Professional Team Sports Leagues," Working Papers 0100, University of Zurich, Institute for Strategy and Business Economics (ISU), revised 2009.
    2. 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, July.
    3. 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).
    4. Helmut Dietl, 2010. "Besonderheiten des Sports ‐ Was rechtfertigt eine "eigene Ökonomik"?," Working Papers 0137, University of Zurich, Institute for Strategy and Business Economics (ISU).
    5. 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.
    6. Helmut Dietl & Rodney Fort & Markus Lang, 2011. "International Sports League Comparisons," Working Papers 0042, University of Zurich, Center for Research in Sports Administration (CRSA).
    7. 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.
    8. 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 0122, University of Zurich, Institute for Strategy and Business Economics (ISU).
    9. Miriam Marcén, 2016. "The Bosman ruling and the presence of native football players in their home league: the Spanish case," European Journal of Law and Economics, Springer, vol. 42(2), pages 209-235, October.
    10. Helmut Dietl & Egon Franck & Martin Grossmann & Markus Lang, 2009. "Contest Theory and its Applications in Sports," Working Papers 0029, University of Zurich, Center for Research in Sports Administration (CRSA).
    11. Christian Deutscher & Oliver Gürtler & Joachim Prinz & Daniel Weimar, 2017. "The Payoff To Consistency In Performance," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 1091-1103, April.

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    Keywords

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    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J49 - Labor and Demographic Economics - - Particular Labor Markets - - - Other
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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