Why Football Players May Benefit from the 'Shadow of the Transfer System'
25 Pages Posted: 3 Oct 2006 Last revised: 22 Feb 2009
Date Written: August 1, 2007
Abstract
Transfer restrictions have a long tradition in professional sports but came under heavy attack in recent years (e.g. Bosman ruling, Monti system). Based on a bargaining model with stochastic player productivity, we show that more restrictive transfer rules reallocate ex post bargaining power from players to clubs. This reallocation is efficient and in the ex ante self-interest of players. The right to charge transfer fees enables clubs to insure their players. The players, in turn, benefit by converting risky future income into riskless current income. Overall, player utility is higher under more than under less restrictive transfer rules.
Keywords: labour contracts, transfer restrictions, transfer fees, Bosman and Monti transfer system, FIFA regulations
JEL Classification: D86, J49, L83
Suggested Citation: Suggested Citation
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