Transfer Fee Regulations in European Football

28 Pages Posted: 8 Feb 2002

See all articles by Gerd Muehlheusser

Gerd Muehlheusser

University of Hamburg; IZA Institute of Labor Economics

Eberhard Feess

Frankfurt School of Finance & Management gemeinnützige GmbH

Date Written: February 2002

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.provide little support for the recent legislative changes.

Keywords: Labor Contracts, Bosman Judgement, Transfer Fees, Breach of Contract, Investment Incentives, General Skills, Externalities

JEL Classification: J41, K12, L83

Suggested Citation

Muehlheusser, Gerd and Feess, Eberhard, Transfer Fee Regulations in European Football (February 2002). IZA Discussion Paper No. 423. Available at SSRN: https://ssrn.com/abstract=299686

Gerd Muehlheusser (Contact Author)

University of Hamburg ( email )

Von Melle Park 5
Hamburg, 20146
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Eberhard Feess

Frankfurt School of Finance & Management gemeinnützige GmbH ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

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