The transfer system in European football: a pro-competitive no-poaching agreement?
Tinbergen Institute Discussion Paper 2020-034/VII
48 Pages Posted: 14 Jul 2020 Last revised: 15 Dec 2020
Date Written: December 14, 2020
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.
Keywords: no-poaching, antitrust, revenue redistribution, transfer system, European football
JEL Classification: L41, J41, K12, L83
Suggested Citation: Suggested Citation