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

See all articles by Sam Hoey

Sam Hoey

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Thomas Peeters

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); University of Antwerp - Department of Economics

Francesco Principe

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: December 14, 2020

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.

Keywords: no-poaching, antitrust, revenue redistribution, transfer system, European football

JEL Classification: L41, J41, K12, L83

Suggested Citation

Hoey, Sam and Peeters, Thomas and Principe, Francesco, The transfer system in European football: a pro-competitive no-poaching agreement? (December 14, 2020). Tinbergen Institute Discussion Paper 2020-034/VII, Available at SSRN: https://ssrn.com/abstract=3631763 or http://dx.doi.org/10.2139/ssrn.3631763

Sam Hoey (Contact Author)

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

Thomas Peeters

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

University of Antwerp - Department of Economics ( email )

Prinsstraat 13
Antwerp, B-2000
Belgium

Francesco Principe

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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