Why Football Players May Benefit from the 'Shadow of the Transfer System'

25 Pages Posted: 3 Oct 2006 Last revised: 22 Feb 2009

See all articles by Helmut M. Dietl

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW)

Egon P. Franck

University of Zurich - Department of Business Administration (IBW)

Markus Lang

University of Zurich - Department of Business Administration (IBW)

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

Dietl, Helmut M. and Franck, Egon P. and Lang, Markus, Why Football Players May Benefit from the 'Shadow of the Transfer System' (August 1, 2007). European Journal of Law and Economics, Vol. 26, 2008. Available at SSRN: https://ssrn.com/abstract=934547

Helmut M. Dietl

University of Zurich - Department of Business Administration (IBW) ( email )

Hottingerstrasse 10
Plattenstrasse 14
Zurich, 8032
Switzerland

Egon P. Franck

University of Zurich - Department of Business Administration (IBW) ( email )

Plattenstrasse 14
Zurich 8032
Switzerland
+41 1 634 28 45 (Phone)

Markus Lang (Contact Author)

University of Zurich - Department of Business Administration (IBW) ( email )

Hottingerstrasse 10
Plattenstrasse 14
Zurich, 8032
Switzerland

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