Is Blood Thicker than Water? The Impact of Player Agencies on Player Salaries: Empirical Evidence from Five European Football Leagues

Sage Felix () and Prinz Joachim
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Sage Felix: Mercator School of Management, University of Duisburg-Essen, Chair of General Business Administration, Lotharstraße 65, 47057 Duisburg, Germany
Prinz Joachim: Mercator School of Management, University of Duisburg-Essen, Chair of General Business Administration, Lotharstraße 65, 47057 Duisburg, Germany

Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), 2024, vol. 244, issue 5-6, 453-473

Abstract: In this article, we analyze how different representation models of professional football players affect their salaries in salary negotiations. We distinguish between self-representation, representation by relatives and representation by player agencies. Based on the principal agent theory and against the background of asymmetric information, we hypothesize that the self-representation model has the most lucrative effect on salaries. Furthermore, we argue that the number of players represented by an agency has a negative effect on salaries. To test our hypotheses, we use a unique panel dataset containing 3,775 players from the top five European leagues over five collection dates. In addition to market values and salaries, we also include individual and team performance. Furthermore, we use information on the different representation models and, in the case of player agencies, information on the particular agency. In our study, we found no significant effect of the representation model on the salary of professional football players, which challenges the justification of agencies in general.

Keywords: salary determination; football; player agencies; asymmetric information (search for similar items in EconPapers)
JEL-codes: D82 D86 J31 Z21 Z22 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:jns:jbstat:v:244:y:2024:i:5-6:p:453-473:n:1008

DOI: 10.1515/jbnst-2023-0098

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