Why football players may benefit from the "shadow of the transfer system"

Helmut Dietl, Egon Franck and Markus Lang

No 13, Working Papers from University of Zurich, Center for Research in Sports Administration (CRSA)

Abstract: The transfer system imposed by the football governing bodies on employment relations made sure that a player could not leave his current club and sign with another club without the current club's explicit consent. The 1995 Bosman judgement of the European Court of Justice declaring football players to free agents after expiration of their contracts and the 2001 intervention of the European Commission, which, among other things, limited contract durations in football, can be interpreted as the two major steps towards restricting the application of the transfer system. Based on a bargaining model with stochastic player productivity, we show that less 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 (search for similar items in EconPapers)
JEL-codes: D86 J49 L83 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2006, Revised 2007
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http://repec.business.uzh.ch/RePEc/rsd/CRSA_WPS/13_CRSA_full.pdf First version, 2006 (application/pdf)

Related works:
Journal Article: Why football players may benefit from the ‘shadow of the transfer system’ (2008)
Journal Article: Why football players may benefit from the ‘shadow of the transfer system’ (2008)
Working Paper: Why football players may benefit from the "shadow of the transfer system" (2007)
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