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Why football players may benefit from the `shadow of the transfer system´


Franck, E; Dietl, H; Lang, M (2008). Why football players may benefit from the `shadow of the transfer system´. European Journal of Law and Economics, 26(2):129-151.

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 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.

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 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.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Language:English
Date:October 2008
Deposited On:17 Nov 2008 15:13
Last Modified:05 Apr 2016 12:32
Publisher:Springer
ISSN:0929-1261
Additional Information:The original publication is available at www.springerlink.com
Publisher DOI:https://doi.org/10.1007/s10657-008-9059-5

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