Wednesday, 20 February 2013

The economics of player transfers

The study on the economic and legal aspects of transfers of players by European Commission  demonstrates that the total amount of transfers in football for 2010/11 was about €3 billion in the EU with significant elements of concentration: the “big-5” represented more than 55% of this amount. The study establishes that between 1995 and 2011, the number of transfers in the EU has been multiplied by 3.2 and the total value of transfer fees by 7.4.  

Year                                       Number of transfers                  Value (€)
1994-95                                   5 735                                          €402 869 000
1999-2000                               8 531                                          €1 704 603 000
2005-06                                   15 952                                        €1 952 066 000
2010-11                                   18 307                                        €3 002 198 000
Source: CDES (based on data provided by FIFA and CIES) 

The study highlights the strong segmentation of the labour market in European football and its main developments. Based on the economic literature and on many experts’ advice, the study shows that, unlike theories traditionally used, the market is not a market of pure and perfect competition. It is composed of three main segments with different structures and on which the market power of the different stakeholders are not the same. 
  1. the higher primary market, on which a limited number of players (the “superstars”) faces a limited number of clubs, has a monopolistic structure. 
  2. the lower primary market, on which a limited number of players (the good and experienced ones) faces a huge number of clubs, has an oligopolistic structure.
  3. The secondary market, on which many players face a  limited number of clubs, has an oligopsony structure.
Asian countries? Malaysia? How much do you want to pay for all these three categories of players?

For further reading: