Abstract
Billions of euros are invested every year by professional football clubs for the recruitment of players. How do market actors decide prices? This paper presents an econometric model unveiling the key factors coming into play in determining fees on the transfer market for professional football (soccer) players. The statistical technique used to build the model is multiple linear regression (MLR), with fees paid by clubs as an independent variable. The sample comprises over 2000 transactions of players transferred for money from clubs in the five major European leagues during the period stretching from July 2012 to November 2021. This paper notably highlights the importance of taking into consideration the remaining duration of contracts binding players with the club to which they belong, a factor often neglected in the existing literature. It also shows that a statistical model can explain over 80% of the differences in the transfer fees paid for players. This paper reveals various applications of the approach developed for the football industry to both assess and predict football players’ transfer fees and values: transfer negotiations, club sales or purchases, bank credit, fund raising, financial planning and communication, legal disputes, etc.
Highlights
This paper outlines the approach developed by the authors to assess from an econometric perspective the transfer value of professional football players
Inspired by FIFA’s (Fédération Internationale Football Association) wording (FIFA 2021), as well as by Herm et al (2014), Müller et al (2017) and Velema’s (2018) papers, transfer value is defined as the fee that an engaging team is willing to agree with the releasing team as compensation for breaching the contract of a player with respect to the transfer fees paid in the past for footballers with similar characteristics
The econometric model presented was built from 2045 fee-paying transfers that occurred between July 2012 and November 2021 concerning players belonging to teams from the five major European leagues: the English Premier League, the Spanish La Liga, the Italian Serie A, the German Bundesliga and the French Ligue 1
Summary
This paper outlines the approach developed by the authors to assess from an econometric perspective the transfer value of professional football (soccer) players. Transfer fees are agreed by market actors on a free basis, following negotiations that can last several weeks or even months These negotiations include the representatives of both the engaging and releasing teams (primarily club owners, CEOs and sports directors), as well as, using again FIFA’s wording (FIFA 2015), football intermediaries, more commonly known as football agents (Poli 2009). The latter may represent both the player and the clubs involved and, in the latter case, may be entitled to a share of the transfer fee negotiated. It adds value to previous research in this field by relying on an unprecedentedly large sample of fee-paying transactions with full information available (notably concerning players’ contract duration) covering all the five major football markets (England, Spain, Italy, Germany and France) over an extended period (almost ten years)
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