Abstract
Transfer fees in European football have experienced a rapid increase in the past years. Simultaneously, an increasing number of domestic and recently foreign investors — who are assumed to further increase team spending in European football — have entered the football market by becoming club owners. In light of these developments, fears associated with an increasing influence of foreign (majority) investors from the financial as well as the emotional fan perspective have increased. Given the rather limited number of empirical studies focusing on the impact of investors on transfer fees, we shed further light on this topic. Based on a data sample including transfer fees, player characteristics, player performance and team performance from 2012–2013 to 2018–2019 for the English Premier League, we estimate OLS regressions and quantile regressions to analyze the effects of ownership concentration and investor origin on the amount of individual transfer fees. While we do not find strong evidence that ownership concentration increases the willingness to pay, we find fairly consistent results that foreign investors are willing to pay a premium compared to domestic investors. Our results also indicate that especially foreign investors who own a majority share of a club have a positive effect on transfer fees for the upper quantiles.
Highlights
In recent years, European football has experienced a considerable economic step-up that is made most evident by numerous revenue and transfer fee records
Because international recognition benefits from sporting success, which is strongly related to team investments, we argue that foreign investors have a higher willingness to pay a premium for players than domestic investors do in order to outbid other teams when signing players
Foreign investors tend to have a positive effect on transfer fees
Summary
European football has experienced a considerable economic step-up that is made most evident by numerous revenue and transfer fee records. Some crucial determinants for this development are higher broadcasting revenues and the ongoing globalization of Europe’s top leagues (Rohde & Breuer, 2017), which have increased the global sales potential for clubs. Another driver that has gained regularly considerable attention in the sports-economics literature, and the general public is the entry of (foreign) investors with high spending power (Lang, Grossmann, & Theiler, 2011; Wilson, Plumley, & Ramchandani, 2013; Madden, 2015; Sims, 2018). Due to the increasing importance of club-ownership structures and investors’ origins, even the highly-scrutinized annual football reports by Deloitte and Europe’s football governing body, UEFA, contain a dedicated section on club ownership (Deloitte, 2019; UEFA, 2020)
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