Legal Restrictions on Buyout Fees: Theory and Evidence from German Soccer

Eberhard Feess (), Bernd Frick () and Gerd Muehlheusser ()
Additional contact information
Bernd Frick: University of Paderborn
Gerd Muehlheusser: University of Hamburg

No 1180, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We perform a theoretical and empirical analysis of the impact of transfer fee regulations on professional soccer in Europe. Based on a model on the interaction of moral hazard and heterogeneity, we show (i) how the regulations effect contract durations and wages, (ii) that contracting parties have an incentive to agree upon inefficiently long contracts, (iii) how these incentives vary with the legal system, and (iv) how the relationship between contract duration and performance also depends on the legal system. With one exception, all theoretical results are empirically confirmed using a comprehensive data set from the top German Soccer League ("Bundesliga").

Keywords: Labor contracts; Bosman judgement; empirical contract theory (search for similar items in EconPapers)
JEL-codes: J41 L83 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2004-06
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Citations: View citations in EconPapers (13)

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Working Paper: Legal Restrictions on Buyout Fees: Theory and Evidence from German Soccer (2004)
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