The Economics of Long‐term Contracts in the Footballers' Labour Market

Abstract

Peter Sloane's seminal article in this journal on the objectives of football clubs argued that utility maximising clubs would seek out player talent more aggressively than profit maximising clubs and that this accumulation of player talent by larger teams might need to be checked by redistribution of revenues. We suggest in this article that, in a context of rising revenues and high rewards, the pressures to acquire more and better talent so as to out‐perform other teams on the football pitch leads to a requirement for teams to practise effective contract management. Using a large dataset from the German Bundesliga, we find that players with longer term contracts perform better, ceteris paribus. Hence, selection effects in the award of long‐term contracts dominate moral hazard (shirking) effects in the Bundesliga.

Staring into the abyss? The state of UK rugby's Super League

“…Buraimo, Frick and Hickfang and Simmons, 2015;Fort, 2015;Kesenne, 2015;Leach and Szymanski, 2015;Sloane, 2015;Vrooman, 2015). Professional sports league are primarily structured in such ways to drive fan engagement and to make the sport an attractive 'product' for consumers.…”

Competitive Balance and Assortative Matching in the German Bundesliga

“…If we adopt a similar approach as in Equation (2) for grades (where we replace goal difference as an outcome with goals), we get a correlation coefficient of ρ = −.79. This shows that the partial correlation of each player with the goal margin is closely related with a ratings by experts used in other studies such as Buraimo et al [2015]. Figure 12 shows the distribution of player performance for players who appear only in the 1st Bundesliga (25%), who always play in the sample period in the 2nd Bundesliga (23%) and those of play for teams in both divisions (52%).…”

“…Player performance measures are closely related to professional grades attributed by the Kicker sports magazine. Amongst other things, these grades have been used in Buraimo et al [2015] to analyze moral hazard aspects with respect to contract length of Bundesliga players. If we run the same Equation (1) for grades rather than for the goal margin, we find a correlation of ρ ≈ −0.79 between our performance measure and the coefficients derived from the regression with grades as outcome (in Germany lower grades are better), see Appendix.…”

The UEFA Champions League: maintaining the status quo?

“…Buraimo, Frick and Hickfang and Simmons, 2015;Fort, 2015;Kesenne, 2015;Leach and Szymanski, 2015;Sloane, 2015;Vrooman, 2015). The theoretical literature on the determinants of the degree of competitive inequality in sports leagues was developed by US sports economists, with North…”