The economics of long-term contracts in the footballers' labour market

Buraimo, Babatunde and Frick, Bernd and Hickfang, Michael and Simmons, Robert (2015) The economics of long-term contracts in the footballers' labour market. Scottish Journal of Political Economy, 62 (1). pp. 8-24. ISSN 0036-9292

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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.

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Journal Article
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Scottish Journal of Political Economy
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18 Jun 2015 06:02
Last Modified:
22 Nov 2022 01:54