Arbitrator Decision‐Making in the Transfer Market: an Empirical Analysis

Abstract

This paper analyses data generated by the annual round of arbitrated settlements of disputed transfer fees for end‐of‐contract players in the English Football League. Using information on final‐offers of the disputant clubs and data on a variety of player and club characteristics we analyse arbitrated fees and final‐offers, and the relative importance of final‐offers and case facts in fashioning outcomes. Our analysis suggests that a large proportion of the variation in settlements can be accounted for by certain case facts rather than a mechanical compromise of final‐offers, with the latter receiving a relatively low weight. In general, our findings are consistent with the view that conventional arbitration systems generate little useful information in terms of final‐offers from the disputant parties.

Football transfer fee premiums and Europe's big five

“…Similar evidence is found by Speight and Thomas (1997), while Dobson and Gerrard (1999) and Gerrard and Dobson (2000) derive formal models which include monopoly rents in the transfer fees, that is, the amount extracted by the selling club from the excess of the buying club's total valuation of a player over the selling club's reservation price. Using a sample of English professional football clubs, they empirically confirm that the characteristics of the buyer are statistically significant determinants of transfer fees, implying that monopoly rents exist.…”

The Football Players' Labor Market: Empirical Evidence From the Major European Leagues

“… First, as transfer fees are quite often a matter of dispute between selling and buying club, most European leagues have implemented some kind of an arbitration procedure. Controlling for arbitrated settlements (Carmichael and Thomas, 1993; Reilly and Witt, 1995; Speight and Thomas, 1997a, b), however, produces mixed results. Some studies find that arbitrated fees are higher than those on which buyer and seller agree while others find that they are significantly lower. Second, as the probability of being traded to a new club is not identical for all players, the estimation procedure employed in almost all of the available studies is likely to produce biased coefficients (see Carmichael et al ., 1999).…”

“…First, as transfer fees are quite often a matter of dispute between selling and buying club, most European leagues have implemented some kind of an arbitration procedure. Controlling for arbitrated settlements (Carmichael and Thomas, 1993; Reilly and Witt, 1995; Speight and Thomas, 1997a, b), however, produces mixed results. Some studies find that arbitrated fees are higher than those on which buyer and seller agree while others find that they are significantly lower.…”

The Wisdom of Crowds and Transfer Market Values

“…A number of papers examine the factors which determine the actual transfer fee when one club purchases the contract of a player from another club. Carmichael, Forrest, and Simmons (1999), Carmichael and Thomas (1993), Dobson, Gerrard, and Howe (2000), Reilly and Witt (1995) and Speight and Thomas (1997) all estimate models of the determinants of transfer prices. The results are not surprising and those factors that make a transfer fee large also tend to explain both a larger player salary and a greater likelihood of being transferred (Frick, 2007).…”