The Determination of Player Transfer Fees in English Professional Soccer

Abstract

Unlike most major U.S. sport teams, it is common for professional soccer clubs around the world to trade players for cash. This article develops a model of the player-transfer market in soccer in which observed transfer fees are determined by player characteristics, selling-club characteristics, buying-club characteristics, and time effects. The model is based on data on 1,350 transfer fees in English professional soccer from June 1990 to August 1996. The estimated model is used to investigate the rate of inflation in transfer fees. In addition, the determination of transfer fees is considered within different segments of the transfer market. It is found that the determination of transfer fees differs markedly among segments.