The Bosman Case

Abstract

A league benefits from signing a contract that makes compensation compulsory to a team that loses its player on the expiry of his contract. This article analyzes the consequences of impeding such contracts between teams, as in the Bosman case, settled by the European Court of Justice in 1995. It is argued that smaller teams will sell their talent before the expiry of their contracts with the players to be able to bargain for a transfer fee from the recruiting team. Consequently, the quality of the leagues decreases.