Soccer transfers, team efficiency and the sports cycle in the most valued European soccer leagues – have European soccer teams been efficient in trading players?

ABSTRACT

The sale of soccer players is a serious issue for the sustainability of professional teams. This article discusses the efficiency of the values that 183 European soccer teams have received for the sales of their players since 2007. We estimated stochastic frontiers for these soccer teams using stochastic frontier analysis. We found that teams with higher numbers of titles, with huge past acquisitions of players, and achieving good rankings in the previous season tend to receive more transfer inflows. The efficiency of these inflows can be significantly influenced if the team exhibits a long sports history or if the team participates in the Champions League or in the Europa League.

KEYWORDS:

• Soccer
• transfers
• efficiency

JEL CLASSIFICATION:

• L83
• D61
• G23

Acknowledgements

The author is indebted to Andreia Valverde for collecting the data used in this work. The author is also indebted to two anonymous reviewers who have provided valuable comments on a previous version of this article. The author also acknowledges the stimulus provided by the ‘Prémio de Investigação Albino Maria / 2015’, which has been awarded to a previous version of this research. Remaining errors are author’s exclusive ones.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ We remark that transfers can assume different figures from those belonging to the traditional group of ‘wholly owned’ rights by the hiring team. There are cases (such as loans or involving players’ funds or private investment companies) that allow only a certain share (below 100%) to be a part of the hiring team’s assets and expenses.

² There is an additional point in this issue. It relates to the treatment of fees in club balance sheets. As this point strictly relates to each country’s regulations (namely the concerned depreciations), we only focused on the current value of transfers recorded at each player’s contract. For additional information on this accountability discussion, we suggest Radu and Howard (2010).

³ In Europe, the professional leagues start in August of a given year ‘t-1’ and end in May of the following year ‘t’. We considered this year ‘t’ as the reference year.

⁴ As Battese and Corra (1977) recognize the system composed of Equations (3) and (4) is estimated by maximum likelihood. Other methods (like panel data estimations using fixed effects) provided converging results to these. However, fixed-effects estimations are more exposed to heteroscedasticity problems, as Battese and Corra (1977) recognize, and as our panel data estimations also achieved. Full comments are available under request.

⁵ For the observation of season t, this difference is equal to points_t-1 − points_t-2.

⁶ Imagine a situation where a purchase of a player by Barcelona signals to other European clubs that ‘this player is of high quality and we need to purchase him’. Barcelona may be profiting simply off of the signal relayed to the rest of the industry that they think a given player is of high quality.

⁷ Check Prime Time (2013).

⁸ The partial variance inflation factors are transfer inflows (value of sales of players, current euros): 3.2; cumulated number of titles: 3.0; previous season’s number of different titles: 2.8; previous season’s transfers balance (inflows – outflows, at current euros): 2.7; previous season’s final points (at nat. league): 2.6; difference of final points between the two previous seasons (at nat. league): 2.2; previous season’s avg. number of spectators (log): 2.1; presence in the season’s UEFA Champions League (dummy): 1.2; presence in the season’s UEFA Europa League (dummy): 1.1; percent players born in the country: 1.1; and age of the club: 1.0.

⁹ Check values for instances from the source Transfermarkt.com. Following this source, of alternatively Prime Time (2013), AC Milan and Manchester United are some of the European clubs that from 2010 to 2012 had assumed expressive transfer outflows in the European universe. AC Milan spent a yearly value of 45 million euros, Manchester United paid 40 million euros, in these three seasons. With these values and following our findings, AC Milan and Manchester United should have capitalized more their sales considering its history, its titles, and the size of its salary bill in order to minimize so significant imbalances.