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Is Blood Thicker than Water? The Impact of Player Agencies on Player Salaries: Empirical Evidence from Five European Football Leagues

Author

Listed:
  • Sage Felix

    (Mercator School of Management, University of Duisburg-Essen, Chair of General Business Administration, Lotharstraße 65, 47057 Duisburg, Germany)

  • Prinz Joachim

    (Mercator School of Management, University of Duisburg-Essen, Chair of General Business Administration, Lotharstraße 65, 47057 Duisburg, Germany)

Abstract

In this article, we analyze how different representation models of professional football players affect their salaries in salary negotiations. We distinguish between self-representation, representation by relatives and representation by player agencies. Based on the principal agent theory and against the background of asymmetric information, we hypothesize that the self-representation model has the most lucrative effect on salaries. Furthermore, we argue that the number of players represented by an agency has a negative effect on salaries. To test our hypotheses, we use a unique panel dataset containing 3,775 players from the top five European leagues over five collection dates. In addition to market values and salaries, we also include individual and team performance. Furthermore, we use information on the different representation models and, in the case of player agencies, information on the particular agency. In our study, we found no significant effect of the representation model on the salary of professional football players, which challenges the justification of agencies in general.

Suggested Citation

  • Sage Felix & Prinz Joachim, 2024. "Is Blood Thicker than Water? The Impact of Player Agencies on Player Salaries: Empirical Evidence from Five European Football Leagues," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 244(5-6), pages 453-473.
    • Handle: RePEc:jns:jbstat:v:244:y:2024:i:5-6:p:453-473:n:1008
    DOI: 10.1515/jbnst-2023-0098
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    More about this item

    Keywords

    salary determination; football; player agencies; asymmetric information;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • Z21 - Other Special Topics - - Sports Economics - - - Industry Studies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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