A Strategic Rationale for the Use of Sell–On Fees in European Sports

Abstract

In European team sports, contracts that govern the transfer of a player from one club to another often contain a clause specifying a sell-on fee. Such clause ensures that the selling club profits from a future transfer of the player. This article gives possible explanations for the use of sell-on fees. Besides rather obvious explanations based on risk considerations and wealth constraints, the article shows that a sell-on fee could be used for strategic reasons. In particular, the clubs may agree on a sell-on fee since it affects the behavior of the buying club in future transfer negotiations in a favorable way.