Valuation of football players : a complete pricing framework

Abstract

In this thesis we will describe a football player’s value to a football club. First we will explore how a player can generate revenue. In doing so, we will describe two valuation factors, where a football player can fulfil none, one or both of them. The two factors will describe how a football player can generate revenue for his club. Next we will present a valuation model based on theory from option pricing. The valuation model will be linked up to the two factors, and give us the financial value of a football player. A player’s financial value can differ among clubs. So, in the case of a potential transfer the clubs involved must negotiate a transfer fee, while the buying clubs must negotiate a salary with the player. We will present a bargaining framework to discuss which parties have bargaining power. With this framework we can also discuss outcomes of transfer fee and salary.