How soccer players have a stronger bargaining power in contract negotiations
Links:
http://www.espnfc.us/story/2855907/real-madrids-sergio-ramos-considered-manchester-united-transfer
https://www.theguardian.com/football/2016/sep/09/neymar-psg-barcelona-offered-sign-650000
In European club football (soccer), players earn millions of dollars per week, and have agents who are on their heels for any opportunity to earn more money for their clients, and more importantly for themselves. Clubs are generating hundreds of millions of dollars in revenue, but the power still lies with the superstars and their agents. All clubs strive for stability in their squads. Stability helps generate more revenue, reduces further expenses on transfer fee for recruiting replacements, creates a stable fan base, and doesn’t affect the team’s chemistry. Therefore, to ensure that the best players stay at the club, they negotiate new contracts with them to ensure they stay at the club. Players and agents have the bargaining power here, because they have other equally lucrative options which they can choose from. They can either sign a new contract, or refuse to do so and join a rival club and possibly earn more money. They are aware of their bargaining power, and they use it negotiate as hard as they can.
The articles linked above discuss how two extremely important players for their clubs considered other offers and used them to get better contracts for themselves. One player even got a personal jet allowance to travel to Brazil, his native country, during vacation. The negotiations are insane, and the money involved is absurd. This is similar to the bargaining situations we studied in class where players have outside options and have a stronger bargaining power, and thus get more out of the deal. The clubs who have no outside options, succumb to the players’ demands.