Does the Dual Representation System of Player Agents in International Football Benefit Players? An Economic Analysis

Abstract

It is common in international football for the same agent to be paid both commission fees by the purchasing club for negotiating a player salary and a transfer fee. This dual representation creates a potential conflict of interest for the agent. The agent may not negotiate the highest salary for the player if a higher salary reduces the likelihood of a successful transfer by lowering the resources available for the transfer fee. We construct a gamble model of the transfer process and simulate the ex-ante agent commissions rates, expected player salary, transfer fee and club profit under the assumption of dual representation where the buying club pays all agent commissions. The assumption that the quality of the agent increases with the commission rate is essential to the model. Both the player and the club are better off when the club pays both commissions, however the agent is worse off.