Tournaments within football teams: players’ performance and wages

Abstract

Football players’ wages are, in most clubs, the largest share of expenses and one of the most important incentives to keep players motivated. How are football players encouraged to constantly improve their performance and what is the effect of good performances on wages? Are wage spreads within teams being set to motivate players, as in a rank-order tournament? Using accurate data from Portuguese First League football player wages, we study the relationship between wages and players’ performance. Using minutes, number of games and performance statistics during the season as a proxy for players’ performance, we show that players who play more minutes earn a wage prize and those at the top face a convex relationship suggesting the setup of a tournament within football teams.