Edited by John Goddard and Peter Sloane
Chapter 12: Achieving transactional efficiency in professional team sports: the theory and practice of player valuation
The core production process in professional team sports involves converting financial input into sporting output. Efficient teams are able to minimise the costs of playing talent and maximise the sporting performance of their playing squad. A key component in maximising the efficiency of professional teams is the capability to identify, recruit and retain cost-effective playing talent. This represents transactional efficiency and is critical to success for teams with more restrictive resource constraints compared to some of their league rivals. Maximising transactional efficiency is vital for small-market teams or teams operating under a financial self-sufficiency regime which still aspire to sporting success. This chapter focuses on the role of player valuation in achieving transactional efficiency. Two types of player valuation are reviewed: comparative valuation and fundamental valuation. Examples of the application of both types of valuation in (association) football are provided. The financial input into the sporting production process takes two forms: player wage costs and acquisition costs. Professional players have employment contracts with teams and receive remuneration in the form of basic salaries, performance-related bonuses and other benefits including personal healthcare insurance and accommodation expenses. In addition, teams may also incur acquisition costs in the form of transfer fees or other payments if the player’s registration (that is, the exclusive right to field the player in games) has been acquired from another team.
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