Winner’s Curse: An Analysis of Transactions Happening in Soccer Clubs

Abstract

The literature states the term winner’s curse as the fact that auction winners pay higher prices a good, above its actual value. The purpose of this article is to verify whether soccer clubs around the world conducting their main business transactions (buying and selling players) incur so-called the “Curse of the Winner”. A descriptive research was conducted through the Transfermarkt database analyzes involving renowned clubs and soccer players transactions in recent years. The results point out that the biggest and more relevant soccer clubs in the market present the winner’s curse, i.e., they acquired players who do not deliver good results in performance and economy, paying a million dollar for them. Nevertheless, the analysis was limited for probabilistic expectations of the occurrence of the curse of the winner, as well as contingency factors such as: human behavior, injuries, etc. In addition, this article contributes to the literature about the winner’s curse, especially in relation to the uncertainties of the soccer market. Likewise, the very measurement and accounting recognition of such transactions are fragile in estimating the true economic resource arising from training or hiring a soccer player.