Determinants of Transfer Fees for Football Players under Dual Segmentation of Transfer Market

This paper studies the determinants and differences of transfer fees between foreign players and domestic players in Chinese Football Association Super League. Theory analysis suggests that the quota system for foreign players and the low competitiveness of domestic players have resulted in dual segmentation of transfer market. Under dual segmentation of transfer market, the transfer fees for foreign players are determined by bargaining mechanism, while the ones for domestic players are determined by bidding mechanism. The empirical analysis of player transfer data in 2013-2016 demonstrates that 1) the transfer fees for foreign players increase with transfer expenditure and recent match performance, and decrease with relative bargaining power of buying-clubs; 2) the financial and performance characteristics of buying-clubs have no significant impact on the transfer fees for domestic players. The empirical results support the theoretical analysis. Regulations of transfer fees should be different under dual segmentation of transfer market.