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Opportunity Cost - Reflective Exercise

What are the economic arguments on whether a football club should sell an important player?

Learning Focus

  • Developing an understanding of opportunity cost and its role in decision making

Threshold Concepts pivotal to this learning

  • Opportunity Cost
  • Marginality

The threshold concept of equilibrium is also used.

The Scenario

Hope City is a Premier League football club playing in Europe next season. They have had enquiries from a well known Spanish club for their star player and a figure of £34 million has been mentioned. This player rose through the club's own youth programme and is currently captain of the team. He still has a number of years to run on his contract. The club has to decide what to do.

Setting the framework for investigating this question

What is the cost to the club in keeping the player?

Tick however many of the following you think appropriate, then compare with an economist's answer(s).

(a) *The value of next best alternative player in the squad.
(b) *What the player cost the club to develop through their youth programme.
(c) *Explore whether the £34 million is the highest offer they can get and consider the highest offer as the cost of keeping the player.
(d) *Consider the value of the last highly rated player to be sold from the league.
(e) *Consider what the player would be worth in his next best alternative occupation.

How would you work out how to make the decision?

Tick however many of the following you think appropriate, then compare with an economist's answer(s).

(a) *If the club has major cash flow problems and urgently needs more funds they should sell the player, if it doesn't they shouldn't sell the player.
(b) *Assess the costs and benefits to the club of selling the player.
(c) *The club should not consider selling this player as he is their star and has been loyal to them.
(d) *Explore the likely ways in which they could spend the highest offer and assess whether the benefits of keeping the player more than outweigh the benefits of bringing new players in with this money.

There is a complication to what we have been considering, known as the Bosman ruling. If a player gets to the end of their contract, the club will get no transfer fee from a move and the player can agree a contract with any club he wants.

Go here for a further interactive question on the subject, and compare your answer with an economist's.

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