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Transfer Fees

By Jim Chen et al.

I have not read Why England Lose: and other Curious Football Phenomena Explained by Simon Kuper and Stefan Szymanski but this excerpt of a review of the book in the August 13th issue of the Economist caught my eye:

"A third myth is that clubs cannot buy success. They can, so long as they spend on players? wages rather than on transfers. Almost 90% of the variation in the positions of leading English teams is explained by wage bills. Transfer fees contribute little. New managers hoping to make their mark often waste money. Stars of recent World Cups or European championships are overrated. So are older players. So, curiously, are Brazilians and blonds."

I guess the best example of this in baseball is the Red Sox and Dice-K. But I wondered if there are transfer fees in law teaching and could the same phenomena be at work. I could only think of one transfer and and one that is like a transfer fee.

At my School, if you take a sabbatical you must come back for at least a year. If not, as I understand it, either the person leaving or, more likely the destination school must provide compensation. To me that is very similar to a transfer fee but certainly not of the magnitude of those you read about in soccer.

Another practice that has the same effect is the treatment of a trailing spouse. The trailing spouse matter usually involves privileged people who have come to believe that, unlike the lower classes, they should not be put to life's hard choices. At my University for a time (and maybe even now) there was a plan. If one department wanted to hire a person who had a trailing spouse, that department would pitch in 1/3 of the trailer's salary. The department hiring the trailer would pay 1/3 and the central administration would pay 1/3.

So, suppose a department found a good candidate and offered $100,000. The the trailing spouse matter is then raised and plan is put into action. The trailer's salary will be $90,ooo. Listing it as the trailer's salary is a nice way to let the trailer save face but in every reality, the new faculty member is being paid at least $130,000, not $100,000.

Is this a tranfer fee? Obviously it is not because ultimately it becomes, indirectly, part of the wage of the new hire. On the other hand, the first department had a budget to spend on the "player" of $100,000. If it had known that it really had a budget of $130,000 it could have shopped at a different and more productive level. Put differently, if the school had considered what it was actually paying for its new hire, it could have hired someone better. As with the transfer fee, for the total amount paid, a better decision could be made.

Are there other academic hiring transfer fees? Not sure.

Full post as published by MoneyLaw on August 17, 2009 (boomark / email).