Beyond Sporting Talent: Other Determinants of Football Clubs’ Wage Bills

ABSTRACT This article delves into the understanding of how football clubs determine wage bills to compensate talent. Using data from first‐division teams in elite European leagues, we estimate wage models based on indicators of sporting performance, “Elo ratings” as a proxy for clubs’ historical achievements and brand strength, and “media visibility” as a measure of players’ and clubs’ ability to attract media attention. Our findings show that clubs with stronger brands and greater popularity remunerate their workforce with higher wages, indicating that wage‐setting reflects not only sporting performance but also media appeal and potential economic returns. These hypotheses receive empirical support in models estimated for the full sample and for subsamples by domestic leagues. Results remain robust across specifications, including models in levels and mean deviations, pooled and fixed effect (FE) estimations, and regardless of whether one or two lags of explanatory variables were introduced. Furthermore, dynamic specifications reinforce the main conclusions, although statistical significance is more dubious, suggesting the need for further research.