As a big soccer fan, I was thinking about why the best soccer players in the world would end up playing in Turkish teams later in their careers. Even though they get offers from much better leagues like Premier and La Liga they somehow end up getting retired in one of the teams in the Turkish League.
This situation is a great example of the principal-agent problem stemming from different interests among coaches and players. Coaches (principal) transfer star players (agent) to their teams according to the players’ former stats and performances. Thus, the coaches don’t really make biased decisions because they receive adequate information regarding the transferred players. The main difference between what the European teams and Turkish teams offer star players is not the salary, it is the length of the contract. Turkish teams generally offer much more longer-term contracts to those players than European teams. Long-term contracts are very compelling offers especially for star players over 30 years since they can enjoy big salaries without worrying about getting fired if they show low performances. Hence, they don’t feel much economic pressure to perform which makes them more risk-averse. They don’t take risks which can lead to injury or hurt their stats because they act in their individual interests rather than in the principal’s interest.
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