Today is the final day of the winter registration period for soccer in England. This is marketed as ‘deadline day’. The Premier League explain the logistics of the system here. This day usually is associated with frantic negotiations.The graph below shows the number of summer deadline day (permanent) transfers to Premier League Clubs from 2008 to 2014. I gathered the data from a range of websites, most prominently the BBC, the Telegraph and the Express. I thinks it’s reasonably accurate. Approximately seven permanent transfers on average occurred on summer deadline days from 2008 to 2014.
What often happens when common value goods are auctioned is something called the winner’s curse. This is a general tendency to overbid when information between buyers and sellers is incomplete. A winning bid can be overly optimistic and it can exceed the intrinsic value of an asset purchased be it oil tracts, spectrum rights or in this case a sports star, Simply put, if Stoke, Newcastle or Tottenham win a bidding war for the striker this evening there is a chance the winner will be had!
As ever, deadline day and buyer rationality do not go hand-in-hand. With the added motivation of a new TV deal next year, expect some more craziness before 11pm tonight.