For young players at least compensation has to be paid for training when they move.

And for established players, if clubs don’t train they play crap and don’t win stuff, so they still have the incentive to train.

I guess you could characterise the costs of developing players as sunk, which may give a dynamic efficiency reason for recovering them through transfer fees.

Training and investment?  A lot of the players form comes from training.  A football club may only be only willing to invest in this way if they can peg someone to a contract for a number of years – and so they agree on that.  This would be consistent with the fact that the contracts of younger players are for longer periods of time.

I also have to add the fact that players could just move around constantly if they weren’t pegged to a contract for at least a season.

tl;dr I’m off to the pub then the airport:)

Does this help?

That’s all fine, and I accept that when you breach a contract the other party should be made whole.

But that’s not really getting at the issue I think I am interested in, which is why do we have that legal form of contract for soccer players in the first place? And what would the world look like if soccer players weren’t on fixed term contracts but had to give e.g. a seasons notice?

Yes. You’re not breaching your employment contract when you give notice but they are. Because you’re not breaching it you’re not liable to your employer but they would be.

As a test, do transfer fees get paid when a contract comes to a close and the player then signs with another club? I’d guess not because then there’s no breach and no liability. 

Nope.

So you think the defining feature is that soccer players are on fixed term contracts?

Do you work on a fixed-term, fixed-fee contract, though?

I can give notice at my job and then go work for a competitor, a football player can’t. That’s where I see a difference.

Maybe good footballers players being relatively scarce explains the difference.

Is it different from other jobs? If you’re on a fixed-term contract with your employer and decide to leave halfway because of a better offer by one of their competitors might they object? Well, if you’re valuable enough to the firm then certainly. A more common remedy for a breach than monetary compensation might be specific performance but there are cases of compensation. Just look at ‘golden handshakes’ for an example of compensation for a unilateral breach of contract.

The difference may be that most employees are easy enough to replace that it isn’t worth the effort to haggle for compensation.