Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return
Sport, Business and Management
ISSN: 2042-678X
Article publication date: 8 July 2020
Issue publication date: 16 September 2020
Abstract
Purpose
The aims of the research are twofold: (1) exploring whether football club stocks can be considered an asset class of their own; (2) investigating whether football stocks enable well-diversified investors to achieve more efficient risk-return combinations.
Design/methodology/approach
Using efficient frontier optimization, a base portfolio, with standard stocks and bonds, and a corresponding enhanced portfolio, which includes football stocks in the investment opportunity set, are defined. This procedure is applied to four portfolio composition rules. Pairwise comparisons of portfolio Sharpe ratios include a test for statistical significance.
Findings
The results indicate a low correlation of football stocks and standard stocks; thus, football stocks could be considered an asset class of their own. Nevertheless, the addition of football stocks to a well-diversified portfolio does not improve its risk-return efficiency because the weak performance of football stocks eliminates their advantage of low correlation.
Research limitations/implications
This study contributes to the evidence that investments in football are different from ‘ordinary’ investments and need further research, particularly into market participants and their investment motives.
Practical implications
Football stocks are not attractive to pure financial investors. Thus, football clubs need to know more about which side benefits are appreciated by which kind of investor and how much it costs to produce these side benefits.
Originality/value
To the best of authors’ knowledge, this is the first study to analyse the risk-return efficiency of football stocks from the perspective of a pure financial investor, i.e. an investor in football stocks who does not earn side benefits, such as strategic investors or fan investors.
Keywords
Citation
Prigge, S. and Tegtmeier, L. (2020), "Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return", Sport, Business and Management, Vol. 10 No. 4, pp. 471-494. https://doi.org/10.1108/SBM-07-2019-0063
Publisher
:Emerald Publishing Limited
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