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Article
Publication date: 16 March 2012

Rasmus K. Storm

The purpose of this paper is to argue for the necessity of regulating European club football financially, in order to create a fair structure of sporting competition.

Abstract

Purpose

The purpose of this paper is to argue for the necessity of regulating European club football financially, in order to create a fair structure of sporting competition.

Design/methodology/approach

By deploying the soft budget constraint approach – originally developed by Hungarian Economist János Kornai in order to understand (public) business behavior in socialist and post‐socialist economies – and combining it with empirical analysis, the paper develops an understanding of why the majority of European top league clubs are loss‐makers and why regulation is needed. The paper rests on its application of the soft budget constraint approach to build its argument and uses existing empirical research in order to support it within the field of European professional football.

Findings

The paper finds substantial evidence of soft budget constraints in professional football clubs, and argues that softness punishes the few financially well‐managed clubs in sporting terms for balancing their books.

Research limitations/implications

From a theoretical point of view, the new perspective of soft budget constraints takes political, cultural and emotional aspects into account in order to understand economic behavior among professional team sports clubs. This gives promising new insights into the discipline of sports economics and sports management.

Practical implications

The paper's findings demand action to be taken to secure financial fair play in order to deal with issues of equal sporting competition. It argues that this must be done through a central regulation scheme covering all European leagues, thus endorsing the new UEFA financial fair play program. At the same time, however, the paper recognizes the problems in implementing the program efficiently.

Originality/value

The originality and value of the paper is its application of a new theoretical approach that clarifies the problems of European professional football and the reasons why regulatory solutions are necessary to harden the budget constraints.

Details

Sport, Business and Management: An International Journal, vol. 2 no. 1
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 8 July 2020

Stefan Prigge and Lars Tegtmeier

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…

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.

Details

Sport, Business and Management: An International Journal, vol. 10 no. 4
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 12 October 2018

Daniel Plumley, Girish Mohan Ramchandani and Robert Wilson

The purpose of this paper is to examine competitive balance in European football leagues before and after the inception of Financial Fair Play (FFP) regulations by Union…

Abstract

Purpose

The purpose of this paper is to examine competitive balance in European football leagues before and after the inception of Financial Fair Play (FFP) regulations by Union of European Football Associations in 2011, designed to bring about financial stability and improve competitive balance in the European game.

Design/methodology/approach

The research focuses on the top division football leagues in England (English Premier League), Germany (Bundesliga), France (Ligue 1), Italy (Serie A) and Spain (La Liga). The paper is organised into two distinct time periods: pre-FFP, comprising the six seasons between 2005/2006 and 2010/2011; and post-FFP, comprising the six seasons between 2011/2012 and 2016/2017. The paper uses recognised measures of concentration and dominance to measure competitive balance.

Findings

The results show a statistically significant decline in competitive balance post-FFP for leagues in Spain, Germany and France but not for England and Italy. Furthermore, the results report significantly higher levels of concentration and dominance by a select number of clubs in Germany.

Originality/value

The paper is one of the first to analyse competitive balance in this way both pre- and post-FFP. Whilst the paper cannot demonstrate a causal link between FFP and competitive balance, there are strong indications that competitive balance has been adversely affected (for some leagues) since the regulations have been imposed. To that end, the paper argues that FFP has had “unintended consequences” in respect of competitive balance.

Details

Sport, Business and Management: An International Journal, vol. 9 no. 2
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 12 April 2019

A. Carolin Fleischmann and Martin Fleischmann

The purpose of this paper is to investigate how professional football clubs from the English Premier League, German Bundesliga and Spanish Primera División use digital…

Abstract

Purpose

The purpose of this paper is to investigate how professional football clubs from the English Premier League, German Bundesliga and Spanish Primera División use digital media to expand their international reach in emerging football markets (EFM) outside of Europe. Based on the EPRG framework and Rugman’s home-region hypothesis, the aim is to broaden the perspective where “sports go global” for a further understanding of actors’ international orientation in the digital sphere.

Design/methodology/approach

The study is based on data from desk research and a qualitative survey, comprising information on international digital media activities of 58 European clubs. Cluster analysis is used to identify different international orientations with regard to digital media activities.

Findings

The data provide evidence that clubs differ strongly in their orientations towards EFM. While some global players that provide digital media content in several EFM languages and attract a large share of Facebook followers from EFM exist, other clubs focus on their home region. League-specific differences become apparent.

Originality/value

This study determines the international online orientations of European football clubs by combining two previously separated research streams in football management studies: internationalisation and digital media activities. Most clubs with a strong EFM fan base choose polycentric, multi-language digital media strategies, followed by geocentric, standardised approaches. By offering a novel angle on internationalisation in professional football, this study contributes towards optimising clubs’ international online strategies for EFM, which are markets that promise high growth rates.

Details

Sport, Business and Management: An International Journal, vol. 9 no. 1
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 1 April 2009

Chantal Rouvrais-Charron and Christophe Kim

Consumers are increasingly looking beyond products, and are expressing concern for the respect of societal values. This paper analyses how football organisations and…

Abstract

Consumers are increasingly looking beyond products, and are expressing concern for the respect of societal values. This paper analyses how football organisations and governing bodies in Europe are adapting their marketing strategies to reflect these concerns. 'Ethical charters' or 'ethical codes of behaviour' need to be redefined under close scrutiny from shareholders and stakeholders. Whether it is a deliberate decision or a forced change, football organisations must respond to simultaneous commercial and political pressures.

Details

International Journal of Sports Marketing and Sponsorship, vol. 10 no. 3
Type: Research Article
ISSN: 1464-6668

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Article
Publication date: 8 May 2017

Christopher John Freestone and Argyro Elisavet Manoli

The introduction of financial fair play (FFP) regulations in 2011 was accompanied by criticism that they would have an adverse effect on competitive balance in European

Abstract

Purpose

The introduction of financial fair play (FFP) regulations in 2011 was accompanied by criticism that they would have an adverse effect on competitive balance in European football. Counter-points were also expressed, suggesting that the opposite would occur; that they would actually increase competitive balance through reducing the importance of financial power. The lack of clarity and cohesion on this issue prompted this paper. The purpose of this paper is to examine the effect FFP has had on competitive balance in the English Premier League.

Design/methodology/approach

The analysis conducted uses the Herfindahl Index of Competitive Balance as the primary method, and is supported by standard deviation of points analysis and a Scully-Noll ratio analysis, which together provide an indication of the level of competitive balance for each of the past 21 seasons, from 1995/1996 to 2015/2016. This examination allows for the trends in competitive balance to be identified, with emphasis drawn on the seasons after the introduction of the regulations.

Findings

The results provide no indication that FFP regulations have resulted in a decline in competitive balance in the EPL, instead hinting that a positive effect may have been caused. This positive effect exceeds the primary aim of the regulations and underlines their importance in the future stability of club football.

Originality/value

While underlining the need for further research on the topic, this study provides the first insights into the effects of FFP regulations on competitive balance in the EPL. These insights would support the view that FFP initiatives have begun to shift the focus of sporting competition away from financial strength towards more natural means of competition such as efficiency, innovation and good management.

Details

Sport, Business and Management: An International Journal, vol. 7 no. 2
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 10 November 2020

Daniel Plumley, Jean-Philippe Serbera and Rob Wilson

This paper analyses English Premier League (EPL) and English Football League (EFL) championship clubs during the period 2002–2019 to anticipate financial distress with…

Abstract

Purpose

This paper analyses English Premier League (EPL) and English Football League (EFL) championship clubs during the period 2002–2019 to anticipate financial distress with specific reference to footballs' Financial Fair Play (FFP) regulations.

Design/methodology/approach

Data was collected for 43 professional football clubs competing in the EPL and Championship for the financial year ends 2002–2019. Analysis was conducted using the Z-score methodology and additional statistical tests were conducted to measure differences between groups. Data was split into two distinct periods to analyse club finances pre- and post-FFP.

Findings

The results show significant cases of financial distress amongst clubs in both divisions and that Championship clubs are in significantly poorer financial health than EPL clubs. In some cases, financially sustainability has worsened post-FFP. The “big 6” clubs – due to their size – seem to be more financially sound than the rest of the EPL, thus preventing a “too big to fail” effect. Overall, the financial situation in English football remains poor, a position that could be exacerbated by the economic crisis, caused by COVID-19.

Research limitations/implications

The findings are not generalisable outside of the English football industry and the data is susceptible to usual accounting techniques and treatments.

Practical implications

The paper recommends a re-distribution of broadcasting rights, on a more equal basis and incentivised with cost-reduction targets. The implementation of a hard salary cap at league level is also recommended to control costs. Furthermore, FFP regulations should be re-visited to deliver the original objectives of bringing about financial sustainability in European football.

Originality/value

The paper extends the evidence base of measuring financial distress in professional team sports and is also the first paper of its kind to examine this in relation to Championship clubs.

Details

Journal of Applied Accounting Research, vol. 22 no. 1
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 26 February 2019

João Ribeiro, Manuel Castelo Branco and João Alves Ribeiro

The purpose of this paper is to examine differences in corporate social responsibility (CSR) reporting on the websites of football clubs based in five European countries…

Abstract

Purpose

The purpose of this paper is to examine differences in corporate social responsibility (CSR) reporting on the websites of football clubs based in five European countries with different levels of football corporatisation.

Design/methodology/approach

The study examines CSR reporting on the internet by football clubs based in five European countries. Multiple regression analysis is used to analyse some factors which influence reporting and test a set of hypotheses.

Findings

The findings suggest that clubs from countries in which the level of corporatisation is higher disclose more CSR information. Also, clubs with higher public visibility disclose a higher variety of CSR information.

Originality/value

This study adds to the scarce research on CSR reporting in professional sports leagues by providing new empirical data and by extending prior research comparing such practices within different international frameworks of CSR.

Details

International Journal of Sports Marketing and Sponsorship, vol. 20 no. 2
Type: Research Article
ISSN: 1464-6668

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Article
Publication date: 15 March 2019

Thomas Aichner

The purpose of this paper is threefold: to measure and compare the degree of social media use (SMU) by football clubs, to assess football fans’ engagement with content…

Abstract

Purpose

The purpose of this paper is threefold: to measure and compare the degree of social media use (SMU) by football clubs, to assess football fans’ engagement with content posted by football clubs (FCs) and to evaluate differences in user engagement with commercial social media advertisement targeting football fans, based on the advertisements’ appeal.

Design/methodology/approach

This paper employs three approaches. First, it uses the corporate social media use (CSMU) model to analyse 20,954 Facebook, YouTube, Instagram and Twitter postings from 78 European FCs. Second, it develops a categorisation for social media postings and uses ANOVA and Scheffè tests to conduct a pairwise comparison. Third, it uses a fictional hedonic low-involvement product (chocolate bar) to conduct an experiment by creating a Facebook advertising campaign with three advertisements that are manipulated regarding their general appeal.

Findings

Study 1 demonstrates that individual FCs show big differences between their degree of SMU. There are, however, no differences between European leagues, social media platforms, or more/less successful FCs. The results of Study 2 indicate that social media users like, comment and share postings by FCs independently of the content of the posting. Study 3 reveals that both user engagement and reach of advertisements can be substantially increased by employing football-related appeals.

Originality/value

This paper helps understanding consumer engagement in social media. The results presented are relevant and helpful for a multitude of actors, including FCs and other sports clubs, companies targeting football fans and researchers interested in social media and sports marketing.

Details

Marketing Intelligence & Planning, vol. 37 no. 3
Type: Research Article
ISSN: 0263-4503

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Article
Publication date: 20 May 2019

Stefan Prigge and Lars Tegtmeier

The purpose of this paper is to explore whether stocks in football clubs are valued in line with the valuation of other capital assets in the capital market. Moreover, it…

Abstract

Purpose

The purpose of this paper is to explore whether stocks in football clubs are valued in line with the valuation of other capital assets in the capital market. Moreover, it analyzes the risk profile of football stocks. By taking this perspective, the paper also contributes to the discussion on the motives of those who invest in football clubs, particularly the question of whether they expect extra benefits, i.e., in addition to dividends and share price appreciation, from the investments.

Design/methodology/approach

The empirical study analyzes the share prices of 19 listed European football clubs from January 2010 to December 2016. Building on the capital asset pricing model, the authors used Zellner’s (1962) seemingly unrelated regressions.

Findings

The results indicate that the majority of the football clubs in the sample are overvalued. This implies that investments in football stocks are mainly attractive for those investors who expect to derive extra benefits from their investment. That might be likely for strategic, patron and fan investors, but not for purely financial investors.

Research limitations/implications

As a next step, more advanced factor models could be applied to the analysis.

Practical implications

For investors, the results imply that portfolio diversification is particularly beneficial while buying football stocks. For football clubs, the rather low general market risk, combined with the overvaluation, leads to low equity costs when new shares are issued.

Originality/value

The results suggest that dividends and share price appreciation are not the only benefits football stock owners derive from the stocks, thus underlining that further investigations in their motives to hold football stocks are very promising.

Details

Sport, Business and Management: An International Journal, vol. 9 no. 2
Type: Research Article
ISSN: 2042-678X

Keywords

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