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Article
Publication date: 9 April 2018

Alex G. Gillett and Kevin D. Tennent

Existing studies of the finance of English Association Football (soccer) have tended to focus on the sport’s early years, or on the post-1992 Premiership era. The authors…

Abstract

Purpose

Existing studies of the finance of English Association Football (soccer) have tended to focus on the sport’s early years, or on the post-1992 Premiership era. The authors examine a case from the turbulent 1980s charting the struggle for economic survival of one club in a rapidly changing financial, economic, political and demographic landscape. The purpose of this paper is to examine not only the financial management of a football club during this time, but also the interventionist role of the local authority during this turbulent period.

Design/methodology/approach

The authors investigate the financial difficulties of a sport business, Middlesbrough Football and Athletic Company Limited, examining the broader economic context, drawing on unseen archival sources dating from the 1980s to analyze the relationship between club, local and national government and the regional economy.

Findings

They not only examine the financial management of the football club but also analyse the interventionist role of the local authority in supporting the club which had symbolic value for the local community.

Practical implications

This paper is relevant to policymakers interested in the provision of local sports facilities and the links between elite sport and participation.

Originality/value

The authors show that professional sports clubs are driven by a different institutional logic to state organizations and the findings enable them to define these differences, thereby refining Thornton et al.’s (2012) typology of institutional orders. Furthermore, the case study highlights practices involving informal partnership between state and sport that the authors label as shadow hybridity.

Details

Journal of Management History, vol. 24 no. 2
Type: Research Article
ISSN: 1751-1348

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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: 1 April 2010

John Beech, Simon Horsman and Jamie Magraw

This paper identifies five types of insolvency in English football: clubs that have failed to cope with relegation; failed to pay monies due to the UK government; seen…

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405

Abstract

This paper identifies five types of insolvency in English football: clubs that have failed to cope with relegation; failed to pay monies due to the UK government; seen 'soft debts' become 'hard debts'; lost the ownership of their stadium; or have been 'repeat offenders'. As the second of a three-phase research project, the paper concludes with an indication of the final phase research and implications of the findings so far for other professional sports.

Details

International Journal of Sports Marketing and Sponsorship, vol. 11 no. 3
Type: Research Article
ISSN: 1464-6668

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Article
Publication date: 1 January 1986

B.J. Webb and J.M. Broadbent

The precarious position of Football League Club finances has been highlighted by extensive press coverage and has given concern to the Football League. It is our…

Abstract

The precarious position of Football League Club finances has been highlighted by extensive press coverage and has given concern to the Football League. It is our contention that the use of “traditional” financial reporting practices has hindered full understanding and consideration of the causes and indicators of clubs' financial difficulties. The first part of this article considers the objectives of financial reporting, and the view that these are best met by cash‐flow information; the second part reports on the results of an empirical investigation of a sample of Football Club accounts and assesses the informational value of a cash flow approach.

Details

Managerial Finance, vol. 12 no. 1
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 15 March 2013

Robert Wilson, Daniel Plumley and Girish Ramchandani

The purpose of this paper is three‐fold. First, to explore the relationship between the financial and sporting performance of clubs competing in the English Premier League…

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5484

Abstract

Purpose

The purpose of this paper is three‐fold. First, to explore the relationship between the financial and sporting performance of clubs competing in the English Premier League (EPL). Second, to investigate the effect of different models of EPL club ownership on financial and league performance. Third, to review the finances of EPL clubs in the context of UEFA's Financial Fair Play regulations.

Design/methodology/approach

Financial data from annual reports for the period 2001‐2010 was collected for 20 EPL clubs. Correlation analysis was conducted to examine the relationship between the finances of EPL clubs and their league position. One‐way analysis of variance (ANOVA) tests were then used to examine the effect of ownership type on clubs’ financial and league performances. Where the results of ANOVA testing revealed statistically significant differences between groups, these were investigated further using appropriate post hoc procedures.

Findings

The stock market model of ownership returned better financial health relative to privately owned (domestic and foreign) clubs. However, clubs owned privately by foreign investors or on the stock market performed better in the league in comparison with domestically owned clubs. The stock market model was more likely to comply with Financial Fair Play regulations.

Originality/value

The paper confirms empirically that football clubs that float on the stock market are in better financial health and that clubs in pursuit of short‐term sporting excellence are reliant on substantial investment, in this case from foreign investors.

Details

Sport, Business and Management: An International Journal, vol. 3 no. 1
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 7 October 2013

Stephen Morrow

The purpose of this paper is to critically evaluate football club financial reporting with reference to: the long-standing debate on the nature and purpose of accounting;…

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2999

Abstract

Purpose

The purpose of this paper is to critically evaluate football club financial reporting with reference to: the long-standing debate on the nature and purpose of accounting; and the implementation of UEFA's Financial Fair Play (FFP) regulations.

Design/methodology/approach

The paper is based on a review and analysis of academic literature, accounting regulation and football regulations.

Findings

The focus of financial reporting on rational economic decision-makers results in football club financial reports being of limited use to many football club stakeholders. Consideration of the social and organisational context of football, as takes place in FFP, can be used as a catalyst to consider broader approaches to football club reporting. The paper calls for fuller and different pictures to be provided of clubs’ performance, in particular broadening the scope of accountability to users beyond that provided by an economic account.

Research limitations/implications

The paper is designed to stimulate debate about accounting for and reporting on football club businesses. A necessary next step is an exploratory project, focusing on one or a small number of clubs and their stakeholders, exploring in a practical setting what enhanced football club reporting might look like.

Originality/value

While the weaknesses of financial reporting have been considered extensively in the mainstream accounting literature and on occasion in terms of sport, the paper seeks to progress this discussion by linking it to significant football policy initiatives and to wider social and community-based football research.

Details

Sport, Business and Management: An International Journal, vol. 3 no. 4
Type: Research Article
ISSN: 2042-678X

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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…

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3225

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: 8 August 2018

Matteo Balliauw and Tomas Van Den Spiegel

Academics have studied the finances of football clubs, but not the financial situation of professional football players. To fill this gap in literature, the purpose of…

Abstract

Purpose

Academics have studied the finances of football clubs, but not the financial situation of professional football players. To fill this gap in literature, the purpose of this paper is to analyse the financial situation of individual players, the causes of financial problems and the probability of encountering financial difficulties.

Design/methodology/approach

A survey has been conducted of 102 players of five clubs in the Belgian first division. Based on this unique data set, a multivariate nominal logistic regression model allows the causes of financial difficulties to be identified. A derived classification model is estimated in order to predict the probability of professional players encountering financial problems.

Findings

About one out of four professional players is confronted with occasional financial problems. Next to the use and investment of income; personal, family and career status factors have a peculiar impact on the individual financial situation of professional sports players.

Practical implications

The results allow better identification of professional players likely to incur financial problems and better assisting them avoid problems.

Originality/value

Given the gap in the sports management literature, the findings from the econometric approach provide both researchers and practitioners with new insights into financial management issues of athletes. The findings may help athletes, their managers and club managers in their decision making. Future research can further build on these findings.

Details

Sport, Business and Management: An International Journal, vol. 8 no. 4
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 11 May 2015

Rasmus Nissen

– The purpose of this paper is to outline a theoretical framework that can be used to understand coach dismissals in professional football.

Abstract

Purpose

The purpose of this paper is to outline a theoretical framework that can be used to understand coach dismissals in professional football.

Design/methodology/approach

In order to embed the suggested framework empirically and thereby strengthen the argumentation, a total of 90 management accounts from 18 Danish professional football clubs have been analyzed using a qualitative content analysis approach. The accounts cover a period of five consecutive seasons.

Findings

The analysis shows that dismissing the coach is a frequent occurrence in Danish clubs. This finding is included in the discussion, in which it is suggested that a coach dismissal may be the outcome of mimetic, coercive or normative isomorphism.

Research limitations/implications

The applied methodology makes it difficult to assess whether coach dismissals actually stem from institutional forces. A more extensive research design and methodological setup is required in order to elaborate the proposed framework.

Practical implications

By focussing on the dynamics of club-stakeholder relationships, the proposed framework can be seen as an attempt to clarify key features of the decision-making process surrounding coach dismissals in European professional football. Furthermore, the framework suggests that in order for a club to stay attractive to its stakeholders, and thereby increase its chances of securing future financial support, club directors should pay attention to their external environment.

Originality/value

In contrast to existing research, this study does not aim at assessing whether a coach dismissal pays off in terms of wins on the pitch. Instead, a qualitative approach has been selected in order to offer a framework that aims at providing an in-depth understanding of coach dismissals in professional football.

Details

Sport, Business and Management: An International Journal, vol. 5 no. 2
Type: Research Article
ISSN: 2042-678X

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Article
Publication date: 1 January 1996

STEPHEN MORROW

This paper considers whether the prospective services provided by a football player on behalf of the club holding his registration can be recognised as an accounting…

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2305

Abstract

This paper considers whether the prospective services provided by a football player on behalf of the club holding his registration can be recognised as an accounting asset. The first section of the paper considers the appropriateness of treating these prospective services as intangible assets within the terms of the UK Accounting Standards Board criteria for definition and recognition of assets. In the second section, four valuation methodologies are evaluated using case study data made available by a major Scottish club. Each of the methods evaluated is either currently used in accounting practice by some clubs, or is used in some form in the existing market place for players. The historical cost model involves capitalising players acquired by the club via the transfer market on the balance sheet at their cost of registration. The earnings multiplier model applies a multiplier to a player's earnings to produce a current valuation of that player. The third model involves capitalising players at directors' valuation, while the independent multiple player evaluation model involves obtaining valuations for players from various informed sources, knowledgeable on those particular players. The paper concludes that there are convincing arguments for the conceptualisation of the services provided by football players as accounting assets, and recommends an system of valuation in which players are valued at their realisable value by independent experts.

Details

Journal of Human Resource Costing & Accounting, vol. 1 no. 1
Type: Research Article
ISSN: 1401-338X

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