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Making Money Out of Football

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  • Stephanie Leach
  • Stefan Szymanski

Abstract

type="main" xml:id="sjpe12065-abs-0001"> In the US, most economists argue that professional sports teams are profit-maximising businesses, but it is a widely held view in Europe that professional football clubs are not run on a profit-maximising basis. This belief has important implications for the impact of widely-advocated policy measures, such as revenue sharing. This paper looks at the performance of 16 English football clubs that acquired a stock exchange listing in the mid-1990s. If the European story is true, we should have observed a shift toward profit-maximising behaviour at these clubs, under the assumption that investors were attracted to these football clubs to earn a positive return. This paper finds no evidence of any shift in the behaviour of these 16 clubs after flotation. This result is consistent with the view that football clubs in England have been much more oriented toward profit objectives than is normally assumed.

Suggested Citation

  • Stephanie Leach & Stefan Szymanski, 2015. "Making Money Out of Football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(1), pages 25-50, February.
    • Handle: RePEc:bla:scotjp:v:62:y:2015:i:1:p:25-50
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    File URL: http://hdl.handle.net/10.1111/sjpe.2015.62.issue-1
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    References listed on IDEAS

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    Cited by:

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    3. Rohde, Marc & Breuer, Christoph, 2018. "Competing by investments or efficiency? Exploring financial and sporting efficiency of club ownership structures in European football," Sport Management Review, Elsevier, vol. 21(5), pages 563-581.
    4. Rudemarlyn Urdaneta & Juan C. Guevara-Pérez & Fernando Llena-Macarulla & José M. Moneva, 2021. "Transparency and Accountability in Sports: Measuring the Social and Financial Performance of Spanish Professional Football," Sustainability, MDPI, vol. 13(15), pages 1-16, August.
    5. Francesco Fenton, 2018. "L'Importanza Socio/Economica Della Scolarizzazione Nei Settori Giovanili. Confronto Tra Il Modello Italiano E Quello Tedesco," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 14(2), pages 121-142, ottobre.
    6. Warren Maroun & Wayne van Zijl & Rottok Chesaina & Robert Garnett, 2022. "The Beautiful Game: Fair Value, Accountability and Accounting for Player Registrations," Australian Accounting Review, CPA Australia, vol. 32(3), pages 334-351, September.
    7. Joseph Kolawole-ABON & Rufus O. ADEBAYO, 2021. "Potential Professional Football Club: A Business-Oriented Organisation," Management and Marketing Journal, University of Craiova, Faculty of Economics and Business Administration, vol. 0(1), pages 27-45, May.
    8. Richard Evans, 2024. "The S-Score of Financial Sustainability for Professional Football Clubs," Journal of Sports Economics, , vol. 25(3), pages 322-345, April.
    9. Daniel Plumley & Rob Wilson & Robbie Millar & Simon Shibli, 2019. "Howzat? The Financial Health of English Cricket: Not Out, Yet," IJFS, MDPI, vol. 7(1), pages 1-17, February.
    10. N. A. Osokin, 2018. "Win vs. Profit maximization: optimal strategy for managing organizational performance of russian football clubs," Strategic decisions and risk management, Real Economy Publishing House, issue 2.
    11. Marco Di Domizio & Lorenzo Neri & Giambattista Rossi & Antonella Russo, 2019. "Sport O Business? Il Calcio-Mercato Si Rivela," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 15(2), pages 121-144, ottobre.
    12. Alabi, Mobolaji & Urquhart, Andrew, 2024. "The financial impact of financial fair play regulation: Evidence from the English premier league," International Review of Financial Analysis, Elsevier, vol. 92(C).
    13. Peter J. Sloane, 2015. "The Economics of Professional Football Revisited," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(1), pages 1-7, February.
    14. Budzinski, Oliver & Kunz-Kaltenhäuser, Philipp, 2020. "Promoting or restricting competition? - The 50plus1-rule in German football," Ilmenau Economics Discussion Papers 141, Ilmenau University of Technology, Institute of Economics.
    15. Philip L. Hersch & Jodi E. Pelkowski, 2019. "The Consequences (and Nonconsequences) of Ownership Change: The Case of Major League Baseball," Journal of Sports Economics, , vol. 20(1), pages 72-90, January.
    16. Solntsev, Ilya V.(Солнцев, Илья) & Osokin, Nikita A. (Осокин, Никита) & Taranenko, Maksim A. (Тараненко, Максим) & Zheleznyakov, Anton O. (Железняков, Антон), 2018. "Bargaining Power or Player Statistics: What Determines the Transfer Fees in Professional Football? [Переговорная Сила Или Спортивные Показатели: Что Влияет На Формирование Стоимости Трансферных Сде," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 4, pages 134-159, August.
    17. Richau, Lukas & Follert, Florian & Frenger, Monika & Emrich, Eike, 2021. "The Rainmaker?! The impact of investors on transfer fees in the English Premier League," Working Paper 187/2021, Helmut Schmidt University, Hamburg.

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