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Value‐maximizing football clubs

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  • Aloys Prinz
  • Stefan Thiem

Abstract

In this paper, football clubs are modeled as value‐maximizing enterprises. With a long‐term perspective in this framework, players are not only factors of production, but also assets of the club. It is shown that talent investment is higher with value‐maximization than with profit maximization for homogeneous football clubs. Club heterogeneity is then modeled by different time‐horizons regarding future profits, which leads to asymmetric levels of talent investment. Teams with longer time‐horizons demand more talent and tilt the competition to their favor. Increases in transfer prices for players worsen the competitive balance, while higher player wages improve it.

Suggested Citation

  • Aloys Prinz & Stefan Thiem, 2021. "Value‐maximizing football clubs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(5), pages 605-622, November.
    • Handle: RePEc:bla:scotjp:v:68:y:2021:i:5:p:605-622
    DOI: 10.1111/sjpe.12282
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    References listed on IDEAS

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