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Predicting the value of professional sport clubs. A study of European soccer, 2005-2018

Author

Listed:
  • Zelenkov, Yu.

    (HSE University, Moscow, Russia)

  • Solntsev, I.

    (Financial University under the Government of Russian Federation, Moscow, Russia)

Abstract

This article aims to build a general valuation model that can be applied by investors and current shareholders of professional sport clubs from different countries and leagues. The study is based on panel data on the valuation of soccer clubs published annually by Forbes. Authors analyze all value-drivers that were used previously, expanding the time horizon (number of observations) and incorporating various models including linear and non-linear mixed effect regressions. The best performance is obtained using a mixed-effect model with treebased fixed part. The following determinants were found significant for the fixed effect: revenue and number of Google search requests. Analysis of actual deals in 2015-2020 confirms the model's predictive ability. It is also shown that since Forbes overestimates the market value of soccer clubs, the proposed model predicts an upper bound on the real value. In this regard, transactions with real value exceeding the estimates are of particular interest. A deeper analysis of such transactions allows to identify additional "non-soccer" factors affecting the deal. Therefore, the proposed model can serve as a tool for the rapid assessment of a soccer club based on open data.

Suggested Citation

  • Zelenkov, Yu. & Solntsev, I., 2022. "Predicting the value of professional sport clubs. A study of European soccer, 2005-2018," Journal of the New Economic Association, New Economic Association, vol. 56(4), pages 28-46.
    • Handle: RePEc:nea:journl:y:2022:i:56:p:28-46
    DOI: 10.31737/2221-2264-2022-56-4-2
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    club value; valuation of soccer club; sports investments; sports fi nance; mixed effect model;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Z23 - Other Special Topics - - Sports Economics - - - Finance

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