IDEAS home Printed from https://ideas.repec.org/a/rfa/aefjnl/v3y2016i2p243-255.html
   My bibliography  Save this article

The Financial Impact of (Foreign) Private Investors on Team Investments and Profits in Professional Football: Empirical Evidence from the Premier League

Author

Listed:
  • Marc Rohde
  • Christoph Breuer

Abstract

US owners at Manchester United, Arsenal London, and Liverpool; Arab owners at Manchester City; Russian owners at Chelsea London ¨C the top football clubs from England have been acquired by private (mostly foreign) majority investors. Some of these clubs have been claimed to distort national competition, and Manchester City had to pay €60m as a punishment for violating UEFA Financial Fair Play rules in 2014. Thus, this article addresses the controversial financial impact of (foreign) private majority investors in the overinvestment environment of European professional football. Applying property rights theory to an unbalanced panel from the first English division from 2005/06 to 2011/12, this paper tests theoretical predictions from the ¡®sugar daddy¡¯ literature and empirically shows that, first, private investors increase team investment and decrease profits. And, second, the positive influence on team investment can mainly be reduced to foreign investors. Implications for utility- and profit-maximizing team owners, managers, and regulators are derived.

Suggested Citation

  • Marc Rohde & Christoph Breuer, 2016. "The Financial Impact of (Foreign) Private Investors on Team Investments and Profits in Professional Football: Empirical Evidence from the Premier League," Applied Economics and Finance, Redfame publishing, vol. 3(2), pages 243-255, May.
    • Handle: RePEc:rfa:aefjnl:v:3:y:2016:i:2:p:243-255
    as

    Download full text from publisher

    File URL: http://redfame.com/journal/index.php/aef/article/view/1366/1614
    Download Restriction: no
    File URL: http://redfame.com/journal/index.php/aef/article/view/1366
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Marc Rohde & Christoph Breuer, 2016. "Europe’s Elite Football: Financial Growth, Sporting Success, Transfer Investment, and Private Majority Investors," IJFS, MDPI, vol. 4(2), pages 1-20, June.
    2. 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).
    3. 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.
    4. Marc Rohde & Christoph Breuer, 2018. "Competing by investments or efficiency? Exploring financial and sporting efficiency of club ownership structures in European football," Sport Management Review, Taylor & Francis Journals, vol. 21(5), pages 563-581, December.
    5. Holzmayer, Florian & Schmidt, Sascha L., 2020. "Dynamic managerial capabilities, firm resources, and related business diversification – Evidence from the English Premier League," Journal of Business Research, Elsevier, vol. 117(C), pages 132-143.
    6. Lukas Richau & Florian Follert & Monika Frenger & Eike Emrich, 2021. "The sky is the limit?! Evaluating the existence of a speculative bubble in European football," Journal of Business Economics, Springer, vol. 91(6), pages 765-796, August.
    7. Antoine Feuillet & Loris Terrettaz & Mickaël Terrien, 2023. "Farmers league: squad structure and resource dependency The case of French Ligue1," Post-Print hal-04323874, HAL.
    8. John K. Malagila & Alaa M. Zalata & Collins G. Ntim & Ahmed A. Elamer, 2021. "Corporate governance and performance in sports organisations: The case of UK premier leagues," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 2517-2537, April.
    9. Havran, Zsolt & András, Krisztina, 2022. "A puha költségvetési korlát szindrómája a hivatásos labdarúgásban. Kitekintés a nemzetközi és a magyarországi sajátosságokra [The soft-budget constraint in professional football syndrome. A view of," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 230-254.
    10. 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.

    More about this item

    Keywords

    Sports finance; majority investors; foreign owners; property rights theory; resource-based view; overinvestment; profitability; soccer;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rfa:aefjnl:v:3:y:2016:i:2:p:243-255. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Redfame publishing (email available below). General contact details of provider: https://edirc.repec.org/data/cepflch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.