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Using Monte Carlo Methods for the Valuation of Intangible Assets in Sports Economics

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  • Majewski Sebastian

    (University of Szczecin, Faculty of Economics and Management, Institute of Finance, A. Mickiewicza 64, 71-101Szczecin, Poland)

  • Majewska Agnieszka

    (University of Szczecin, Faculty of Economics and Management, Institute of Finance, A. Mickiewicza 64, 71-101Szczecin, Poland)

Abstract

This paper indicates the possibilities of using Monte Carlo simulations methods in players’ performance rights value monitoring. The authors have formulated a hypothesis that connects Monte Carlo methods (MC) and econometric models of the player’s life cycle that could give club managers another source of information for the decision process. The MC method in finance is usually used to value the option price on the basis of assumed distribution of price changes. In this approach, the method was used to determine future the hypothetical value of footballers’ performance rights. Using econometric models of the player’s life cycle we could observe and analyse the phase in the life cycle of a football player and determine volatility.In this paper we use historical data of the market values of chosen football players from the website http://transfermarkt.de. The analysis is based on popular valuable players after the growth phase of their life cycle. For the visualisation of the “Championships games bubble” problem we analyse the periods before and after the UEFA EURO 2016.The opportunities and threats of a such an attempt are shown in this paper.

Suggested Citation

  • Majewski Sebastian & Majewska Agnieszka, 2017. "Using Monte Carlo Methods for the Valuation of Intangible Assets in Sports Economics," Folia Oeconomica Stetinensia, Sciendo, vol. 17(2), pages 71-82, December.
    • Handle: RePEc:vrs:foeste:v:17:y:2017:i:2:p:71-82:n:5
    DOI: 10.1515/foli-2017-0019
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    References listed on IDEAS

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    More about this item

    Keywords

    valuation; players’ performance rights; econometric models; Monte Carlo methods;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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