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Is there evidence of softness in the budget constraint in football? Some evidence from English clubs

In: Professional Team Sports and the Soft Budget Constraint

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  • Stefan Szymanski

Abstract

The Soft Budget Constraint (SBC) theory has been advanced as an explanation for frequent insolvency among football clubs in Europe. This chapter examines the theoretical underpinnings of the theory and provides empirical evidence on football club insolvencies to show that SBC theory is inconsistent with the data. The chapter suggests that an alternative explanation, recently advanced in the literature, which attributes insolvency to the impact of random shocks in the context of the promotion and relegation system, provides a more plausible account of the insolvency phenomenon.

Suggested Citation

  • Stefan Szymanski, 2022. "Is there evidence of softness in the budget constraint in football? Some evidence from English clubs," Chapters, in: Rasmus K. Storm & Klaus Nielsen & Zsolt Havran (ed.), Professional Team Sports and the Soft Budget Constraint, chapter 7, pages 155-171, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:20206_7
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    Keywords

    Economics and Finance;

    Statistics

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