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The win/profit maximization debate: strategic adaptation as the answer?

Author

Listed:
  • Mickael Terrien

    (CesamS - Centre d'étude sport et actions motrices - UNICAEN - Université de Caen Normandie - NU - Normandie Université)

  • Nicolas Scelles

    (University of Stirling)

  • Stephen Morrow

    (University of Stirling)

  • Lionel Maltèse

    (AMU IAE - Institut d'Administration des Entreprises (IAE) - Aix-en-Provence - AMU - Aix Marseille Université)

  • Christophe Durand

    (CesamS - Centre d'étude sport et actions motrices - UNICAEN - Université de Caen Normandie - NU - Normandie Université)

Abstract

Purpose The purpose of this paper is twofold. First, to highlight the heterogeneity of the organizational aims within the professional football teams in Ligue 1. Second, to understand why some teams swing from a win orientation towards a soft budget constraint from year to year, and vice versa. Design/methodology/approach Financial data from annual reports for the period 2005/2015 was collected for the 35 Ligue 1 clubs. To define the degree of compliance with the intended strategy for those clubs, an efficiency analysis was conducted thanks to the data envelopment analysis method. This measure of performance was supplemented with the identification of productivity and demand shocks to identify whether clubs suffered from such shock or changed their strategy. It enables to precise the nature of the evolution in the utility function, with regards to the gap between expectation and actual performance. Findings The paper suggests that a team can switch from one orientation to another from year to year due to the uncertain nature of the sports industry. The club director's utility function could also be maximized under inter temporal budget function in order to adjust the weight between win and profit according to the opportunities in the environment. Originality/value The paper sheds new light on the win/profit maximization. The theoretical model provides an assessment of the weight between win and profit in Ligue 1 and then identifies a new explanation for persistent losses in the sports industry.

Suggested Citation

  • Mickael Terrien & Nicolas Scelles & Stephen Morrow & Lionel Maltèse & Christophe Durand, 2017. "The win/profit maximization debate: strategic adaptation as the answer?," Post-Print halshs-02111106, HAL.
    • Handle: RePEc:hal:journl:halshs-02111106
    DOI: 10.1108/SBM-10-2016-0064
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    Citations

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    Cited by:

    1. Pierre-Yves Janssoone & Antoine Feuillet & Mathieu Jéöl & Mickael Terrien, 2022. "The Economic Models Of Sports Associations: The Case Of Handball Clubs In Northern France [Les modèles économiques des associations sportives : le cas des clubs de handball du nord de la France]," Working Papers hal-03418321, HAL.
    2. Dina A. M. Miragaia & João J. M. Ferreira & Cédric T. Vieira, 2024. "Efficiency of Non-profit Organisations: a DEA Analysis in Support of Strategic Decision-Making," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 3239-3265, March.
    3. Javier Cifuentes‐Faura, 2022. "Efficiency and transparency of Spanish football clubs: A non‐parametric approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1850-1860, September.
    4. Richard Evans, 2024. "The S-Score of Financial Sustainability for Professional Football Clubs," Journal of Sports Economics, , vol. 25(3), pages 322-345, April.
    5. N. A. Osokin, 2018. "Win vs. Profit maximization: optimal strategy for managing organizational performance of russian football clubs," Strategic decisions and risk management, Real Economy Publishing House, issue 2.
    6. Budzinski, Oliver & Feddersen, Arne, 2022. "Should organizing premier-level European football be a monopoly? And who should run it? - An economists' perspective," Ilmenau Economics Discussion Papers 166, Ilmenau University of Technology, Institute of Economics.
    7. Antoine Feuillet & Mickael Terrien & Nicolas Scelles & Christophe Durand, 2021. "Determinants of coopetition and contingency of strategic choices: the case of professional football clubs in France," Post-Print halshs-02974491, HAL.
    8. Nicolas Scelles & Qi Peng & Maurizio Valenti, 2021. "Do the Peculiar Economics of Professional Team Sports Apply to Esports? Sequential Snowballing Literature Reviews and Implications," Economies, MDPI, vol. 9(1), pages 1-18, March.

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