IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/13158.html
   My bibliography  Save this paper

Modelo de valoración de clubes de fútbol basado en los factores clave de su negocio
[Valuation model for football clubs based on the key factors of their business]

Author

Listed:
  • Barajas, Angel

Abstract

I have designed a valuation method adjusted to the specific characteristics of Spanish professional soccer clubs under the hypothesis that clubs behave financially reasonably. I analyse the factors that define the context where soccer business takes place. I have built a conceptual model that links support, squad quality (proxy by financial criteria), sports results, revenues, investment and socio-economic variables with cash flows, from wich. I obtain the club value. The work is structured in three sections. The first one is a historic and strategic analysis of the sector. The second one deals with the study of the essential factors for value creation in football and the las one shows the valuation methos based on the discounted cash-flow model, using the estimated free cash-flow claculated according to the relationships reached in the previous chapters. I have checked the existence of a high tange of beta value in function of the period of time used on their calculation. So, I propose the use of qualitative betas that gather aspects linked to business risk, financial structure and the characteristics of the managerial team. Afterwards, I determine the weighted average cost of capital and, with it, reach the value of a benchmark club. Finally, I show the viability of the model, not only for valuation, but also in order to manage professional football clubs to create value for shareholders.

Suggested Citation

  • Barajas, Angel, 2004. "Modelo de valoración de clubes de fútbol basado en los factores clave de su negocio [Valuation model for football clubs based on the key factors of their business]," MPRA Paper 13158, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:13158
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/13158/1/MPRA_paper_13158.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fama, Eugene F & French, Kenneth R, 1992. "The Cross-Section of Expected Stock Returns," Journal of Finance, American Finance Association, vol. 47(2), pages 427-465, June.
    2. Antonio Marques, 2002. "Competitive Balance in the Portuguese premier league of professional soccer," Industrial Organization 0211025, University Library of Munich, Germany.
    3. Stefan Szymanski, 2010. "Income Inequality, Competitive Balance and the Attractiveness of Team Sports: Some Evidence and a Natural Experiment from English Soccer," Palgrave Macmillan Books, in: Football Economics and Policy, chapter 9, pages 182-201, Palgrave Macmillan.
    4. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-930, December.
    5. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64(3), pages 242-242.
    6. Bill Gerrard & Steve Dobson, 2000. "Testing for monopoly rents in the market for playing talent – Evidence from English professional football," Journal of Economic Studies, Emerald Group Publishing, vol. 27(3), pages 142-164, September.
    7. Palomino, F.A. & Sakovics, J., 2000. "Revenue Sharing in Professional Sports Leagues : For the Sake of Competitive Balance or as a Result of Monopsony Power?," Discussion Paper 2000-110, Tilburg University, Center for Economic Research.
    8. Haan, Marco & Koning, Ruud H. & Witteloostuijn, Arjen van, 2002. "Market forces in European soccer," CCSO Working Papers 200211, University of Groningen, CCSO Centre for Economic Research.
    9. Thomas Hoehn & Stefan Szymanski, 2010. "The Americanization of European football," Palgrave Macmillan Books, in: Football Economics and Policy, chapter 3, pages 52-96, Palgrave Macmillan.
    10. Roger G. Noll, 2002. "The Economics of Promotion and Relegation in Sports Leagues," Journal of Sports Economics, , vol. 3(2), pages 169-203, May.
    11. Stephen Dobson & Bill Gerrard & Simon Howe, 2000. "The determination of transfer fees in English nonleague football," Applied Economics, Taylor & Francis Journals, vol. 32(9), pages 1145-1152.
    12. repec:fth:geneec:00.04 is not listed on IDEAS
    13. Boulier, Bryan L. & Stekler, H. O., 2003. "Predicting the outcomes of National Football League games," International Journal of Forecasting, Elsevier, vol. 19(2), pages 257-270.
    14. Angelo Cocco & J. C. H. Jones, 1997. "On going south: the economics of survival and relocation of small market NHL franchises in Canada," Applied Economics, Taylor & Francis Journals, vol. 29(11), pages 1537-1552.
    15. Renneboog, L.D.R. & Vanbrabant, P., 2000. "Share Price Reactions to Sporty Performances of Soccer Clubs listed on the London Stock Exchange and the AIM," Discussion Paper 2000-19, Tilburg University, Center for Economic Research.
    16. Myron J. Gordon & Eli Shapiro, 1956. "Capital Equipment Analysis: The Required Rate of Profit," Management Science, INFORMS, vol. 3(1), pages 102-110, October.
    17. Fernández , Pablo, 2002. "Valuing companies by cash flow discounting: Ten methods and nine theories," IESE Research Papers D/451, IESE Business School.
    18. Roger Buckland & Patricia Fraser, 2001. "Political and Regulatory Risk in Water Utilities: Beta Sensitivity in the United Kingdom," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 28(7‐8), pages 877-904, September.
    19. Jaume García & Plácido Rodríguez, 2002. "The Determinants of Football Match Attendance Revisited," Journal of Sports Economics, , vol. 3(1), pages 18-38, February.
    20. Roger Buckland & Patricia Fraser, 2001. "Political and Regulatory Risk in Water Utilities: Beta Sensitivity in the United Kingdom," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 28(7&8), pages 877-904.
    21. Feess, Eberhard & Muehlheusser, Gerd, 2003. "Transfer fee regulations in European football," European Economic Review, Elsevier, vol. 47(4), pages 645-668, August.
    22. Eberhard Feess & Frank Stähler, 2009. "Revenue Sharing In Professional Sports Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(2), pages 255-265, May.
    23. Alejandro Gaviria, 2000. "Is soccer dying? A time series approach," Applied Economics Letters, Taylor & Francis Journals, vol. 7(4), pages 275-278.
    24. Kothari, S P & Shanken, Jay & Sloan, Richard G, 1995. "Another Look at the Cross-Section of Expected Stock Returns," Journal of Finance, American Finance Association, vol. 50(1), pages 185-224, March.
    25. Mark Baimbridge, 1997. "Match attendance at Euro 96: was the crowd waving or drowning?," Applied Economics Letters, Taylor & Francis Journals, vol. 4(9), pages 555-558.
    26. Ignacio Palacios-Huerta, 2004. "Structural changes during a century of the world’s most popular sport," Statistical Methods & Applications, Springer;Società Italiana di Statistica, vol. 13(2), pages 241-258, September.
    27. Frederic Palomino, 2000. "Competitive Balance vs. Incentives to Win: A Theoretical Analysis of Revenue Sharing," Econometric Society World Congress 2000 Contributed Papers 0930, Econometric Society.
    28. Peter Dawson & Stephen Dobson & Bill Gerrard, 2000. "Estimating Coaching Efficiency in Professional Team Sports: Evidence from English Association Football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 399-421, September.
    29. El-Hodiri, Mohamed & Quirk, James, 1971. "An Economic Model of a Professional Sports League," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1302-1319, Nov.-Dec..
    30. Stephen Dobson & John Goddard, 2004. "Revenue Divergence And Competitive Balance In A Divisional Sports League," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(3), pages 359-376, August.
    31. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, September.
    32. Su-Jane Hsieh & Scott I. Jerris & William Kross, 1999. "Quarterly Earnings Announcements and Market Risk Adjustments," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(3-4), pages 313-336.
    33. Seung-Hoon Yoo, 2001. "A robust estimation of hedonic price models: least absolute deviations estimation," Applied Economics Letters, Taylor & Francis Journals, vol. 8(1), pages 55-58.
    34. Sloane, Peter J, 1971. "The Economics of Professional Football: The Football Club as a Utility Maximiser," Scottish Journal of Political Economy, Scottish Economic Society, vol. 18(2), pages 121-146, June.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Francisco Martín Lozano & Amalia Carrasco Gallego, 2011. "Deficits of accounting in the valuation of rights to exploit the performance of professional players in football clubs. A case study," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 22(3), pages 335-357, November.
    2. Mercedes Mareque & Angel Barajas & Francisco Lopez-Corrales, 2018. "The Impact of Union of European Football Associations (UEFA) Financial Fair Play Regulation on Audit Fees: Evidence from Spanish Football," IJFS, MDPI, vol. 6(4), pages 1-20, November.
    3. Andrews, Matt & Harrington, Peter, 2016. "Off Pitch: Football's Financial Integrity Weaknesses, and How to Strengthen Them," Working Paper Series 16-009, Harvard University, John F. Kennedy School of Government.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Barajas, Angel & Fernández-Jardón, Carlos & Crolley, Liz, 2005. "Does sports performance influence revenues and economic results in Spanish football?," MPRA Paper 3234, University Library of Munich, Germany.
    2. Stefan Szymanski, 2010. "The Economic Design of Sporting Contests," Palgrave Macmillan Books, in: The Comparative Economics of Sport, chapter 1, pages 1-78, Palgrave Macmillan.
    3. Wladimir Andreff, 2009. "Équilibre compétitif et contrainte budgétaire dans une ligue de sport professionnel," Revue économique, Presses de Sciences-Po, vol. 60(3), pages 591-633.
    4. Ferda HALICIOGLU, 2005. "Forecasting the Professional Team Sporting Events: Evidence from Euro 2000 and 2004 Football Tournaments," Industrial Organization 0508001, University Library of Munich, Germany.
    5. Barajas, Angel & Crolley, Liz, 2005. "A model to explain support in Spanish football," MPRA Paper 3235, University Library of Munich, Germany.
    6. Antonio Samagaio & Eduardo Couto & Jorge Caiado, 2009. "Sporting, financial and stock market performance in English football: an empirical analysis of structural relationships," CEMAPRE Working Papers 0906, Centre for Applied Mathematics and Economics (CEMAPRE), School of Economics and Management (ISEG), Technical University of Lisbon.
    7. Raul Caruso & Francesco Addesa & Marco Di Domizio, 2019. "The Determinants of the TV Demand for Soccer: Empirical Evidence on Italian Serie A for the Period 2008-2015," Journal of Sports Economics, , vol. 20(1), pages 25-49, January.
    8. Markus LANG & Alexander RATHKE & Marco RUNKEL, 2010. "The Economic Consequences Of Foreigner Rules In National Sports Leagues," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 31, pages 47-64.
    9. Ferda Halicioglu, 2005. "Can We Predict The Outcome Of The International Football Tournaments : The Case Of Euro 2000?," Microeconomics 0503008, University Library of Munich, Germany.
    10. Allen R. Sanderson & John J. Siegfried, 2003. "Thinking about Competitive Balance," Journal of Sports Economics, , vol. 4(4), pages 255-279, November.
    11. Bouvet, Patrick, 2011. "Que valent les compétitions sportives? Une nouvelle piste de réflexion," L'Actualité Economique, Société Canadienne de Science Economique, vol. 87(2), pages 205-222, juin.
    12. Meletakos, Panagiotis & Chatzicharistos, Dimitrios & Apostolidis, Nikolaos & Manasis, Vasilios & Bayios, Ioannis, 2016. "Foreign players and competitive balance in Greek basketball and handball championships," Sport Management Review, Elsevier, vol. 19(4), pages 391-401.
    13. Åse Jacobsen & Morten Kringstad & Tor-Eirik Olsen, 2021. "Extraordinary Funding and a Financially Viable Football Industry—Friends or Foes? A Norwegian Football League Perspective," Sustainability, MDPI, vol. 13(5), pages 1-19, March.
    14. Wladimir Andreff, 2006. "New Perspectives in Sports Economics: A European View," Working Papers 0605, International Association of Sports Economists;North American Association of Sports Economists.
    15. Helmut Dietl, 2010. "Besonderheiten des Sports ‐ Was rechtfertigt eine "eigene Ökonomik"?," Working Papers 0137, University of Zurich, Institute for Strategy and Business Economics (ISU).
    16. Rodríguez Guerrero, Plácido, 2012. "La economía del deporte/The Economics of Sport," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 30, pages 387-418, Agosto.
    17. Pedro Garcia-del-Barrio & Francesc Pujol, 2004. "Pay and Performance in the Spanish Soccer League: Who Gets the Expected Monopsony Rents?," Faculty Working Papers 05/04, School of Economics and Business Administration, University of Navarra.
    18. Stephen Dobson & John Goddard, 2004. "Revenue Divergence And Competitive Balance In A Divisional Sports League," Scottish Journal of Political Economy, Scottish Economic Society, vol. 51(3), pages 359-376, August.
    19. Alexander John Bond & Francesco Addesa, 2020. "Competitive Intensity, Fans’ Expectations, and Match-Day Tickets Sold in the Italian Football Serie A, 2012-2015," Journal of Sports Economics, , vol. 21(1), pages 20-43, January.
    20. Thomas Cristofaro Warrener & Carlos Eduardo da Gama Torres & Igor Viveiros Melo Souza, 2022. "The relationship between financial and sporting performance of professional football clubs: empirical evidence from brazilian football," Textos para Discussão Cedeplar-UFMG 641, Cedeplar, Universidade Federal de Minas Gerais.

    More about this item

    Keywords

    Valuation; football; soccer; finances;
    All these keywords.

    JEL classification:

    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

    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:pra:mprapa:13158. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.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.