Financial player valuation from the perspective of the club: the case of football

Leifheit, Nicolas; Follert, Florian

doi:10.1080/23750472.2021.1944821

Cited by 11 publications

(16 citation statements)

References 46 publications

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“…Payouts directly associated with a player investment are primarily the potential transfer fee, fixed salary payments and variable payments (e.g. Mart ın Lozano and Carrasco Gallego, 2011; Leifheit and Follert, 2023).…”

Section: Literature Review and Research Gap 21 Previous Literaturementioning

confidence: 99%

A decision model to value football player investments under uncertainty

Follert,

Gleißner

2024

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PurposeFrom the buying club’s perspective, the transfer of a player can be interpreted as an investment from which the club expects uncertain future benefits. This paper aims to develop a decision-oriented approach for the valuation of football players that could theoretically help clubs determine the subjective value of investing in a player to assess its potential economic advantage.Design/methodology/approachWe build on a semi-investment-theoretical risk-value model and elaborate an approach that can be applied in imperfect markets under uncertainty. Furthermore, we illustrate the valuation process with a numerical example based on fictitious data. Due to this explicitly intended decision support, our approach differs fundamentally from a large part of the literature, which is empirically based and attempts to explain observable figures through various influencing factors.FindingsWe propose a semi-investment-theoretical valuation approach that is based on a two-step model, namely, a first valuation at the club level and a final calculation to determine the decision value for an individual player. In contrast to the previous literature, we do not rely on an econometric framework that attempts to explain observable past variables but rather present a general, forward-looking decision model that can support managers in their investment decisions.Originality/valueThis approach is the first to show managers how to make an economically rational investment decision by determining the maximum payable price. Nevertheless, there is no normative requirement for the decision-maker. The club will obviously have to supplement the calculus with nonfinancial objectives. Overall, our paper can constitute a first step toward decision-oriented player valuation and for theoretical comparison with practical investment decisions in football clubs, which obviously take into account other specific sports team decisions.

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Section: Literature Review and Research Gap 21 Previous Literaturementioning

confidence: 99%

A decision model to value football player investments under uncertainty

Follert,

Gleißner

2024

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“…In this negotiation, both parties will know their use value. The gap between the willingness to pay (use value of the buyer, V B ) and the willingness to accept (use value of the seller, V S ), with V B > V S , is the economic rent that the transaction generates (Leifheit & Follert, 2021). Thus, the farther the final price is from one's own limit, the greater the advantage of one party.…”

Section: Proposal For a New Approachmentioning

confidence: 99%

Football players in light of economic value theory: Critical review and conceptualisation

Franceschi,

Brocard,

Follert

et al. 2023

Manage Decis Econ

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Football players represent the key assets of football clubs, and their value determination is therefore at the heart of clubs' investment and decision‐making processes. Unsurprisingly, the topic of player value has attracted the attention of scholars from various disciplines for decades. Despite this, there is a corpus of academic literature, which, although it works empirically with the relevant data, does not discuss any of the concepts related to the terms ‘value’ and ‘price’ in depth. Conversely, there are studies that do so but do not present a unified and coherent concept of the terminologies used. Consequently, no comprehensive definition of the value of football players seems to emerge from the literature. The central aim of this paper is to fill this gap. Based on a critical review of existing literature, we propose a unified framework embedded in subjective value theory, particularly as formulated by the Austrian school of economics. As a result, this work presents a theoretical basis for defining the use value and market value of football players, the comparison of which can improve clubs' decision‐making. In this context, we also discuss the conceptual validity of Transfermarkt values, a widely used crowd‐sourced valuation tool. Overall, we seek to strengthen the link between economic theory and practical management problems in the football industry. Furthermore, our results are not solely limited to football but are also applicable to athlete valuation in other sports.

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“…Human capital value is a longstanding concept (Becker, 1964;Weisbrod, 1961), thoroughly embedded in the structure of human societies. Commercial examples include salary differentials, athlete transfer fees (Leifheit & Follert, 2021), and payments for client lists or social media followers. Policy examples include public funding for education (Grosse & Zhou, 2021) and healthcare (Hanly et al, 2022;Rice & Cooper, 1967), and visa programs for migrant skills and labor.…”

Section: Theoretical Framework: Human Capitalmentioning

confidence: 99%

Economic Value of Tourism Through Human Capital Gains

Buckley

2022

Journal of Travel Research

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Leisure tourism can be analyzed as a mechanism to rebuild human capital depleted by work. Human capital is an essential input to human economies, and possesses a corresponding economic value. Therefore, tourism possesses an economic value additional to expenditure and multipliers, which can be seen as investments in increasing human capital as an asset. Calculating the financial value of human capital gains is likely to prove a more powerful political tool for the tourism sector, than current political perceptions as discretionary leisure.

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Financial player valuation from the perspective of the club: the case of football

Cited by 11 publications

References 46 publications

A decision model to value football player investments under uncertainty

A decision model to value football player investments under uncertainty

Football players in light of economic value theory: Critical review and conceptualisation

Economic Value of Tourism Through Human Capital Gains

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