Who invests in financial instruments of sport clubs? An empirical analysis of actual and potential individual investors of professional European football clubs

Huth, Christopher

doi:10.1080/16184742.2019.1684539

Cited by 25 publications

(33 citation statements)

References 69 publications

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“…Turning to small fan shareholders, recent research by Huth (2018aHuth ( , 2018bHuth ( , 2019) could be used as a starting point for identifying relevant traits. He found that club attachment, income, SBM 10,4 age, and nationality were related to willingness to invest.…”

Section: Managerial Implicationsmentioning

confidence: 99%

Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return

Prigge

Tegtmeier

2020

SBM

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PurposeThe aims of the research are twofold: (1) exploring whether football club stocks can be considered an asset class of their own; (2) investigating whether football stocks enable well-diversified investors to achieve more efficient risk-return combinations.Design/methodology/approachUsing efficient frontier optimization, a base portfolio, with standard stocks and bonds, and a corresponding enhanced portfolio, which includes football stocks in the investment opportunity set, are defined. This procedure is applied to four portfolio composition rules. Pairwise comparisons of portfolio Sharpe ratios include a test for statistical significance.FindingsThe results indicate a low correlation of football stocks and standard stocks; thus, football stocks could be considered an asset class of their own. Nevertheless, the addition of football stocks to a well-diversified portfolio does not improve its risk-return efficiency because the weak performance of football stocks eliminates their advantage of low correlation.Research limitations/implicationsThis study contributes to the evidence that investments in football are different from ‘ordinary’ investments and need further research, particularly into market participants and their investment motives.Practical implicationsFootball stocks are not attractive to pure financial investors. Thus, football clubs need to know more about which side benefits are appreciated by which kind of investor and how much it costs to produce these side benefits.Originality/valueTo the best of authors’ knowledge, this is the first study to analyse the risk-return efficiency of football stocks from the perspective of a pure financial investor, i.e. an investor in football stocks who does not earn side benefits, such as strategic investors or fan investors.

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Section: Managerial Implicationsmentioning

confidence: 99%

Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return

Prigge

Tegtmeier

2020

SBM

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“…This is because the returns of clubs are massive and eminent. Football clubs are generating more returns from their investment: this is the prevalent reason why investors are financing them using issued financial instruments (Huth, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Investment review in sports leagues: financial evidence from Pakistan Super League

Aftab

Naveed

2020

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PurposeThe study invites seminal investigation on potential of investment returns in professional sports leagues. In line with scope of research, the analysis of this study brings into focus the Pakistan Cricket Board (PCB) and franchises pertinent to Pakistan Super League (PSL) for investment appraisal and returns analysis.Design/methodology/approachThe methodical aspect of research deals with financial ratios and sensitivity analysis capturing the potential of returns on investment for target sample of study.FindingsThe investment appraisal substantiates the significance of potential returns on sports projects. The returns of investment reports sluggish seasonal returns during initial phase of PSL; however, return on investment (ROI) optimized with the maturity and further capitalization of Pakistan Supper League in more concentrated competitive environment. Sensitivity analysis proves variability of returns with changes in growth prospect of franchises.Research limitations/implicationsThe study provides important working knowledge for existing and potential new investors and sports boards to consider the financial investment feasibility through customized investment models and relative orientations of promotion of sports, new talent hunting and re-fabricating the structure of sports in line with new age.Originality/valueThe efficacy of research is ensured through empirical verification of data obtained from reliable sources, and the novelty of research comes from investment appraisal and analysis of growing sports league familiarized as Pakistan Super League. The research approach and target sample are quite unique in context of sports leagues literature.

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“…The American systems, particularly the NFL (National Football League), prioritize profit maximization and the leagues are structured and operate accordingly. In the European system, despite some clubs being listed on stock exchanges, football clubs' financial statements show they are burdened with high debt and are operating at a loss, with very few exceptions [68][69][70][71][72]. This shows that those investing in sports where there is an operating loss must be doing so for non-capitalist reasons, as many wealthy people make highly speculative risks when they buy loss-generating football clubs, which generally never produce positive financial outcomes.…”

Section: Introductionmentioning

confidence: 99%

“…A competitive market (championship) is therefore essential to ensure the uncertainty of results, consequently increasing both public interest and financial returns. Uncertainty of results is clearly a necessary condition for maximizing the profit of the individual clubs and the league as a whole [68][69][70][71][72]. Spectators enjoy an underdog story, which is why the story of David and Goliath is still told to this day, and also why a movie was made when Leicester City won the English Premier League in 2016.…”

Section: Introductionmentioning

confidence: 99%

“…(The structure of the North American leagues is closed, and the European structure is open inwards and outwards). (2) Broadcasting rights revenue distribution; in North America, national and international sports broadcasting is bargained by the leagues, who collectively negotiate the rights of teams, dividing their revenues equally (only local TV networks can negotiate directly with the clubs), while in Europe, sports broadcasting rights are generally determined on the basis of performance and, only to a lesser extent, at a fixed rate [68][69][70][71][72].…”

Section: Introductionmentioning

confidence: 99%

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Measuring and Monitoring Sustainability in Listed European Football Clubs: A Value-Added Reporting Perspective

et al. 2020

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All sports have their roots and connection in some way to the Olympic spirit, and therefore fall within the vision and mission of the Olympic Committee, which has a central aim of “building a better world”. This is a fundamental value of the Olympics and sustainability is a “working principle” of this. This research analyses the performance of professional European football teams that are publicly listed on stock markets, analysing their income statements and factoring in how the value-added perspective is impacting professional sport. The methodology we use considers the sustainable contribution of the distribution of added value. The Value-Added Statement is considered as a part of broader Corporate Social Responsibility (CSR), which can be traced back as a concept to the late 1970s. It is still in widespread use and is regarded as being both a credible and a tested measure. In this paper, the authors apply a slightly modified and simplified version of this value-added approach to all publicly listed European football clubs and use these as a proxy for wider professional sport. This research demonstrates that, although most professional sports clubs are profit-oriented, the distribution of wealth generated by the added value is unbalanced. In most cases, at least in financial terms, the data shows shareholders are the most disadvantaged, whereas athletes are the most rewarded.

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Who invests in financial instruments of sport clubs? An empirical analysis of actual and potential individual investors of professional European football clubs

Cited by 25 publications

References 69 publications

Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return

Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return

Investment review in sports leagues: financial evidence from Pakistan Super League

Measuring and Monitoring Sustainability in Listed European Football Clubs: A Value-Added Reporting Perspective

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