Football, stock market, sports performance, profitability, financial performance, business model, European football, economic model, institutional investors, financial return, market value, investments
To diversify the football club's ownership and financial base. Thus, it can be interesting for a football club to diversify its economic activities to diminish the sporting uncertainty, making financial results uncertain. Such a strategy was made for instance by the Danish club FC Copenhagen.
To attract institutional investors. Indeed, football teams listed in the stock market can offer a diversification strategy for investors, only if the financial return of diversification is uncorrelated with traditional stock markets, namely if "financial returns are strong enough compared to their volatility or if the index brings with it some diversification compared with traditional asset classes" (Aglietta, Andreff and Drut, 2010).
[...] Such relationship creates instability on the financial performance of the team. It results a strong uncertainty on the club assets and stock's fair value. Moreover, football clubs exhibit a weak effective corporate governance, so that the IPO's leads to a failure. According to such literature review, we can propose 4 questions of research to test with our empirical studies: Research question The correlation between football stocks and conventional asset classes are uncorrelated. Research question Volatility of football clubs stocks are more important than conventional asset. [...]
[...] They find that football clubs' stocks are strongly affected by sporting outcomes. Moreover, according to Palomino et al. (2009), investors should exploit the information from the betting market to apply short-term stock strategies. Indeed, the bookmakers' odds are particularly relevant to predict the games' outcomes. Moreover, the influence of sporting result on the share's price of the football team is confirmed by the works of Stadtmann (2006) on the Borussia Dortmund or Bernile and Lyandres (2009) on a sample of different European clubs. [...]
[...] Football clubs on the Stock Exchange: An inappropriate match?, The Irish Accounting Review, 61-90. Morrow, S. (2006), Impression management in football club financial reporting, International Journal of Sport Finance 96-108. Palomino F., Renneboog, L. & Zhang, C. (2009), Information Salience, Investor Sentiment, and Stock Returns: the Case of British Soccer Betting, Journal of Corporate Finance, 368-387. Renneboog L. and P. Van Brabant (2000), Share Price Reactions to Sporty Performances of Soccer Clubs Listed on the London Stock Exchange and the AIM, CentER DP 2000-19, University of Tilburg. [...]
[...] To attract institutional investors. Indeed, football teams listed in the stock market can offer a diversification strategy for investors, only if the financial return of diversification is uncorrelated with traditional stock markets, namely if "financial returns are strong enough compared to their volatility or if the index brings with it some diversification compared with traditional asset classes" (Aglietta, Andreff and Drut, 2010). Such an assumption must be confirmed (or not) by studying the returns on clubs' stocks. In other words, is the investment in the football club relevant in a standard scheme of portfolio allocation? [...]
[...] Indeed, most football club shares tend to be thinly traded. For most listed clubs, days when there is no movement in the quoted share price, occur frequently. In the English case, that we focus below, Manchester Utd is the only one for which the market is sufficiently liquid, so that share price daily fluctuates Overview of the English football club's listed on the stock market The first initial public offering of a European football club Tottenham Hotspur in October 1983; then, Millwall (October 1989) and Manchester United in October 1991. [...]
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