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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]

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Author Info
Barajas, Angel

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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.

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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13158.

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Date of creation: 10 May 2004
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Handle: RePEc:pra:mprapa:13158

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Related research
Keywords: Valuation; football; soccer; finances;

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Find related papers by JEL classification:
D46 - Microeconomics - - Market Structure and Pricing - - - Value Theory
L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Recreation; Tourism
G30 - Financial Economics - - Corporate Finance and Governance - - - General
M4 - Business Administration and Business Economics; Marketing; Accounting - - Accounting
M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  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 427-65, June. [Downloadable!] (restricted)
  2. Baimbridge, Mark, 1997. "Match Attendance at Euro 96: Was the Crowd Waving or Drowning?," Applied Economics Letters, Taylor and Francis Journals, vol. 4(9), pages 555-58, September. [Downloadable!] (restricted)
  3. Renneboog, L.D.R. & Vanbrabant, P., 2000. "Share price reactions to sporty performance of soccer clubs listed on the London stock exchange and the AIM," Discussion Paper 19, Tilburg University, Center for Economic Research. [Downloadable!]
  4. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-30, December. [Downloadable!] (restricted)
  5. Palomino, F. & Sakovics, J., 2000. "Revenue sharing in professional sports leagues : for the sake of competitive balance or as a result of monopsony power?," Discussion Paper 110, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  6. 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. [Downloadable!] (restricted)
  7. 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. [Downloadable!]
  8. Cocco, Angelo & Jones, J C H, 1997. "On Going South: The Economics of Survival and Relocation of Small Market NHL Franchises in Canada," Applied Economics, Taylor and Francis Journals, vol. 29(11), pages 1537-52, November. [Downloadable!] (restricted)
  9. Su-Jane Hsieh & Scott I. Jerris & William Kross, 1999. "Quarterly Earnings Announcements and Market Risk Adjustments," Journal of Business Finance & Accounting, Blackwell Publishing, vol. 26(3-4), pages 313-336. [Downloadable!] (restricted)
  10. Yoo, Seung-Hoon, 2001. "A Robust Estimation of Hedonic Price Models: Least Absolute Deviations Estimation," Applied Economics Letters, Taylor and Francis Journals, vol. 8(1), pages 55-58, January. [Downloadable!] (restricted)
  11. Antonio Marques, 2002. "Competitive Balance in the Portuguese premier league of professional soccer," Industrial Organization 0211025, EconWPA. [Downloadable!]
  12. Feess, Eberhard & Muehlheusser, Gerd, 2003. "Transfer fee regulations in European football," European Economic Review, Elsevier, vol. 47(4), pages 645-668, August. [Downloadable!] (restricted)
  13. Carmichael, F & Thomas, D, 1993. "Bargaining in the Transfer Market: Theory and Evidence," Applied Economics, Taylor and Francis Journals, vol. 25(12), pages 1467-76, December.
  14. Dawson, Peter & Dobson, Stephen & Gerrard, Bill, 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. [Downloadable!] (restricted)
  15. 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 121-46, June.
  16. Gaviria, Alejandro, 2000. "Is Soccer Dying? A Time Series Approach," Applied Economics Letters, Taylor and Francis Journals, vol. 7(4), pages 275-78, April. [Downloadable!] (restricted)
  17. Dobson, Stephen & Gerrard, Bill & Howe, Simon, 2000. "The Determination of Transfer Fees in English Nonleague Football," Applied Economics, Taylor and Francis Journals, vol. 32(9), pages 1145-52, July. [Downloadable!] (restricted)
  18. Fernández , Pablo, 2002. "Valuing companies by cash flow discounting: Ten methods and nine theories," IESE Research Papers D/451, IESE Business School. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Barajas, Angel & Crolley, Liz, 2005. "A model to explain support in Spanish football," MPRA Paper 3235, University Library of Munich, Germany. [Downloadable!]
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