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Betting on the Market: The Influence of Match-Day Odds on Price Reactions of European Football Clubs

Author

Listed:
  • Pascal Alterauge

    (Faculty of Business, Economics and Law, University of Applied Sciences, Cologne, German)

  • Marc Mehlhorn

    (Faculty of Business, Economics and Law, University of Applied Sciences, Cologne, German)

Abstract

This research investigates the relationship between football match outcomes, betting odds and the stock prices of publicly traded European football clubs, spanning from 11 February 2004 to 7 April 2022. Drawing data from 12 major European and publicly traded clubs, the study utilised betting odds as a key metric. These odds, aggregated from the Odds Portal, serve as a gauge for expected versus unexpected match outcomes. Preliminary findings showed a market value increase of 0.44% after a win and a decrease of 1.08% post-defeat. Moreover, deviations from betting odds predictions significantly influenced stock prices, with unexpected wins and losses resulting in a 2.27% increase and 1.35% decrease, respectively. The temporal dimension of matches revealed differential stock price reactions based on the match’s placement within the season. Additionally, National League games, due to their economic implications, showcased a distinct impact on stock prices compared to Cup games. This study accentuates the instrumental role of betting odds in interpreting the interplay between football outcomes and stock market dynamics, enhancing our comprehension of capital market efficiency. The results suggest that the capital market efficiently takes into account the published betting odds.

Suggested Citation

  • Pascal Alterauge & Marc Mehlhorn, 2024. "Betting on the Market: The Influence of Match-Day Odds on Price Reactions of European Football Clubs," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 2(22), pages 1-12.
    • Handle: RePEc:sgm:jbfeuw:v:2:y:2024:i:22:p:1-13
    DOI: 10.7172/2353-6845.jbfe.2024.2.1
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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z20 - Other Special Topics - - Sports Economics - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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