IDEAS home Printed from https://ideas.repec.org/a/spr/annopr/v266y2018i1d10.1007_s10479-017-2631-z.html
   My bibliography  Save this article

A combined methodology for the concurrent evaluation of the business, financial and sports performance of football clubs: the case of France

Author

Listed:
  • Emilios Galariotis

    () (Institute of Finance)

  • Christophe Germain

    (Institute of Finance)

  • Constantin Zopounidis

    (Institute of Finance
    Technical University of Crete)

Abstract

Abstract The recent transformation of football clubs to businesses and the challenges posed by this transformation motivate us to study the financial, business, and sports performance of French football clubs. We propose a two-stage method that can be applied to other settings, especially when there exist sample size and theoretical/model specification issues: first, Multicriteria Analysis is used to rank clubs on their financial and business performance dimensions; second, these rankings and the league standing (capturing sports performance) are used to assess the interrelationships of the different dimensions by means of a Partial Least Squares Structural Equation Modeling Approach. We find an amphidromous positive relationship between business performance and sports performance, and a one-way inverse relationship where financial performance affects sports performance. Put simply, more revenues affect sports achievements positively and these in turn impact positively on revenues in a virtuous cycle. The higher revenues do not aid financial performance given a race for success that can be possibly augmented by stakeholder myopia: the inherent to the sport pursuit of short term objectives to the detriment of long term sustainability. Consequently, the role of regulators (national authorities, UEFA Financial Fair Play) as custodians, is ever more important in protecting clubs from financial distress.

Suggested Citation

  • Emilios Galariotis & Christophe Germain & Constantin Zopounidis, 2018. "A combined methodology for the concurrent evaluation of the business, financial and sports performance of football clubs: the case of France," Annals of Operations Research, Springer, vol. 266(1), pages 589-612, July.
  • Handle: RePEc:spr:annopr:v:266:y:2018:i:1:d:10.1007_s10479-017-2631-z
    DOI: 10.1007/s10479-017-2631-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10479-017-2631-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Dijkstra, Theo, 1983. "Some comments on maximum likelihood and partial least squares methods," Journal of Econometrics, Elsevier, vol. 22(1-2), pages 67-90.
    2. Walter C. Neale, 1964. "The Peculiar Economics of Professional Sports," The Quarterly Journal of Economics, Oxford University Press, vol. 78(1), pages 1-14.
    3. Plácido Moreno & Sebastián Lozano, 2014. "A network DEA assessment of team efficiency in the NBA," Annals of Operations Research, Springer, vol. 214(1), pages 99-124, March.
    4. John Y. Campbell & Jens Hilscher & Jan Szilagyi, 2008. "In Search of Distress Risk," Journal of Finance, American Finance Association, vol. 63(6), pages 2899-2939, December.
    5. Yorgos Goletsis & John Psarras & Jesus-Emmanuel Samouilidis, 2003. "Project Ranking in the Armenian Energy Sector Using a Multicriteria Method for Groups," Annals of Operations Research, Springer, vol. 120(1), pages 135-157, April.
    6. Ángel Barajas & Plácido Rodríguez, 2010. "Spanish Football Clubs Finances: Crisis and Player Salaries," International Journal of Sport Finance, Fitness Information Technology, vol. 5(1), pages 52-66, February.
    7. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    8. Isidoro Guzmán & Stephen Morrow, 2007. "Measuring efficiency and productivity in professional football teams: evidence from the English Premier League," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 15(4), pages 309-328, November.
    9. Dries Goossens & Jeroen Beliën & Frits Spieksma, 2012. "Comparing league formats with respect to match importance in Belgian football," Annals of Operations Research, Springer, vol. 194(1), pages 223-240, April.
    10. Carlos A. Molina & Lorenzo A. Preve, 2009. "Trade Receivables Policy of Distressed Firms and Its Effect on the Costs of Financial Distress," Financial Management, Financial Management Association International, vol. 38(3), pages 663-686, September.
    11. Matt Pinnuck & Brad Potter, 2006. "Impact of on-field football success on the off-field financial performance of AFL football clubs," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(3), pages 499-517.
    12. Boscá, José E. & Liern, Vicente & Martínez, Aurelio & Sala, Ramøn, 2009. "Increasing offensive or defensive efficiency? An analysis of Italian and Spanish football," Omega, Elsevier, vol. 37(1), pages 63-78, February.
    13. Narayanan, M P, 1985. " Managerial Incentives for Short-term Results," Journal of Finance, American Finance Association, vol. 40(5), pages 1469-1484, December.
    14. D. Duvivier & O. Roux & V. Dhaevers & N. Meskens & A. Artiba, 2007. "Multicriteria optimisation and simulation: an industrial application," Annals of Operations Research, Springer, vol. 156(1), pages 45-60, December.
    15. Carlos Pestana Barros & Stephanie Leach, 2006. "Performance evaluation of the English Premier Football League with data envelopment analysis," Applied Economics, Taylor & Francis Journals, vol. 38(12), pages 1449-1458.
    16. Ron De Heij & Patrick Vermeulen & Linda Teunter, 2006. "Strategic actions in European soccer: Do they matter?," The Service Industries Journal, Taylor & Francis Journals, vol. 26(6), pages 615-632, September.
    17. Guyot, Alexis & Doumpos, Michael & Zopounidis, Constantin, 2016. "A novel multi-attribute benchmarking approach for assessing the financial performance of local governments: Empirical evidence from FranceAuthor-Name: Galariotis, Emilios," European Journal of Operational Research, Elsevier, vol. 248(1), pages 301-317.
    18. Kostas Kounetas, 2014. "Greek football clubs’ efficiency before and after Euro 2004 Victory: a bootstrap approach," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 22(4), pages 623-645, December.
    19. Salvatore Corrente & José Figueira & Salvatore Greco, 2014. "Dealing with interaction between bipolar multiple criteria preferences in PROMETHEE methods," Annals of Operations Research, Springer, vol. 217(1), pages 137-164, June.
    20. repec:spr:annopr:v:245:y:2016:i:1:d:10.1007_s10479-016-2287-0 is not listed on IDEAS
    21. Cohen, Sandra & Doumpos, Michael & Neofytou, Evi & Zopounidis, Constantin, 2012. "Assessing financial distress where bankruptcy is not an option: An alternative approach for local municipalities," European Journal of Operational Research, Elsevier, vol. 218(1), pages 270-279.
    22. Vrooman, John, 2000. "The Economics of American Sports Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(4), pages 364-398, September.
    23. Chih-Hai Yang & Hsuan-Yu Lin & Chiang-Ping Chen, 2014. "Measuring the efficiency of NBA teams: additive efficiency decomposition in two-stage DEA," Annals of Operations Research, Springer, vol. 217(1), pages 565-589, June.
    24. repec:spr:annopr:v:245:y:2016:i:1:d:10.1007_s10479-014-1606-6 is not listed on IDEAS
    25. Bernd Frick, 2007. "The Football Players' Labor Market: Empirical Evidence From The Major European Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 422-446, July.
    26. Frick, Bernd & Barros, Carlos Pestana & Prinz, Joachim, 2010. "Analysing head coach dismissals in the German "Bundesliga" with a mixed logit approach," European Journal of Operational Research, Elsevier, vol. 200(1), pages 151-159, January.
    27. Emilios C. Galariotis & Alexis Guyot & Michael Doumpos & Constantin Zopounidis, 2016. "A novel multi-attribute benchmarking approach for assessing the financial performance of local governments: Empirical evidence from France," Post-Print hal-01194629, HAL.
    28. Dieter J. Haas, 2003. "Productive efficiency of English football teams-a data envelopment analysis approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 24(5), pages 403-410.
    29. S. M. Dobson & J. A. Goddard, 1998. "Performance and revenue in professional league football: evidence from Granger causality tests," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1641-1651.
    30. 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 121-146, June.
    31. António S. Ribeiro & Francisco Lima, 2012. "Portuguese football league efficiency and players' wages," Applied Economics Letters, Taylor & Francis Journals, vol. 19(6), pages 599-602, April.
    32. Corrente, Salvatore & Figueira, José Rui & Greco, Salvatore, 2014. "The SMAA-PROMETHEE method," European Journal of Operational Research, Elsevier, vol. 239(2), pages 514-522.
    33. de Dios Tena, Juan & Forrest, David, 2007. "Within-season dismissal of football coaches: Statistical analysis of causes and consequences," European Journal of Operational Research, Elsevier, vol. 181(1), pages 362-373, August.
    34. Behzadian, Majid & Kazemzadeh, R.B. & Albadvi, A. & Aghdasi, M., 2010. "PROMETHEE: A comprehensive literature review on methodologies and applications," European Journal of Operational Research, Elsevier, vol. 200(1), pages 198-215, January.
    35. Pindado, Julio & Rodrigues, Luis & de la Torre, Chabela, 2008. "Estimating financial distress likelihood," Journal of Business Research, Elsevier, vol. 61(9), pages 995-1003, September.
    36. Peter Dawson & Stephen Dobson, 2002. "Managerial efficiency and human capital: an application to English association football," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(8), pages 471-486.
    Full references (including those not matched with items on IDEAS)

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:annopr:v:266:y:2018:i:1:d:10.1007_s10479-017-2631-z. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.