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Insolvency in French Soccer

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  • Scelles, Nicolas
  • Szymanski, Stefan
  • Dermit-Richard, Nadine

Abstract

This paper examines insolvency at the highest levels of French soccer. Between 1970 and 2014 we observed 72 cases of insolvency arising from participation in the top two or three (since 1993) divisions. We find that demand (attendance) shocks can account for insolvency to a significant degree. We also find that insolvency can be explained by ownership structure, with the tradition Association form being more likely to lead to insolvency. We also examine the post-insolvency performance of soccer clubs and find that the adverse consequences of insolvency are long lasting.

Suggested Citation

  • Scelles, Nicolas & Szymanski, Stefan & Dermit-Richard, Nadine, 2016. "Insolvency in French Soccer," MPRA Paper 71219, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:71219
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    References listed on IDEAS

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    7. Stefan Szymanski, 2012. "Insolvency in English professional football: Irrational Exuberance or Negative Shocks?," Working Papers 1202, International Association of Sports Economists;North American Association of Sports Economists.
    8. Wladimir Andreff, 2012. "Mondialisation économique du sport," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00681921, HAL.
    9. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    10. Umberto Lago & Rob Simmons & Stefan Szymanski, 2006. "The Financial Crisis in European Football," Journal of Sports Economics, , vol. 7(1), pages 3-12, February.
    11. Jean-Jacques Gouguet & Didier Primault, 2006. "The French Exception," Journal of Sports Economics, , vol. 7(1), pages 47-59, February.
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    Cited by:

    1. Babatunde Buraimo & Giuseppe Migali & Rob Simmons, 2022. "Impacts of the Great Recession on sport: evidence from English Football League attendance demand [US household tourism expenditure and the great recession: an analysis with the consumer expenditure," Oxford Economic Papers, Oxford University Press, vol. 74(1), pages 155-177.
    2. Åse Jacobsen & Morten Kringstad & Tor-Eirik Olsen, 2021. "Extraordinary Funding and a Financially Viable Football Industry—Friends or Foes? A Norwegian Football League Perspective," Sustainability, MDPI, vol. 13(5), pages 1-19, March.
    3. Nicolas Scelles & Matthieu Llorca, 2021. "Leader Dismissal or Continuity, President Longevity, Geographic Orientation of Owners and Team Performance: Insights from French Men’s Football, 1994–2016," JRFM, MDPI, vol. 14(9), pages 1-17, September.
    4. Mickaël Terrien & Loris Terrettaz & Yann Carin, 2023. "How Fear, Exogeneous Shocks and Leadership Impact Change: The Case of Economic Models of the French Men’s Professional Basketball Clubs," Sustainability, MDPI, vol. 15(6), pages 1-17, March.
    5. Artur Wyszyński, 2021. "Niewypłacalność zawodowych klubów piłki nożnej," Ekonomista, Polskie Towarzystwo Ekonomiczne, issue 1, pages 142-166.
    6. Rodney Paul & Andrew Weinbach & Nick Riccardi, 2019. "Attendance in the Canadian Hockey League: The Impact of Winning, Fighting, Uncertainty of Outcome, and Weather on Junior Hockey Attendance," IJFS, MDPI, vol. 7(1), pages 1-11, February.
    7. Artur Wyszyński, 2021. "Niewypłacalność zawodowych klubów piłki nożnej," Ekonomista, Polskie Towarzystwo Ekonomiczne, vol. 1, pages 142-166, January.
    8. Wladimir Andreff, 2018. "Financial and Sporting Performance in French Football Ligue 1: Influence on the Players’ Market," Post-Print hal-03206972, HAL.
    9. Tim Wallrafen & Tim Pawlowski & Christian Deutscher, 2019. "Substitution in Sports: The Case of Lower Division Football Attendance," Journal of Sports Economics, , vol. 20(3), pages 319-343, April.
    10. Aurélien François & Nadine Dermit-Richard & Daniel Plumley & Robert Wilson, 2021. "Analyzing the effectiveness of UEFA's financial fair play regulations: A comparative study of the French Ligue 1 and the English Premier League [L'analyse du fair-play financier au prisme de son ef," Working Papers hal-03167685, HAL.
    11. Aurélien François & Nadine Dermit-Richard & Daniel Plumley & Robert Wilson, 2021. "Analyzing the effectiveness of UEFA's financial fair play regulations: A comparative study of the French Ligue 1 and the English Premier League [L'analyse du fair-play financier au prisme de son ef," Post-Print hal-03167685, HAL.
    12. Stefan Szymanski, 2017. "Entry into exit: insolvency in English professional football," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(4), pages 419-444, September.
    13. Thadeu Gasparetto & Angel Barajas, 2022. "Economic effects of promotion and relegation in parallel competitions," Economics and Business Letters, Oviedo University Press, vol. 11(1), pages 7-15.
    14. Lukas Richau & Florian Follert & Monika Frenger & Eike Emrich, 2021. "The sky is the limit?! Evaluating the existence of a speculative bubble in European football," Journal of Business Economics, Springer, vol. 91(6), pages 765-796, August.
    15. Wladimir Andreff, 2018. "Financial and Sporting Performance in French Football Ligue 1: Influence on the Players’ Market," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-03206972, HAL.
    16. Wladimir Andreff, 2018. "Financial and Sporting Performance in French Football Ligue 1: Influence on the Players’ Market," IJFS, MDPI, vol. 6(4), pages 1-17, November.
    17. David Alaminos & Manuel Ángel Fernández, 2019. "Why do football clubs fail financially? A financial distress prediction model for European professional football industry," PLOS ONE, Public Library of Science, vol. 14(12), pages 1-15, December.
    18. Antoine Feuillet & Mickael Terrien & Nicolas Scelles & Christophe Durand, 2021. "Determinants of coopetition and contingency of strategic choices: the case of professional football clubs in France," Post-Print halshs-02974491, HAL.
    19. Thadeu Gasparetto & Angel Barajas, 2022. "Wage Dispersion and Team Performance: The Moderation Role of Club Size," Journal of Sports Economics, , vol. 23(5), pages 548-566, June.
    20. Antoine Feuillet & Nicolas Scelles & Christophe Durand, 2017. "A winner’s curse in the bidding process for broadcasting rights in football? The cases of the French and UK markets," Post-Print hal-01935541, HAL.
    21. Nicolas Scelles & Qi Peng & Maurizio Valenti, 2021. "Do the Peculiar Economics of Professional Team Sports Apply to Esports? Sequential Snowballing Literature Reviews and Implications," Economies, MDPI, vol. 9(1), pages 1-18, March.
    22. Severin J. S. Oeckl & Stephen Morrow, 2022. "CSR in Professional Football in Times of Crisis: New Ways in a Challenging New Normal," IJFS, MDPI, vol. 10(4), pages 1-26, September.

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    More about this item

    Keywords

    insolvency; French soccer; attendance; demand shocks; ownership;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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