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Ownership structure and financial performance in European football

Ownership structure and financial performance in European football PurposeThis paper aims to analyse the relationship between ownership structure and financial performance in the five major European football leagues from 2007-2008 to 2012-2013 and examine the impact of the financial fair play (FFP) regulation.Design/methodology/approachThe sample used comprises 94 teams that participated in the major European competitions: German Bundesliga, Ligue 1 of France, Spanish Liga, English Premier League and the Italian Serie A. The estimation technique used is panel-corrected standard errors.FindingsThe results confirm an inverted U-shaped curve relationship between ownership structure and financial performance as a consequence of both monitoring and expropriation effects. Moreover, the results show that after FFP regulation, the monitoring effect disappears and only the expropriation effect remains.Research limitations/implicationsThe lack of transparency of the information provided by some teams has limited the sample size.Practical implicationsOne of the main issues that the various regulating bodies of the industry should address is the introduction of a code of good practice, not only for aspects related to the transparency of financial information but also to require greater transparency in the information concerning corporate governance.Social implicationsRegulating bodies could also consider other additional control instruments based on corporate governance, such as for example, corporate governance practices, corporate governance codes, greater transparency, control of the boards of directors, etc.Originality/valueThis study tries to provide direct evidence of the impact of large majority investors in the clubs and FFP regulation on the financial performance of football clubs. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

Ownership structure and financial performance in European football

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1472-0701
DOI
10.1108/CG-07-2016-0146
Publisher site
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Abstract

PurposeThis paper aims to analyse the relationship between ownership structure and financial performance in the five major European football leagues from 2007-2008 to 2012-2013 and examine the impact of the financial fair play (FFP) regulation.Design/methodology/approachThe sample used comprises 94 teams that participated in the major European competitions: German Bundesliga, Ligue 1 of France, Spanish Liga, English Premier League and the Italian Serie A. The estimation technique used is panel-corrected standard errors.FindingsThe results confirm an inverted U-shaped curve relationship between ownership structure and financial performance as a consequence of both monitoring and expropriation effects. Moreover, the results show that after FFP regulation, the monitoring effect disappears and only the expropriation effect remains.Research limitations/implicationsThe lack of transparency of the information provided by some teams has limited the sample size.Practical implicationsOne of the main issues that the various regulating bodies of the industry should address is the introduction of a code of good practice, not only for aspects related to the transparency of financial information but also to require greater transparency in the information concerning corporate governance.Social implicationsRegulating bodies could also consider other additional control instruments based on corporate governance, such as for example, corporate governance practices, corporate governance codes, greater transparency, control of the boards of directors, etc.Originality/valueThis study tries to provide direct evidence of the impact of large majority investors in the clubs and FFP regulation on the financial performance of football clubs.

Journal

Corporate Governance – Emerald Publishing

Published: Jun 5, 2017

References

  • Ownership structure and board composition in a high ownership concentration context
  • French football: a financial crisis rooted in weak governance
  • The law and large-block trades