Aaltodoc publication archive (Aalto University institutional repository)
School of Business | Department of Finance | Finance | 2014
Thesis number: 13793
Influence of club ownership structure on football player transfer fees
|Title:||Influence of club ownership structure on football player transfer fees|
|Year:||2014 Language: eng|
|Department:||Department of Finance|
|Index terms:||rahoitus; financing; urheilu; sports; yrityksen arvo; company valuation; omistus; ownership; hinnoittelu; pricing|
» hse_ethesis_13793.pdf size:2 MB (1098770)
|Key terms:||player valuation; ownership structure; transfer fee; football; Premier League|
OBJECTIVES OF THE STUDY:
The purpose of this study is to find, whether the ownership of Premier League clubs influences the transfer fees of acquired football players. The increasing number of foreign and wealthy investors purchasing clubs and financing player acquisitions motivated conduction of this study. The ownership categories studied are foreign, billionaire, and public entities. It is reviewed, if billionaires and foreign owners pay a transfer fee premium. These owners are rather attracted by the ownership status than potential profit, which possibly influences player valuation.
DATA AND METHODOLOGY:
The sample consists of 293 summer transfers in the seasons 2009/10-2012/13, where a Premier League club is the acquirer. Free transfers, winter transfers, and goalkeepers are excluded from the sample. The transfer information and financial statements are derived from public databases, and Ordinary Least Square regression is used to study the determinants of transfer fee i.e. the value of player. Logarithm of transfer fee is the dependent variable in all specifications regarding influence of ownership on transfer fee. In addition, influence of ownership structure on revenue, profitability, leverage, and liquidity of a club studied.
The results indicate that ownership structure influences the transfer fee paid for acquired players and club's financial ratios. Premier League clubs owned by billionaires are found to pay a premium of 16% and clubs in foreign ownership pay a premium of 8% for a similar player. Ownership structure also influences financial ratios of club, as billionaire ownership increases revenues by 48% and foreign ownership by 36% in comparison to the other ownership structures. On the contrary, billionaire ownership decreases profitability by 48% and foreign ownership decreases profitability by 17% for a similar financial year. Ownership structure does not have statistically significant correlation to liquidity but foreign ownership increases debt ratio by 15% whereas billionaire owner decreases leverage by 6% for a similar fiscal year. Public ownership has a controversial effect on player acquisitions and financial results. For a similar player, the transfer fee decreases by 12%. Public ownership increases profitability by 64% and decreases leverage by 28% for a similar financial year.
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