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

Galariotis, Emilios, Germain Christophe, Zopounidis Konstantinos

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Summary

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.

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