The Financial Performance of the English Football Clubs

Abstract

This paper examines the financial performance of the football clubs that participated in the English Premier League in season 2021-22. The study covers the ten-year period spanning from season 2012-13 to season 2021-22, while correlation and panel data analysis is applied. Financial performance is measured as return on assets (ROA), return on equity (ROE), and profit margin. The explanatory variables used concern the size of the clubs, along with their liquidity, leverage, efficiency, cash flow efficiency and turnover per employee. Sporting data is used too. This data includes attendance rate, the number of wins, the uncertainty in the Premier League, the participation in the Premier League or not and the presence in UEFA’s European club competitions or not. The empirical results reveal a positive relation of financial performance with liquidity, efficiency, cash flow efficiency and revenue per employee. The opposite is the case for the relation of performance with leverage. From the sporting variables, the number of wins is positively related to ROA. The opposite relationship is found between ROA and uncertainty. Finally, the presence of the clubs in the Premier League is positively related to financial performance. The importance of our study rests with its significant policy implications for those involved in the administration of the English football clubs. In particular, professional managers should always be hired to run the business of the English football, rather than popular ex-footballers with poor academic records and entrepreneurship experience, which is not rare in the professional football in general. Moreover, the English football clubs have to acknowledge that a business model which creates constant losses may not be viable in the long run.

Keywords: Financial Performance; Football Clubs; liquidity; leverage; efficiency

DOI: 10.7176/EJBM/16-1-08

Publication date: January 31^st 2024