International Journal of Financial Studies

Research

11 pages, 334 KiB

Open AccessArticle

Country of Origin Effects on the Average Annual Values of NHL Player Contracts

by Aju J. Fenn, Lucas Gerdes and Samuel Rothstein

Int. J. Financial Stud. 2019, 7(2), 24; https://doi.org/10.3390/ijfs7020024 - 17 May 2019

Viewed by 3659

Using data from 2005 to 2016, this paper examines if players in the National Hockey League (NHL) are being paid a positive differential for their services due to the competition from the Kontinental Hockey League (KHL) and the Swedish Hockey League (SHL). In [...] Read more.

Using data from 2005 to 2016, this paper examines if players in the National Hockey League (NHL) are being paid a positive differential for their services due to the competition from the Kontinental Hockey League (KHL) and the Swedish Hockey League (SHL). In order to control for performance, we use two different large datasets, (N = 4046) and (N = 1717). In keeping with the existing literature, we use lagged performance statistics and dummy variables to control for the type of NHL contract. The first dataset contains lagged career performance statistics, while the performance statistics are based on the statistics generated during the years under the player’s previous contract. Fixed effects least squares (FELS) and quantile regression results suggest that player production statistics, contract status, and country of origin are significant determinants of NHL player salaries. Full article

(This article belongs to the Special Issue Sports Finance 2018)

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23 pages, 320 KiB

Open AccessArticle

The Impact of College Athletic Success on Donations and Applicant Quality

by Benjamin Baumer and Andrew Zimbalist

Int. J. Financial Stud. 2019, 7(2), 19; https://doi.org/10.3390/ijfs7020019 - 1 Apr 2019

Cited by 8 | Viewed by 7366

Abstract

For the 65 colleges and universities that participate in the Power Five athletic conferences (Pac 12, Big 10, SEC, ACC, and Big 12), the football and men’s basketball teams are highly visible. While these programs generate tens of millions of dollars in revenue [...] Read more.

For the 65 colleges and universities that participate in the Power Five athletic conferences (Pac 12, Big 10, SEC, ACC, and Big 12), the football and men’s basketball teams are highly visible. While these programs generate tens of millions of dollars in revenue annually, very few of them turn an operating “profit.” Their existence is thus justified by the claim that athletic success leads to ancillary benefits for the academic institution, in terms of both quantity (e.g., more applications, donations, and state funding) and quality (e.g., stronger applicants, lower acceptance rates, higher yields). Previous studies provide only weak support for some of these claims. Using data from 2006–2016 and a multiple regression model with corrections for multiple testing, we find that while a successful football program is associated with more applicants, there is no effect on the composition of the student body or (with a few caveats) funding for the school through donations or state appropriations. Full article

(This article belongs to the Special Issue Sports Finance 2018)

15 pages, 2298 KiB

Open AccessArticle

Performance Bonuses and Effort: Evidence from Fight Night Awards in Mixed Martial Arts

by Paul Gift

Int. J. Financial Stud. 2019, 7(1), 13; https://doi.org/10.3390/ijfs7010013 - 20 Feb 2019

Cited by 5 | Viewed by 5644

Abstract

This paper investigates the role of fight night bonus awards on fighter behavior in the Ultimate Fighting Championship (UFC) and World Extreme Cage (WEC) fighting mixed martial arts (MMA) promotions. Behavior is analyzed using detailed fighter performance statistics, exploiting variation in bonus size [...] Read more.

This paper investigates the role of fight night bonus awards on fighter behavior in the Ultimate Fighting Championship (UFC) and World Extreme Cage (WEC) fighting mixed martial arts (MMA) promotions. Behavior is analyzed using detailed fighter performance statistics, exploiting variation in bonus size across events and over time. Findings suggest that fighters are not meaningfully influenced by bonus levels within the range observed in the sample period and possible explanations are discussed. Fight night bonuses appear to serve as a lottery compensation mechanism to ex post reward performances consistent with an MMA promotion’s desires rather than ex ante incentivize such performances. Findings have implications for strategic MMA promoter decisions and contribute more broadly to the personnel economics literature on incentives and compensation. Full article

(This article belongs to the Special Issue Sports Finance 2018)

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11 pages, 223 KiB

Open AccessArticle

Attendance in the Canadian Hockey League: The Impact of Winning, Fighting, Uncertainty of Outcome, and Weather on Junior Hockey Attendance

by Rodney Paul, Andrew Weinbach and Nick Riccardi

Int. J. Financial Stud. 2019, 7(1), 12; https://doi.org/10.3390/ijfs7010012 - 19 Feb 2019

Cited by 6 | Viewed by 6014

Abstract

An attendance model is specified for the Canadian Hockey League (CHL), the top level of junior hockey in Canada with some teams located in the United States. The natural log of attendance is used as the dependent variable, with explanatory variables consisting of [...] Read more.

An attendance model is specified for the Canadian Hockey League (CHL), the top level of junior hockey in Canada with some teams located in the United States. The natural log of attendance is used as the dependent variable, with explanatory variables consisting of the timing of the game, team performance characteristics, uncertainty of outcome measures, and weather-related variables. Weekends and Mondays were the most popular days for games. Winning and fighting were shown to be popular team characteristics that drive attendance. Uncertainty of outcome plays little role, if any, in fan interest at this level, while precipitation significantly reduces attendance. Full article

(This article belongs to the Special Issue Sports Finance 2018)

17 pages, 2000 KiB

Open AccessArticle

Howzat? The Financial Health of English Cricket: Not Out, Yet

by Daniel Plumley, Rob Wilson, Robbie Millar and Simon Shibli

Int. J. Financial Stud. 2019, 7(1), 11; https://doi.org/10.3390/ijfs7010011 - 19 Feb 2019

Cited by 6 | Viewed by 8794

Abstract

In 1997 a review of the financial health of English county cricket highlighted strategic weaknesses within the professional game, principally an over-reliance by clubs on the annual grants provided to them by the England and Wales Cricket Board (ECB). Without such grants the [...] Read more.

In 1997 a review of the financial health of English county cricket highlighted strategic weaknesses within the professional game, principally an over-reliance by clubs on the annual grants provided to them by the England and Wales Cricket Board (ECB). Without such grants the teams, in general terms, would be insolvent. Using the financial statements of the First Class Cricket Counties, this paper explores how the financial position and performance of the county game has changed, 20 years on from the seminal study. A series of structural changes to the game had been made, yet financial problems are still evident. Counties are as reliant on central grant income as they were in 1997, although there are cases where clubs have made strategic enhancements and are becoming self-sustainable as going concerns. Rather than the ECB directly funding county revenue it should be working in collaboration with individual clubs to achieve developments in the game from the grassroots upwards, in order to help clubs grow their own revenue streams. Full article

(This article belongs to the Special Issue Sports Finance 2018)

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19 pages, 1579 KiB

Open AccessArticle

European Club Football after “Five Treatments” with Financial Fair Play—Time for an Assessment

by Egon Franck

Int. J. Financial Stud. 2018, 6(4), 97; https://doi.org/10.3390/ijfs6040097 - 13 Dec 2018

Cited by 38 | Viewed by 10942

Abstract

UEFA’s Club Licensing and Financial Fair Play Regulations (FFP) have impacted European club football. After five distinct applications of the break-even requirement, which represents the cornerstone of these regulations, it is time for an assessment. How has the situation in European top-division football [...] Read more.

UEFA’s Club Licensing and Financial Fair Play Regulations (FFP) have impacted European club football. After five distinct applications of the break-even requirement, which represents the cornerstone of these regulations, it is time for an assessment. How has the situation in European top-division football changed since the FFP regulation? The most recent financial data show that European club football is characterized by significant financial recovery and further polarization. How has the FFP regulation presumably affected this development? This article discusses plausible reasons why FFP has contributed to financial recovery but has not aggravated polarization. Understanding the drivers of polarization is essential before taking further regulatory steps. Full article

(This article belongs to the Special Issue Sports Finance 2018)

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20 pages, 469 KiB

Open AccessArticle

The Impact of Union of European Football Associations (UEFA) Financial Fair Play Regulation on Audit Fees: Evidence from Spanish Football

by Mercedes Mareque, Angel Barajas and Francisco Lopez-Corrales

Int. J. Financial Stud. 2018, 6(4), 92; https://doi.org/10.3390/ijfs6040092 - 13 Nov 2018

Cited by 9 | Viewed by 6345

Abstract

This paper analyzes whether the Financial Fair Play (FFP) regulations set by Union of European Football Associations (UEFA) have influenced the auditing fees charged to football clubs. In addition, it explores the determinants of audit fees. We used a two-sample t-test with equal [...] Read more.

This paper analyzes whether the Financial Fair Play (FFP) regulations set by Union of European Football Associations (UEFA) have influenced the auditing fees charged to football clubs. In addition, it explores the determinants of audit fees. We used a two-sample t-test with equal variances to determine whether differences are present. After this, we carried out a panel data regression with the clubs fix effect to estimate the determinants of audit fees in football clubs. Our findings revealed an increase of audit fees after the implementation of FFP regulations. On top of that, audit fees were explained by the presence of foreign investors if the audit firm was one of the Big 4 and if the auditor was a woman. The regulation change has had an impact on the audit fees charged by auditors for their services. However, this increase may be compensated over future years given the improving financial situation of clubs; therefore, the auditors’ risk diminishes and subsequent audit fees may be reduced. UEFA should monitor audit fees as well as the quality of the audit reports, which have become crucial to obtaining the license to participate in UEFA competitions. Full article

(This article belongs to the Special Issue Sports Finance 2018)

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17 pages, 278 KiB

Open AccessArticle

Financial and Sporting Performance in French Football Ligue 1: Influence on the Players’ Market

by Wladimir Andreff

Int. J. Financial Stud. 2018, 6(4), 91; https://doi.org/10.3390/ijfs6040091 - 8 Nov 2018

Cited by 23 | Viewed by 8505

Abstract

Despite the globalisation of European soccer, each professional league exhibits specificities. French Ligue 1 sometimes contends with the trading-off of financial performance against sporting performance of its teams in European soccer competitions, and its inner auditing body, the Direction Nationale du Contrôle de [...] Read more.

Despite the globalisation of European soccer, each professional league exhibits specificities. French Ligue 1 sometimes contends with the trading-off of financial performance against sporting performance of its teams in European soccer competitions, and its inner auditing body, the Direction Nationale du Contrôle de Gestion (DNCG), is in charge of controlling clubs’ financial accounts. Moreover, Ligue 1 operates with one of the best competitive balances in the Big Five, which is detrimental to its clubs’ success at the European level. However, the league and a number of clubs have not been able to curb payroll inflation and have not avoided being recurrently run in a deficit and accumulating debts, in particular payment arrears and player transfer overdue. Lax management occurs, since very few clubs have been sanctioned by a payment failure, even fewer by liquidation, and there has been no bankruptcy. The concept of a soft budget constraint theoretically encapsulates such empirical evidence. The novelty of the paper is to establish a link between the soft budget constraint and the players’ labour market where it crucially triggers market disequilibria: an excess of demand for superstars’ talents and an excess of supply for journeymen players are modelled. Data paucity about player individual wages hinders econometric testing of the aforementioned link and the model. However, a look at transfer fees that concentrates on a few of the top European soccer clubs provides a first insight into the arms race for talent that fuels an excess of demand for superstars and dips a number of clubs’ finance into the red. Full article

(This article belongs to the Special Issue Sports Finance 2018)

16 pages, 887 KiB

Open AccessArticle

Revenue Sharing in Major League Baseball: The Moments That Meant so Much

by Duane Rockerbie and Stephen Easton

Int. J. Financial Stud. 2018, 6(3), 71; https://doi.org/10.3390/ijfs6030071 - 6 Aug 2018

Cited by 8 | Viewed by 7675

Abstract

Revenue sharing is a common league policy in professional sports leagues. Several motivations for revenue sharing have been explored in the literature, including supporting small market teams, affecting league parity, suppressing player salaries, and improving team profitability. We investigate a different motivation. Risk-averse [...] Read more.

Revenue sharing is a common league policy in professional sports leagues. Several motivations for revenue sharing have been explored in the literature, including supporting small market teams, affecting league parity, suppressing player salaries, and improving team profitability. We investigate a different motivation. Risk-averse team owners, through their commissioner, are able to increase their utility by using revenue sharing to affect higher order moments of the revenue distribution. In particular, it may reduce the variance and kurtosis, as well as affecting the skewness of the league distribution of team local revenues. We first determine the extent to which revenue sharing affects these moments in theory, then we quantify the effects on utility for Major League Baseball over the period 2002–2013. Our results suggest that revenue sharing produced significant utility gains at little cost, which enhanced the positive effects noted by other studies. Full article

(This article belongs to the Special Issue Sports Finance 2018)

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15 pages, 260 KiB

Open AccessArticle

Earnings Persistence of European Football Clubs under UEFA’s FFP

by Panagiotis E. Dimitropoulos and Konstantinos Koronios

Int. J. Financial Stud. 2018, 6(2), 43; https://doi.org/10.3390/ijfs6020043 - 17 Apr 2018

Cited by 13 | Viewed by 5391

Abstract

The goal of this study was to examine the predictability and persistence of earnings of the European football clubs and whether the new Union of European Football Associations (UEFA) Financial Fair Play (FFP) licensing regulation has forced clubs to produce a more predictable [...] Read more.

The goal of this study was to examine the predictability and persistence of earnings of the European football clubs and whether the new Union of European Football Associations (UEFA) Financial Fair Play (FFP) licensing regulation has forced clubs to produce a more predictable earnings stream. We utilized a sample of 109 European top-tier clubs over the period 2008–2016, summing up to 844 firm-year observations. Empirical evidence indicated that the cash flow component of earnings is more relevant in predicting one-year ahead earnings than accruals. This positive impact of cash flows for predicting earnings is more significant after the FFP regulation since earnings predictability has increased during that period. Moreover, the abovementioned finding is more significant for the smaller league clubs rather than the Big-5 league clubs. This finding is attributed to the fact that smaller league clubs are more in need of UEFA prize money relative to Big-5 league clubs, thus they are more incentivized to produce a more predictable earnings stream. Full article

(This article belongs to the Special Issue Sports Finance 2018)

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