Winners in the field versus winners in the media. Do clubs’ owners maximise wins, revenues or visibility?

Garcia-del-Barrio, P. and Rossi, Giambattista (2019) Winners in the field versus winners in the media. Do clubs’ owners maximise wins, revenues or visibility? Working Paper. Birkbeck Sport Business Centre, London, UK.

Abstract

Despite the large revenue growth rates exhibited in the main European football leagues, clubs seldom make profits. This paper applies SEM techniques to revisit the thrilling debate on whether maximising profits or sport performance is more realistic to describe clubs owners’ decisions at hiring talent. Earlier papers advocate that football clubs usually behave as winning maximisers rather than as profit maximisers. First, taking into account the degree of media visibility of football clubs, we re-examine the relationship between: (i) sport talent and sport attainments; and (ii) sport performance and revenue. Then, we study the extent to which, in addition to the twofold choice between profits and sport performance, clubs’ owners might also aim to maximizing their teams’ visibility in the media. To verify this hypothesis, we calculate an index of media value, which jointly capture on-field and off-field skills of players, thereby assessing the global talent that football teams concentrate. Applying path analysis techniques and structural equation models (SEM), we find a significant mediation role of the media value index concerning the link between teams’ sport performance and annual revenues.

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