Maintaining Market Position: Team Performance, Revenue and Wage Expenditure in the English Premier League

Abstract

This paper investigates the relationship between playing success and commercial success in team sports. Utilizing a data set relating to the English Premier League that combines both financial measures and indicators of playing skills and performances, our empirical analysis is based on three behavioural equations. Our analysis indicates that on-field success can be directly related to players' skills and abilities and that revenue is positively related to on-field success. Wage expenditure is also shown to systematically reflect player skills and performances. One interpretation of this evidence is that investment in players' skills and ability buys on-field success, with richer teams becoming ever richer and able to maintain or even build upon success by spending more on players than less successful clubs. To the extent that richer clubs are successful in their objective there is a causal link between revenue earned and competitive imbalance via investments in players. The implications of this tendency within a league are discussed in our conclusion, which also considers the potentially MAINTAINING MARKET POSITION IN THE PREMIER LEAGUE 465 wider implications of our study as they relate to the evolution of firm size and issues of market share.

Do Italians Really Do It Better? Evidence of Migrant Pay Disparities in the Top Italian Football League

“…As noted by Carmichael et al . (), in football the isolation and identification of individual contributions are problematic because of the interactive nature of the game. Interactions happen, both among the players of the same team and with their opponents.…”

“…Carmichael et al . () concluded that at the team level, a wage increase improved the sporting results. In the same vein Della Torre et al .…”

“…At an individual level, Torgler and Schmidt (2007) found a clear positive relationship between a player's annual salary and his performance. Carmichael et al (2011) concluded that at the team level, a wage increase improved the sporting results. In the same vein Della Torre et al (2014) established a positive link between both (absolute and relative) pay level and pay dispersion, and an individual's performance.…”

“…Sport is a labour-intensive industry, and human capital is, therefore, crucial for organisational outcomes (Lechner and Gudmundsson, 2012). Team sports, football (soccer) in particular, focus on individual abilities in the pursuit of a successful performance (Kern and Süssmuth, 2005;Carmichael et al, 2011;Tiedemann et al, 2011).…”

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