Soft budget constraints in professional football

Storm, Rasmus K.; Nielsen, Kurt Aagaard

doi:10.1080/16184742.2012.670660

Cited by 116 publications

(114 citation statements)

References 49 publications

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“…Késenne, 1996). However, as has been well documented, despite rising revenues for a number of years European football has reported declining financial performance and position, with many clubs in perilous financial circumstances clubs (Morrow, 2014a;Storm and Nielsen, 2012). For example, in 2011, 63% of European football clubs reported losses (UEFA, 2013).…”

Section: Introductionmentioning

confidence: 98%

The win/profit maximization debate: strategic adaptation as the answer?

Terrien

Scelles

Morrow

et al. 2017

SBM

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Purpose -The purpose of this paper is twofold. First, to highlight the heterogeneity of the organizational aims within the professional football teams in Ligue 1. Second, to understand why some teams swing from a win orientation toward a soft budget constraint from year to year, and vice versa.Design/methodology/approach -Financial data from annual reports for the period 2005/06 -2014/15 was collected for the 35 Ligue 1 clubs. To define the compliance degree of the intended strategy of those clubs, an efficiency analysis was conducted thanks to the data envelopment analysis (DEA) method. This performance measure was supplemented with the identification of productivity and demand shocks to build a theoretical model. It allow to precise nature of the evolution of the win/profit tension in the utility function related to the gap expectation/performance. Findings -The paper suggests that a team can switch from one archetype to another from year to year due to the stochastic nature of the sport industry. The club director's utility function could also be maximized under an intertemporal budget function to adjust the weight between win and profit according to the opportunities in the environment.Originality/value -The paper shed new light on the win/profit maximization. The theoretical model provides an assessment of the weight between win and profit in Ligue 1 and then points a new explanation for persistent losses in the sport industry.

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Section: Introductionmentioning

confidence: 98%

The win/profit maximization debate: strategic adaptation as the answer?

Terrien

Scelles

Morrow

et al. 2017

SBM

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“…Hungary has frequent cases of troubled sports clubs (which are openly or implicitly commercial, privately owned organizations) seeking and receiving state bailouts. I must admit I had thought this was a Hungarian peculiarity, but I recently read a study entitled "Soft budget constraints in professional football" (Storm and Nielsen 2012), where it emerged that many truly profit-oriented, privately owned sports clubs in Europe regularly receive state subsidies to cover trading losses, and fully expect them. World-famous clubs realize that their collapse would mean a huge loss of prestige to football fans in their city, county, or country.…”

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confidence: 99%

The soft budget constraint

Kornai¹

2014

Acta Oeconomica

104

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The author’s ideas on the soft budget constraint (SBC) were first expressed in 1976. Much progress has been made in understanding the problem over the ensuing four decades. The study takes issue with those who confine the concept to the process of bailing out loss-making socialist firms. It shows how the syndrome can appear in various organizations and forms in many spheres of the economy and points to the various means available for financial rescue. Single bailouts do not as such generate the SBC syndrome. It develops where the SBC becomes built into expectations. Special heed is paid to features generated by the syndrome in rescuer and rescuee organizations. The study reports on the spread of the syndrome in various periods of the socialist and the capitalist system, in various sectors. The author expresses his views on normative questions and on therapies against the harmful effects. He deals first with actual practice, then places the theory of the SBC in the sphere of ideas and models, showing how it relates to other theoretical trends, including institutional and behavioural economics and theories of moral hazard and inconsistency in time. He shows how far the intellectual apparatus of the SBC has spread in theoretical literature and where it has reached in the process of “canonization” by the economics profession. Finally, he reviews the main research tasks ahead.

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“…Наглядный пример такой отрасли -спортивная лига, клубы которой не стремятся к максимизации прибыли. В работе [Storm, Nielsen, 2012] приводятся данные, подтвержда-ющие существование в профессиональном футболе мягких бюджетных ог-раничений, и подчеркивается, что профессиональные футбольные клубы Европы постоянно балансируют на грани несостоятельности, но не ликви-дируются. Коэффициент выживаемости в ней остается высоким 8 , несмотря на то что футбольный бизнес постоянно генерирует убытки.…”

Section: мягкие бюджетные ограничения доходы от продажи прав на телеunclassified

French professional football in European context: how much different?

Andreff¹

2016

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Soft budget constraints in professional football

Cited by 116 publications

References 49 publications

The win/profit maximization debate: strategic adaptation as the answer?

The win/profit maximization debate: strategic adaptation as the answer?

The soft budget constraint

French professional football in European context: how much different?

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