Evaluation of the relationship between financial performance and sport success in European football

Abstract

It is believed that sports and financial performances are linked to each other. Football clubs with weak financial performance are generally in bad positions in terms of sports success. On the other hand, there are only a limited number of football clubs which are in good financial standing without achieving serious sports success. After the increasing number of financial distress reports coming from various European football clubs and the concern about the role of external funds providers, the UEFA decided to increase its controlling power over the football industry and introduced a new set of rules known as the “financial fair play” in 2009. The purpose of this study is to analyze the financial performance of 22 football clubs listed on various European stock markets with the TOPSIS method, and to compare the results with the UEFA club rankings with the Spearman’s rank correlation method. Ten financial ratios are used to obtain the ranking of these football clubs with the TOPSIS method. The Spearman’s correlation coefficient is calculated as 0.17 and the test result do not indicate a statistically significant relation between sports success and financial performance. © JPES.