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Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return

Sport, business and management, 2020-09, Vol.10 (4), p.471-494 [Peer Reviewed Journal]

Emerald Publishing Limited ;Emerald Publishing Limited 2020 ;ISSN: 2042-678X ;EISSN: 2042-6798 ;DOI: 10.1108/SBM-07-2019-0063

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  • Title:
    Football stocks: a new asset class attractive to institutional investors? Empirical results and impulses for researching investor motivations beyond return
  • Author: Prigge, Stefan ; Tegtmeier, Lars
  • Subjects: Business cycles ; Diversification ; Economic crisis ; Equity ; Equity stake ; Hypotheses ; Institutional investments ; Portfolio management ; Private equity ; Professional football ; Stock exchanges ; Stockholders
  • Is Part Of: Sport, business and management, 2020-09, Vol.10 (4), p.471-494
  • Description: PurposeThe aims of the research are twofold: (1) exploring whether football club stocks can be considered an asset class of their own; (2) investigating whether football stocks enable well-diversified investors to achieve more efficient risk-return combinations.Design/methodology/approachUsing efficient frontier optimization, a base portfolio, with standard stocks and bonds, and a corresponding enhanced portfolio, which includes football stocks in the investment opportunity set, are defined. This procedure is applied to four portfolio composition rules. Pairwise comparisons of portfolio Sharpe ratios include a test for statistical significance.FindingsThe results indicate a low correlation of football stocks and standard stocks; thus, football stocks could be considered an asset class of their own. Nevertheless, the addition of football stocks to a well-diversified portfolio does not improve its risk-return efficiency because the weak performance of football stocks eliminates their advantage of low correlation.Research limitations/implicationsThis study contributes to the evidence that investments in football are different from ‘ordinary’ investments and need further research, particularly into market participants and their investment motives.Practical implicationsFootball stocks are not attractive to pure financial investors. Thus, football clubs need to know more about which side benefits are appreciated by which kind of investor and how much it costs to produce these side benefits.Originality/valueTo the best of authors’ knowledge, this is the first study to analyse the risk-return efficiency of football stocks from the perspective of a pure financial investor, i.e. an investor in football stocks who does not earn side benefits, such as strategic investors or fan investors.
  • Publisher: Bingley: Emerald Publishing Limited
  • Language: English
  • Identifier: ISSN: 2042-678X
    EISSN: 2042-6798
    DOI: 10.1108/SBM-07-2019-0063
  • Source: ProQuest Central
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