Is there evidence of softness in the budget constraint in football? Some evidence from English clubs

Stefan Szymanski

Chapter 7 in Professional Team Sports and the Soft Budget Constraint, 2022, pp 155-171 from Edward Elgar Publishing

Abstract: The Soft Budget Constraint (SBC) theory has been advanced as an explanation for frequent insolvency among football clubs in Europe. This chapter examines the theoretical underpinnings of the theory and provides empirical evidence on football club insolvencies to show that SBC theory is inconsistent with the data. The chapter suggests that an alternative explanation, recently advanced in the literature, which attributes insolvency to the impact of random shocks in the context of the promotion and relegation system, provides a more plausible account of the insolvency phenomenon.

Keywords: Economics and Finance (search for similar items in EconPapers)
Date: 2022
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