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If You Get Knocked Down, How Long Before You Get up Again?

Augusto Cerqua ()

International Journal of Sport Finance, 2014, vol. 9, issue 4, 284-304

Abstract: This paper addresses an important question on the consequences of relegation from some of Europe’s top football leagues: What is the team’s performance following relegation, compared to the situation without relegation? We compare the performance of relegated and non-relegated teams that battled until the last match to escape relegation in four large European leagues. We find that, on average, up to six seasons are necessary to completely reabsorb the negative relegation shock in sports outcomes. Additionally, we exploit current information on future TV rights revenues to forecast the extra cost of an ‘unlucky’ relegation in the 2013-14 season. The results show that, on average, relegation will cause an extra cost of about €135m to ‘combative’ teams relegated from the English Premier League. Smaller extra losses apply to the Italian Serie A (€60m), the Spanish La Liga (€38m), and the French Ligue 1 (€32m).

Keywords: cost of relegation; simulation; natural experiment; parachute payments (search for similar items in EconPapers)
JEL-codes: L83 (search for similar items in EconPapers)
Date: 2014
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International Journal of Sport Finance is currently edited by Arne Feddersen, Babatunde Buraimo, Joachim Prinz and Jane Ruseski

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