Predicting the value of professional sport clubs. A study of European soccer, 2005-2018

Yu. Zelenkov and I. Solntsev
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Yu. Zelenkov: HSE University, Moscow, Russia
I. Solntsev: Financial University under the Government of Russian Federation, Moscow, Russia

Journal of the New Economic Association, 2022, vol. 56, issue 4, 28-46

Abstract: This article aims to build a general valuation model that can be applied by investors and current shareholders of professional sport clubs from different countries and leagues. The study is based on panel data on the valuation of soccer clubs published annually by Forbes. Authors analyze all value-drivers that were used previously, expanding the time horizon (number of observations) and incorporating various models including linear and non-linear mixed effect regressions. The best performance is obtained using a mixed-effect model with treebased fixed part. The following determinants were found significant for the fixed effect: revenue and number of Google search requests. Analysis of actual deals in 2015-2020 confirms the model's predictive ability. It is also shown that since Forbes overestimates the market value of soccer clubs, the proposed model predicts an upper bound on the real value. In this regard, transactions with real value exceeding the estimates are of particular interest. A deeper analysis of such transactions allows to identify additional "non-soccer" factors affecting the deal. Therefore, the proposed model can serve as a tool for the rapid assessment of a soccer club based on open data.

Keywords: club value; valuation of soccer club; sports investments; sports fi nance; mixed effect model (search for similar items in EconPapers)
JEL-codes: C13 G12 G17 G32 Z23 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2022:i:56:p:28-46

DOI: 10.31737/2221-2264-2022-56-4-2

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