Performance and revenue in professional league football: evidence from Granger causality tests

Stephen Dobson and J. A. Goddard

Applied Economics, 1998, vol. 30, issue 12, 1641-1651

Abstract: Using a dataset comprising annual performance (measured by final league position) and gate revenue for 77 Football League clubs which maintained unbroken league membership between 1946 and 1994, the relationship between performance and revenue is investigated using cointegration and causality tests. A cointegrating relationship between performance and revenue is established in only 10 cases out of 77, although it is argued that some caution is required in interpreting these results, due to the low power of the relevant tests in relatively small samples. In Granger causality tests, more evidence is found of causality running from lagged revenue to current performance than of causality in the opposite direction, while the dependence of performance on revenue seems to be greater for the smaller clubs than for the larger. These results lend empirical support to the popular view that, unless checked by mechanisms for revenue redistribution within the league, the natural tendency is for success to become concentrated increasingly among a small group of elite, wealthy clubs.

Date: 1998
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DOI: 10.1080/000368498324715

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