A beautiful game on hold – impact of Covid-19 on football stocks

Nicolas Stefan Schreiber and Dirk Schiereck

Publications of Darmstadt Technical University, Institute for Business Studies (BWL) from Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL)

Abstract: COVID-19 put the fairytale-like growth of European football to a sudden halt and revealed substantial differences in financial stability between clubs. This study seeks to analyze how listed football clubs were impacted by COVID-19 and whether clubs that exhibited a higher exposure to COVID-19 reacted more significantly to the outbreak of COVID-19 than their peers. Using an event study methodology specifically adapted for illiquid stocks, we analyze the impact of COVID-19 on 22 European football stocks. Our analyses indicate significant negative abnormal returns after the announcement of the first national European lockdown in Italy (March 9) and the respective announcement of league suspensions for each club. Clubs that were still competing in international cup competitions and, hence, had a comparably high risk of non-recoupable revenue shortfalls were thereby significantly more affected than their peers. We find no such effect for other measures of a club’s exposure to COVID-19 indicating that abnormal return differences are mainly driven by a higher exposure of internationally competing clubs to international travel restrictions. A subsequent analysis of trading volumes supports these results by showing that clubs still competing internationally exhibited significantly higher trading volumes after the outbreak of COVID-19 signaling a lower degree of investor confidence in the respective stocks.

Date: 2025-01-24
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Published in Journal of Economics and Finance (2025-01-24) : pp. 176-210

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