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The Effect of Professional Football Clubs' Legal Structure on Sponsoring Revenue

Helmut Dietl and Christian WeingŠrtner ()
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Christian WeingŠrtner: Institute for Strategy and Business Economics, University of Zurich

No 41, Working Papers from University of Zurich, Center for Research in Sports Administration (CRSA)

Abstract: Professional football clubs earn most of their revenues from four sources: sale of broadcasting rights, matchday revenues, merchandising, and sponsorship. The relative importance of these sources differs among clubs and leagues. Economists often argue that the ability of professional football clubs to generate revenues depends to a large extent on their legal structure. In this paper we analyze the effect of different legal structures, such as private company, public company, membersÕ association, on sponsorship. Based on the platform theory we introduce a model of value creation in professional football. After elaborating the property rights situation for each of the legal structures we show the direct and indirect effects on the generation of sponsorship revenues. We theoretically proof the membersÕ association to be the favorable legal structure with regard to sponsorship. The lack of hold-up risks for the stakeholders and the strong position of the fans are the major reasons for the superiority of this non-profit legal structure.

Keywords: Organization; Sponsorship; Network Effects; Platform; Property Rights (search for similar items in EconPapers)
Pages: 22 pages
Date: 2011-01
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