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Maintaining market position: Team performance, revenue and wage expenditure in the English Premier League

Carmichael, F, Mchale, IG and Thomas, D 2011, 'Maintaining market position: Team performance, revenue and wage expenditure in the English Premier League' , Bulletin of Economic Research, 63 (4) , pp. 464-497.

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    Abstract

    This paper investigates the relationship between playing success and commercial success in team sports. Utilizing a data set relating to the English Premier League that combines both financial measures and indicators of playing skills and performances, our empirical analysis is based on three behavioural equations. Our analysis indicates that on-field success can be directly related to players’ skills and abilities and that revenue is positively related to on-field success. Wage expenditure is also shown to systematically reflect player skills and performances. One interpretation of this evidence is that investment in players’ skills and ability buys on-field success, with richer teams becoming ever richer and able to maintain or even build upon success by spending more on players than less successful clubs. To the extent that richer clubs are successful in their objective there is a causal link between revenue earned and competitive imbalance via investments in players. The implications of this tendency within a league are discussed in our conclusion, which also considers the potentially wider implications of our study as they relate to the evolution of firm size and issues of market share.

    Item Type: Article
    Themes: Subjects outside of the University Themes
    Schools: Colleges and Schools > College of Business & Law > Salford Business School > Centre for Sports Business
    Journal or Publication Title: Bulletin of Economic Research
    Publisher: Blackwell
    Refereed: Yes
    ISSN: 03073378
    Depositing User: Dr Ian G. McHale
    Date Deposited: 05 Oct 2011 11:48
    Last Modified: 20 Aug 2013 18:11
    URI: http://usir.salford.ac.uk/id/eprint/17857

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