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

Carmichael, F; Mchale, IG; Thomas, D

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.

Citation

Carmichael, F., Mchale, I., & Thomas, D. Maintaining market position: Team performance, revenue and wage expenditure in the English Premier League. Bulletin of Economic Research, 63(4), 464-497. https://doi.org/10.1111/j.1467-8586.2009.00340.x

• Journal Article Type: Article
• Deposit Date: Oct 5, 2011
• Publicly Available Date: Apr 5, 2016
• Journal: Bulletin of Economic Research
• Print ISSN: 0307-3378
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 63
• Issue: 4
• Pages: 464-497
• DOI: https://doi.org/10.1111/j.1467-8586.2009.00340.x
• Publisher URL: http://dx.doi.org/10.1111/j.1467-8586.2009.00340.x