The Importance of Club Revenues for Player Salaries and Transfer Expenses – How Does the Coronavirus Outbreak (COVID-19) Impact the English Premier League?

48 Pages Posted: 12 Sep 2020 Last revised: 29 Apr 2021

See all articles by Tommy Kweku Quansah

Tommy Kweku Quansah

University of Lausanne

Bernd Frick

University of Witten/Herdecke - Institute of Economics and Business Administration

Markus Lang

University of Lausanne - Faculty of Social and Political Sciences

Kieran Maguire

University of Liverpool - Management School (ULMS)

Date Written: March 24, 2021

Abstract

The COVID-19 pandemic has caused significant disruption in the sports industry and has raised the question of whether the football industry is based on a sustainable business model. Using data from the English Premier League (EPL), we develop an empirical model to achieve two objectives: First, we aim to study the importance of club revenues on player salaries and transfer costs. In particular, we examine how changes in the different income sources of football clubs (TV revenues, match revenues, and commercial revenues) affect player salaries, player market values, and net transfer expenses. Second, we seek to estimate the impact of a major market downturn such as the COVID-19 pandemic in the EPL. Our results suggest that TV revenues are by far the most important source of income for player salaries and market values, followed by match revenues and commercial revenues. Interestingly, each revenue source seems to have a similar impact on net transfer expenses. We forecast that player salaries, market values, and transfer expenses will all decrease in the forthcoming EPL season 2020/21. The magnitude of the reduction depends on the coronavirus scenario and ranges from -20.4% to -9.5% for player salaries and -26.7% to -12.4% for player market values. Our study adds to the understanding of the effects of COVID-19 on sports and aims at providing new insights to sport management professionals as for the development of the football labor market.

Keywords: COVID-19, coronavirus, transfer fees, players market values, Premier League

Suggested Citation

Quansah, Tommy Kweku and Frick, Bernd and Lang, Markus and Maguire, Kieran, The Importance of Club Revenues for Player Salaries and Transfer Expenses – How Does the Coronavirus Outbreak (COVID-19) Impact the English Premier League? (March 24, 2021). Available at SSRN: https://ssrn.com/abstract=3689563 or http://dx.doi.org/10.2139/ssrn.3689563

Tommy Kweku Quansah

University of Lausanne ( email )

Quartier Chambronne
Lausanne, Vaud CH-1015
Switzerland

Bernd Frick

University of Witten/Herdecke - Institute of Economics and Business Administration ( email )

D-58448 Witten
Germany

Markus Lang (Contact Author)

University of Lausanne - Faculty of Social and Political Sciences

Quartier UNIL-Centre
Synathlon
Lausanne, 1015
Switzerland

Kieran Maguire

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom

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