Scoring Profits? The Impact of Private Equity Investments on Soccer Clubs

Abstract

The interplay between private equity (PE) ownership and performance outcomes in soccer clubs raises fundamental questions about the nature of these organizations: Are soccer clubs profit-maximizing entities akin to traditional firms, or do they embody characteristics of non-profit organizations, prioritizing community and social outcomes? This paper contributes to the debate by investigating how PE investments impact financial value and social value, particularly whether financial outcomes come at the expense of team dynamics and team performance. Analyzing 96 male teams (28 PE and 68 non-PE) and 67 female teams (15 PE and 52 non-PE) (in addition to their players) across the five major European leagues as of the 2023-2024 season, the study uses a staggered difference-in-differences methodology and detailed datasets on club financials, player salaries, player and match performance metrics, and management changes. The findings suggest that while PE investments may have successfully boosted commercial and matchday revenue, on-field individual soccer player performance declines as well as team match performance. This discrepancy highlights a trade-off where off-field gains haven't translated into on-field success. I argue that individual player and match performance suffers because of team dynamics changes. I document that degree centrality, betweenness centrality, and closeness centrality among players decline following the PE deal, which has a direct impact on home and away match performance.

Keywords: PE-soccer investments, strategic shift, financial and on-field performance, team dynamics changes, player networks

JEL Classification: G23, L21, L25, L83