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Abstract
Professional football clubs are special businesses since their performance is deemed from two different objectives: success on the field and success in business performance. Thus, efficiency levels can be measured by means of the sport performance from matches played or the financial performance from financial statements. Moreover, economic growth becomes a good indicator of company dynamic behaviour, by measuring the capacity of a company to improve its financial and commercial possibilities.
In this context, the main objective of this paper is to assess the level of financial performance of Spanish football clubs and the relationship thereof with the target for growth based on a parameter of revenue. Efficiency measurements were analysed using a benchmark procedure developed by Charnes et al. (Citation1978), data envelopment analysis (DEA) and also productivity levels by calculating the Malmquist productivity index based on DEA scores. Sustainable growth figures were also calculated using the Higgins (Citation1977) model considering the measure of real growth to be the increase in the revenue for each period analysed. From a sample of Spanish professional football teams in the 2000–1 to 2002–3 seasons, our findings show that only a small number of clubs show improvements in technological change and in approaching the efficiency frontier. Moreover evidence was found that those clubs with the smallest difference between both growth ratios (real and sustainable) prove to be more efficient.
Notes
1. The mentioned report included a study for seven seasons (1995/6 to 2001/2). For the Spanish football teams, it was only possible to gather data for four seasons (1995/6 to 1998/9). (See the company's comments on p. 10 of the document.)
2. For more extensive knowledge of the DEA works, consult Cooper et al. (Citation2000, Citation2004).
3. The subscript ‘i’ indicates that these are input-oriented measurements.
4. A decomposition of the technical efficiency change to take into account VRS technology has been proposed, which distinguishes between ‘scale efficiency’ and ‘pure technical efficiency change’ (Färe et al., 1994). However, this further decomposition has been subject to a number of criticisms (Ray & Desli, Citation1997; Balk, Citation2001), despite the fact that there seems to be consensus that the Malmquist index is correctly measured by the ratio of the CRS distance function even when the technology exhibits VRS (Casu et al., Citation2004). For further information on MPI decompositions consult Zofio (Citation2001).
5. Normally in financial analysis, the Return on Equity (ROE) is expressed as a percentage of the closing equity. However, by using the value of closing equity in equation (Equation11), we will be led to an incorrect value for the sustainable growth ratio.
6. Initially we planned to study five seasons (1998–9 to 2002–3). However, our analysis was restricted to a three-season period only because it was not possible to obtain a larger number of clubs for the sample. Specifically, we were unable to obtain data for four clubs: Athletic de Bilbao, Osasuna, Rayo Vallecano and Real Valladolid.
7. Variable distributions did not assume the condition of normality. Therefore, a non-parametric Mann–Whitney test was applied for all seasons.
8. We can, however, take an output or input oriented model because this specification is only a theoretical issue (Thanassoulis, Citation2001. pp. 180–4).
9. The geometric mean has been applied because the MPI is a multiplicative index.