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Title: An analysis of the performance of football managers and their impact on the value of UK football clubs
Author: Markham, Thomas Neil
Awarding Body: University of Reading
Current Institution: University of Reading
Date of Award: 2013
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This thesis examines three contemporary analyses concerning football finance that are centred on managerial performance and football club valuation. The first analysis develops a performance management tool and considers its application to the football industry. Specifically, the resulting model evaluates the extent to which the performance of English Premier League football club managers can be attributed to skill or luck when measured separately from the characteristics of the team. We first use a specification that models managerial skill as a fixed effect and then implement a bootstrapping approach to generate a simulated distribution of average points that could have taken place after the impact of the manager has been removed. The findings suggest that there are a considerable number of highly skilled managers but also several who perform below expectations. The research proceeds to illustrate how the approach adopted could be used to determine the optimal time for a club to part company with its manager. The second analysis evaluates the 53 managerial sackings and resignations from 16 stock exchange listed English football clubs during the nine seasons between 2000/01 and 2008/09. The results demonstrate that on average, a managerial sacking results in a post-announcement day market-adjusted share price rise of 0.3%, whilst a resignation leads to a drop in share price of 1% that continues for a trading month thereafter, cumulating in a negative abnormal return of over 8% from a trading day before the event. These findings are intuitive, and suggest that sacking a poorly performing manager may be welcomed by the markets as a possible route to better future match performance, while losing a capable manager through resignation, who typically progresses to a superior job, will result in a drop in a club’s share price. The study also reveals that while the impact of managerial departures on stock price volatilities is less clear-cut, speculation in the newspapers is rife in the build-up to such an event. The final analysis introduces an original multivariate metric developed to value English Premier League (EPL) clubs. Prior to developing the metric, established valuation methods are assessed for their accuracy in estimating an EPL club’s worth. Of these metrics, three are general company valuation techniques: market capitalisation, discounted cash flow and bankruptcy values; and three are niche football industry valuation metrics: revenue multiples, Forbes ‘Most Valuable Soccer Teams’ and broker values. For comparison purposes the metrics are implemented for a sample period of nine seasons between 2003/04 and 2011/12. Estimated valuations are also compared to actual club sale transaction prices during the same period. Comparative results show that the multivariate metric introduced in the paper is a universally applicable and reliable methodology to value EPL clubs of the methods evaluated.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available