Football Clubs Drowned by Players

Abstract

Abstract Introduction. The insolvency in football was explained by the underperformance of a football club, either in terms of its ability to achieve playing results which depends on the quality of players on the staff, or in terms of its ability to generate a level of revenue consistent with performance in the league. Hence, two questions were addressed in the study: how deep will the European football crisis be after 2020 and are payrolls the most sensitive factor of football business performance? Material and Methods. The study was based on the European football clubs data derived from the annual financial statement. A descriptive statistics analysis was performed in order to find out how significant salary indicators are in comparison to other football clubs’ performance measures. In order to establish the scale of changes in football finance in 2020, a basic stress test analysis was implemented. Results. The study established that salary to revenue indicator is one of the most significant for football clubs’ performance. Thus, as the first step, the analysis of revenue reduction was elaborated and in the second step, the analysis of the reduction of salaries was performed. The presented stress test scenario implied that the situation of European football would change dramatically under the assumption of 50% reduction of the annual revenue. Conclusions. The study established that the football clubs’situation is too serious not to be carefully managed due to cost and revenue performance.