The Financial Effects of Going Public on Football Clubs

Abstract: In this thesis we analyze the financial performance of Football clubs following an initial public offering (IPO). We conduct several analyses using time series stock data with a focus on finding evidence of long-run underperformance and IPO over/underpricing. To this end, we estimate cumulative abnormal returns (CAR) and Jensen’s Alpha. We also analyze coefficients such as beta to describe the volatility and the link football clubs’ stocks have to the general market. We look at historical events that may have affected the movement of stock prices and confirm this by benchmarking an index (STOXX index) compiled of a number of European football teams. Our results show that football clubs do in fact follow the clear pattern of other entities and sectors and previous research with regard to underperformance in the long run. We find that football clubs’ stocks are less volatile than the general market and have a low beta. With regards to over/underpricing, we only obtain data for a few football clubs. We find small signs of underpricing but are not able to confirm that this is statistical significant due to the size of our sample.