Is financial health a determinant of sport success?

Abstract: The purpose of this study is to find the relationship between financial health in an ice hockey club and its sport success. The study answers the research question: How can financial health of Swedish ice hockey clubs be able to explain the sport success in the Swedish Hockey League? Based on the research question, the study uses the theory Benchmarking and a more specific benchmarking terminology called Financial benchmarking. The study selects eight financial variables in order to benchmark the icehockey clubs in the Swedish Hockey League (SHL). A particular methodology within financial benchmarking, called Grey Relational Analysis (GRA), is used in order to determine the financial health of the clubs in relation to each other and therefore be able to rank the clubs based on each individual variable. The same financial variables, with the addition of four non-financial variables and exclusion of two financial variables, are used in a selected Logistic Regression model to explain how the variables contribute to the sport success of the clubs. The main conclusions which can be drawn from the study are as follows: The variables Net sales and Net profit are the two only variables which are statistically significant and are able to contribute to sport success. Secondly, the club HV71 is overall the club with the most optimal financial health in SHL, among the 12 clubs investigated. Lastly, accounting trends within this industry affects the financial outcome and further how it explained sport success. Trends such as a minimal or no amount of long-term liabilities is common among the clubs, where instead the total amount of liabilities mainly consists of current liabilities. It can be further concluded that profitability, revenue and equity are financial corner stones in a hockey club which participates in SHL.