DOES BETTER SPORTS PERFORMANCE GENERATE HIGHER REVENUES IN THE ENGLISH PREMIER LEAGUE? A PANEL DATA APPROACH

Abstract

In this paper, we examined the relationship of sports performance and revenue generation in the English Premier League (EPL) to understand how performance on the field impacts financial performance of professional football clubs. Further, we verified if increased wage expenses help improve sports performance. Independent dynamic models were estimated by GMM on panel data including N = 28 EPL teams and on a reduced data set excluding the top six teams (N = 22), spanning from the 2008/2009 to 2018/2019 seasons (T = 11). The results of the GMM models confirmed that sports performance and revenue generation significantly correlate. Teams with better sports performance do generate higher revenues. Additionally, higher wage expenses result in better sports performance. A positive relationship of the variables in both hypotheses were established in both directions (full data). In all analyses of reduced data, the parameters of interest are nonsignificant. Dependencies exist due to the top teams.