Are diversified football clubs better prepared for a crisis? First empirical evidence from the stock market. Issue 3 (27th May 2021)

• Record Type: Journal Article
• Authors: Fühner, Johannes; Schmidt, Sascha L.; Schreyer, Dominik
• Is Part Of: European sport management quarterly. Volume 21:Issue 3(2021)
• Page Start: 350
• Page End: 373
• Publication Date: 2021-05-27
• Subjects: COVID-19 -- football/soccer -- diversification -- public health -- strategy; Sports administration -- Periodicals; Sports administration -- Europe -- Periodicals; 796.069
• DOI: 10.1080/16184742.2020.1862273
• Languages: English
• ISSNs: 1618-4742

Abstract

ABSTRACT: Research question: In this short article, we explore whether highly diversified professional football clubs, from an investor perspective, are better prepared for an unpredictable global crisis such as the COVID-19 pandemic than undiversified clubs. Research methods: We apply event study methodology to analyze stock returns of football clubs during the first wave of the COVID-19 pandemic. Results: Analyzing a dataset comprising 5380 daily stock returns of 21 publicly listed football clubs in Europe during the season 2019–20, our results suggest that investors preferred stocks of clubs with high levels of product diversification during the COVID-19 shock period. Vice versa, we observe a moderate negative effect of geographic diversification, i.e. a club's internationalization efforts. Both effects are robust across various model specifications and after adding several control variables. Implications: In the future, football executives may want to increasingly apply product diversification strategies to prepare for future crises better. In contrast, at least during a global health crisis, further expansion to international markets requires caution.