Profit oriented football clubs in UK

Background:

The conflict between the view proposed by United States and that of Europe is a significantly important and interesting to investigate about. Most of the economists in United States believe that professional sports teams are directed towards the maximization of profit for their business, on the other and European professionals proposed that football clubs are not operating based on profit maximization as the ultimate goal. In this research, we are going to answer the question of why these football clubs are directed towards profit maximization by analyzing the English football clubs and the trends of their stock exchange listings. According to the David Conn the clubs aimed at becoming public companies including the Tottenham, Chelsea, Aston villa and Newcastle, are now having the creation of money for the stakeholders as their principle objective. Prior to the flotation if directors of clubs were behaving as the utility maximize, then there should be a significant change in the objectives brought about by the floating (Richard Slack, 2008).

 Our assumption is based upon the fact that investors in the public corporations are highly interested in financial returns and gains. In order to understand the firm’s behavior the most important area to observe is the firm’s objective functions, in our research, it is crucial to understand and analyze the sports leagues. The restrictive agreements including the limitations on players spending, revenue sharing and the restriction on the player mobility are the agreements in which the members of sports leagues usually enter. It is important to consider that a small market team is likely to receive more income under the collective selling but it is not likely to spend more on building successful teams. This research work is going to meet the assistance need for the sport’s policy makers regarding the specific actions, which are to be made, by both regulators and managers for gaining financial stability for the clubs in addition to the overall competitions improvement. Under our hypothesis about the profit maximization the owners of the foot ball teams spends up to a point when the marginal revenue will be equal to the marginal cost  involved, in addition to this the fixed share of broadcasted income will not affect the marginal revenue nor the marginal cost.

The ownership of the limited companies is residing with the shareholders and these shareholders are motivated and get involved by the profit objectives. In this English football clubs, the research indicates that original subscribers are mostly drawn by the Club’s locality and the profit motive is acting as the sporting success. It can be viewed that the stakeholders having commercial interests are more interested in the club’s success from the perspective of generating income for their personal core business interests. Hotspur, Manchester United and the Mill wall were the first three United Kingdom based football clubs, which obtained the stock exchange listings. After it, Premier league established making the stock market receptive to the new emerging issues, further 16 clubs of football gained the stock exchange listing (MMBAYA, 2013).

Rationale of the Research:

Most of the United States economist argued that the professional sports teams including the football teams are clearly profit making and maximizing business. In contrast to it, the Europe stated the professional football clubs are not the profit maximizing business the contrast between the views is having a implication including the income redistribution as the part of policy measures. After the analysis of the major football clubs of UK it is cleared that there is a shift towards the profit making behavior exhibited by the listed clubs in the stock exchange market, which reveled that the European concept is untrue. As compared to the rate, which was previously allowed the United Kigdom,’s football clubs are more directed towards the attainment of profit maximization objectives. We are taking the example of Tottenham, Chelsea, Aston villa and Newcastle, are now having the creation of money for the stakeholders as their principle objective whim were floated to become a public companies (Walters, 2011). Here we are dealing with the questions of Did all of the foot ball clubs were profit maximizes before the flotation, so that the stock market entry did not lead to the change in behaviors, Does the accounting profit give the poor indication regarding economic profit? So that the figures gained will not truly exhibit any change in to the economic performance, to what extent financial performance is likely to affect the profitability potential of the football clubs. In addition, Do the post flotation accounts of PLC are including the data related to the group business activities, which are likely to extend beyond football clubs that are not comparable to the pre flotation data, What is the relationship between Clubs league performance and the stock flotation?

Assignment on: Profit oriented football clubs in UK By: ABC Date: Background: The conflict between the view proposed by United States and that of Europe is a significantly important and interesting to investigate about. Most of the economists in United States believe that professional sports teams are directed towards the maximization of profit for their business, on the other and European professionals proposed that football clubs are not operating based on profit maximization as the ultimate goal. In this research, we are going to answer the question of why these football clubs are directed towards profit maximization by analyzing the English football clubs and the trends of their stock exchange listings. According to the David Conn the clubs aimed at becoming public companies including the Tottenham, Chelsea, Aston villa and Newcastle, are now having the creation of money for the stakeholders as their principle objective. Prior to the flotation if directors of clubs were behaving as the utility maximize, then there should be a significant change in the objectives brought about by the floating CITATION Ric08 \l 1033 (Richard Slack, 2008). Our assumption is based upon the fact that investors in the public corporations are highly interested in financial returns and gains. In order to understand the firm’s behavior the most important area to observe is the firm’s objective functions, in our research, it is crucial to understand and analyze the sports leagues. The restrictive agreements including the limitations on players spending, revenue sharing and the restriction on the player mobility are the agreements in which the members of sports leagues usually enter. It is important to consider that a small market team is likely to receive more income under the collective selling but it is not likely to spend more on building successful teams. This research work is going to meet the assistance need for the sport’s policy makers regarding the specific actions, which are to be made, by both regulators and managers for gaining financial stability for the clubs in addition to the overall competitions improvement. Under our hypothesis about the profit maximization the owners of the foot ball teams spends up to a point when the marginal revenue will be equal to the marginal cost involved, in addition to this the fixed share of broadcasted income will not affect the marginal revenue nor the marginal cost. The ownership of the limited companies is residing with the shareholders and these shareholders are motivated and get involved by the profit objectives. In this English football clubs, the research indicates that original subscribers are mostly drawn by the Club’s locality and the profit motive is acting as the sporting success. It can be viewed that the stakeholders having commercial interests are more interested in the club’s success from the perspective of generating income for their personal core business interests. Hotspur, Manchester United and the Mill wall were the first three United Kingdom based football clubs, which obtained the stock exchange listings. After it, Premier league established making the stock market receptive to the new emerging issues, further 16 clubs of football gained the stock exchange listing CITATION MMB13 \l 1033 (MMBAYA, 2013). Rationale of the Research: Most of the United States economist argued that the professional sports teams including the football teams are clearly profit making and maximizing business. In contrast to it, the Europe stated the professional football clubs are not the profit maximizing business the contrast between the views is having a implication including the income redistribution as the part of policy measures. After the analysis of the major football clubs of UK it is cleared that there is a shift towards the profit making behavior exhibited by the listed clubs in the stock exchange market, which reveled that the European concept is untrue. As compared to the rate, which was previously allowed the United Kigdom,’s football clubs are more directed towards the attainment of profit maximization objectives. We are taking the example of Tottenham, Chelsea, Aston villa and Newcastle, are now having the creation of money for the stakeholders as their principle objective whim were floated to become a public companies CITATION Wal11 \l 1033 (Walters, 2011). Here we are dealing with the questions of Did all of the foot ball clubs were profit maximizes before the flotation, so that the stock market entry did not lead to the change in behaviors, Does the accounting profit give the poor indication regarding economic profit? So that the figures gained will not truly exhibit any change in to the economic performance, to what extent financial performance is likely to affect the profitability potential of the football clubs. In addition, Do the post flotation accounts of PLC are including the data related to the group business activities, which are likely to extend beyond football clubs that are not comparable to the pre flotation data, What is the relationship between Clubs league performance and the stock flotation? After the analysis, the common depiction about the football club owners is reveled to be the “Utility Maximizes” with the link between Utility and the success of football pitch. These profit maximization managers n leaders are likely to select a success or profit combination, which will be tangent to the highest feasible horizontal indifference curve. Whole process involves the indirect consequences including the avoidance of excessive risks, having stable earning streams, a shift in distribution policy towards the higher dividend payments. In contrast to the football clubs in other countries, organized as the sporting association with no stakeholders, the professional Clubs of UK are all limited companies CITATION Wal10 \l 1033 (Walters G. a., 2010). Problem Statement: “Why football clubs in United Kingdom are more committed to the profit oriented objectives” Objectives of the Study: All of the possible changes in the behavior associated with the stock market flotation is the basic focus on this research work. The ownership and operational structure of the football clubs owned by United Kingdom’s owners is highly different from those working in other countries. Here are distinct objectives around which our research work is arranged are as follows In relation to the stock flotation, examination of the significance of objectives for league policy To Examine impact stock flotation is imposing on the ownership and motives in the United Kingdom’s Soccer To ensure Exploration of the predicted effect a objective change might have in relation to the stock flotation To discuss the relationship between stock flotation and clubs league performance out comes. Research Questions: Did all of the foot ball clubs were profit maximizes before the flotation, so that the stock market entry did not lead to the change in behaviors Does the accounting profit give the poor indication regarding economic profit? So that the figures gained will not truly exhibit any change in to the economic performance To what extent financial performance is likely to affect the profitability potential of the football clubs. Do the post flotation accounts of PLC are including the data related to the group business activities, which are likely to extend beyond football clubs that are not comparable to the pre flotation data. What is the relationship between Clubs league performance and the stock flotation Significance of the study: This study is not been widely conducted before but is highly supporting and guiding for the football clubs and the professional leagues administrators. It is likely to support their insight on the financial performance and the profitability of the clubs in order to provide a strong financial base for a club with the better performance, realization of real potential in the emerging industry of foot ball and soccer and to reach the desired sustainability level. This research work is going to meet the assistance need for the sport’s policy makers regarding the specific actions, which are to be made, by both regulators and managers for gaining financial stability for the clubs in addition to the overall competitions improvement. It is also going to be useful in providing value to the academicians by reducing the gap and stimulating the future research in this regard CITATION Tac07 \l 1033 (Tacon, 2007). Limitations of the research: Access: As being a searcher, the limitations involve the limitation on the access to necessary and useful information. As these all organizations awe are examining are the well establish and listed organizations so the access to the documentation, people are restricted in getting the real and true data to make the inferences. Longitudinal effect is definitely having a negative impact as this research is to be completed with a limited period, but involves the analysis of large football clubs on eth topic, which is not being research much before. The literature review and the statistical analysis are time taking CITATION Far05 \l 1033 (Fareeha Shareef, 2005). Lack of reliable and available data Another important limitation to be considered is the limitation to the reliable and available data as it is likely to reduce the scope of analysis and the size of the sample considered which will directed limit eth future research. The lack of prior research studies on this topic is limiting the citation of prior research studies to support the literature review and making the bases for understanding the research problem and its extent. The lack of information some time refers to create a new typology for completing the research like generating the exploratory research instead of explanatory research. Bibliography BIBLIOGRAPHY Fareeha Shareef, H. D. (2005). "Accounting for intellectual capital: Evidence from listed English football clubs",. Journal of Applied Accounting Research , 7 (3), 78 - 116. MMBAYA, L. K. (2013). INANCIAL PERFORMANCE OF FOOTBALL CLUBS IN KENY. A CASE OF KENYAN PREMIER LEAGUE , 1 (1), 1-38. Richard Slack, P. S. (2008). "Social disclosure and legitimacy in Premier League football clubs: the first ten years",. Journal of Applied Accounting Research, , 9 (1), 17 - 28. Tacon, R. (2007). Football and social inclusion: Evaluating social policy. , Managing Leisure , 12 (1), 1-23. Walters, G. a. (2010). Corporate Social Responsibility in Sport: Stakeholder Management in the UK Football Industry. , Journal of Management and Organization , 16 (4), 566-586. Walters, G. (2011). The implementation of a stakeholder management strategy during stadium relocation: a case study of Arsenal football club’s move to the Emirates Stadium. Managing Leisure , 16 (1), 49-64.

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