Celtic the big club small markets: thriving or surviving
TABLE OF CONTENTS
This study is based on the case study of Celtic, the Scottish Football club. It is a big club in Scotland established in 1887 that has won Scottish league championship on 48 occasions(Geeraert & Drieskens, 2015). However being a big club they are limited to a small market, this study tends to explore the situation of Celtic as it is thriving or surviving (Piatti et al., 2012). The main research question raised in this study is how the Celtic team be promoted in the Champions league by which its popularity will rise and pump in money. As this research is a desk research, for investigating about the Celtic position, secondary data and information have been collected in the earlier section in the literature review part. In the literature review data and information has been collected from various sources like sports journals, articles, books, football club journals and web sources. In this section, the findings from the literature review are discussed to generate a broader understanding of the subject matter. The collected data and remain incompletes unless they are interpreted and discussed further to derive specific meanings from various literary sources. Thus this section deals with making wider discussion of the findings that have been made through literature review.
The literature review shows that there is the great impact of UEFA prize money on the football clubs. UEFA distributes huge amount as prize money in the first round of champion league to the entire participant’s clubs whether they are a big or small club. The main prize money amount of champion league holds high importance for every club since the amount is very huge in comparison to other position’s prize money. As shown in the data, during Chelsea’s victory in 2012’s Champion league it earned 59.9 million euro after playing 13 games while the team that stood at the fourth position in EPL earned 54.4 million euro after playing 38 games(Horne, 2010). This shows that there is significant amount difference between first prize and other prizes. It has been mentioned in the literature review part that there is the participation of 32 clubs in champions league and those clubs belong to different leagues. The amount total to 592 million is distributed to these 32 clubs on an unequal basis, and certain 5 percentage goes to the national league of each participating club(Ksenne, 2011).
According to the literary sources, there are some clubs who prefer playing champions league over domestic league since in the champion leagues they can make more money by playing only fewer matches. Normally domestic leagues are played for reaching to some aims or targets which do not yield more money while in Europe these football clubs are considered as a product or from a business point of view. There are many football clubs whose main motive behind these matches is to make a large amount of money. The literature further depicts that in UEFA third element distribution, the member clubs which are connected with UEFA gets 300,000 Swiss francs whereas the clubs participating in the champion league gets 80,000 in each round irrespective of their disqualification for the Champion league and their disqualification for the third round as well(Dabscheck, 2004).
Likewise, domestic champion clubs who becomes disqualified for the group stage also receives 150,000 from the UEFA, and as per fixed payment money system, 32 qualifying teams for the group stage round gets 1.5 million francs(Vamplew, 2016). Hence, every football clubs want to be a part of the UEFA or participate in the champion league since in every way they get access towards some amount whether they win, lose or draw. As stated in the literature Celtic football club is the one and only team from Scottish league to qualify the group stage hence, it gets 1.5 million for participating in the first round with additional 500,000 francs per match. Also Celtic receives extra 500,000 francs if they win and 250,000 in the case of draw match. According to the data, Celtic receives 4.5 million Swiss francs as stated by UEFA money distribution during this season due to their elimination from the group stage round(McGillivray, 2006). The money given by UEFA is exclusive of their gate receipts.
The amount earned by them in the champion league from their gate receipts is higher than the money earned from the domestic leagues. This is one of the main reasons behind the clubs preferring champion leagues over domestic leagues. It has been stated in the literature that the money earned by home team from the gate receipts from the home ground during champion leagues all goes directly to the home team. The literature review further stipulates that market share amount is distributed among the clubs on the basis of TV rights market value represented by the participating clubs in the champion leagues. That means those clubs with higher TV rights market value get huge market share amount while those clubs representing fewer TV rights value get less market share amount. In this context, Scottish league gets very small market share amount since they have very fewer TV rights value compared to other top five teams in the list of TV rights value. The clubs with highest TV right value gets 35-55 million market share, and TV rights of EPL teams seem strongest than that of Scottish teams(McLeod, 2016).
The market share distributed among the clubs is determined by four points such as a number of clubs from each market in the competition, the league position of the club, club performance in the champion league and the performance of the same club from the same country. Based on the above points Celtic club gets 30 million Swiss francs. As shown in the part of literature review, the first rule states that Celtic club is the single team from Scottish league to compete in the champion league. Similarly, the second rule specifies that Scottish league are not on the list of top 5 leagues, so they receive less market share amount. Likewise, as per third rule(Vamplew, 2016). Celtic is the single team to qualify the group stage, hence they receive some amount(McLeod, 2016). Lastly, as per the fourth rule, the performance of English team is much better in comparison to Scottish team in the champion league. This may be due to lack of efficient and best players, effective managerial practices, better policies and strategies of the clubs. The data demonstrates that due to the weaker TV rights, poor performance in the champion league, the low standing of the league and poor performance in compared to EPL team, the Celtic club is accounted for very less money.
It has been stated in the literature review that due to the imposition of some rules and regulations some clubs face difficulties to take part in the champion league competition. Many rules and provisions are introduced for the football clubs from which some clubs are benefitted while some do not entertain those rules. UEFA has enforced Financial Fair Play (FFP) rule to prevent the bankruptcy of the clubs, minimize pressure related to salaries and transfer fees, ensure timely settlement of clubs’ liability, and so on. Based on the FFP rule, the club making losses beyond 25 million Euros are strictly prohibited to take part in UEFA competition. Besides this, there are other forms of penalties for those clubs such as charging fine, prize money withholding, point withdrawal, transfer ban, restriction on signing new player and number of player registered for UEFA competitions(Cairns, 2006).
Furthermore, the club has to manage their expenditures related to football such as players’ wages and transfers through income generated from the gate receipts and TV rights value. Since Celtic have no any TV rights, they have to solely rely on the ticket income as a source for the purpose of meeting football related expenses. Due to the enforcement of this rule, Scottish league are not in a position to participate in UEFA competition as they are suffering from financial issues. In case any club surpasses 5 million cushions permitted by UEFA, that club has to bear punishment as stated in the above rule. However, UEFA provides one more chance to the club by permitting increment of that limit to 35 million given that the amount is fully bear by the club owners. Similarly, FFP policy constitutes break-even rule as its part. According to break an even rule, football clubs must clear all their taxes and their expenses should not exceed 3 million Euros in each of the previous two financial periods(Carr et al., 2007).
Such clubs who do not abide by this rule also have to suffer from punishment as stated. It has also been depicted in the literature review part that FFP has been introduced for controlling big club’s supremacy, transfer revenue and supporting small club to gain stability so that they can come to the same level as of big clubs. However, big clubs are using their money power to flee from the rules stated by the UEFA while on the other hand, small clubs have to suffer from various problems. Many Scottish clubs who are becoming a victim of the financial crisis are in the huge problem since their owners are not able to pay the amount to escape from the UEFA ban. This shows inefficient enforcement of the rule as well as partiality of the UEFA towards the small football clubs.
The literature review also mentions about changing the facet of football post the enforcement of Bosman rule. This rule has created various impacts on the clubs who are participating in the Champion league competition. Mostly small clubs are being affected by Bosman rule since this rule permits the big clubs to take the good players from the small clubs. Prior to the imposition of Bosman rule, no any player was granted permission to leave the current club by being attracted towards any offer provided by another club, and if they wish to play for any other club, they are charged with command transfer fees. But after Bosman rule, any player are allowed to leave the current club after the termination of his contract(A. Cox et al., 2015). There is no need to pay command transfer fees if only six months or less time period is left on the player’s contract with his current club to end. Moreover, Bosman rule provides the players with authority to think for their future, and it further empowers modern automatic fees transfer. In case any player sees his future in playing for other clubs then he can change his club as there is no restriction in that.
As stated in the literature review there is numerous impacts of Bosman rule in the small clubs. This rule affects small clubs in several ways such as only rich European clubs are allowed to sign big star player by luring them with huge inflated wages so as to make them leave small clubs(Carr et al., 2007). Due to this, the small clubs are left in that state in which they are unable to compete with big clubs in the champion league competition. In case the big clubs are unable to negotiate with the small clubs or the small club does not allow their players to leave the club then at that time the big clubs contact the player agent and offer a huge sum to sign the player. The big clubs are often distorting and modifying the rules imposed on them showing their power and money to the regulatory bodies while on the other hand small clubs often become a victim of these types of manipulation in the rules. Small clubs do not have enough money and power to divert the verdict on their favor hence they have to act according to the will of the big clubs. This is the main reason behind small clubs not winning any big champion league.
It has been specified in the part of a literature review that Scottish league and Celtic football club has also suffered from the Bosman rule. Their revenue is very low in compared to the revenue of big European clubs, and also they are not able to offer the same wage to the player as paid by the big clubs. Due to this, they are not able to retain their best players in the club, so many best players of these clubs move to other big clubs which offer them high wages. As a result, these small clubs cannot compete with the big clubs in the champion leagues competition.(Geeraert & Drieskens, 2015) The literature review further states that the act of leaving the current club by the players has affected the wage rate and even the wage rate in other countries have major impacts on the main football related expenses of the clubs. However, the Celtic football club has also been benefitted by the Bosman rule as they are the king of Scottish league. Also, they have a low annual turnover than other clubs in Scottish league hence they are in a state to pay more wages to the players to join their club while other clubs are not able to offer that massive amount to the players to hold them in their club.
From the literature review, it has been found that Celtic is the market leader in the Scottish league as it has won many matches, from the initial time of establishment of Scottish league to the till date Celtic is dominating the league. This could be due to its better playing capacity, players and good management within the club. The club has been able to establish its name and fame in the Scottish football sector with top dominancy. Likewise, the team has a strong financial position which they gain through ticket sales, merchandising and Champions league has aided them to sign good players which further strengthened the club position. The literature review has provided evidence that limelight the strong financial position of the Celtic club. It has been depicted in the literature review part that the money which Celtic won by participating in UEFA (i.e. £30 million excluding gate receipts , winning points as well as revenue of match day)is above the total annual turnover of the Scottish league. It has also been found that Celtic participation has brought benefits to the Scottish league also as Championship league pay solidarity fund of the amount of £1 million to them. In addition, other teams also gain £1,500,000(Berker, 2014).
Similarly, another instant of Celtic prominent financial position is that in the fiscal year 2014/15 when other football clubs were encountering financial difficulty, Celtic was the one that was in a profit of five hundred thousand pounds. On the other side, it is found that other clubs from the Scottish league are encountering complexity in term of the financial aspect. Some of the clubs have gone through a financial crisis in the past while others are facing it at present. Some scholars in football sectors have opined that the financial crisis of one club has an impact over other clubs as well and it brings negative connotations to others as well. With base from the findings made, it can be said that Celtic has managed to build its important part in Scottish football. This evidence from the literacy sources that have been analyzed and reviewed in the literary sources show that Celtic club has a strong financial position in comparison to other Scottish clubs. However, Celtic earns less money than EPL team as Scottish league don’t have T.V rights to the European governing body. Furthermore, it has been reported that Celtic gain £6.93 million by the broadcast of the Champions league(Vamplew, 2016).
Similarly, the findings from the literacy sources have elucidated the growing popularity of Celtic; it is found that UEFA has designated Celtic fans by best fan award as in 2000, for watching the Champions League match 80000 fans from various place went to Sevilla. At that time Celtic has earned around million only from the gate receipts. Although Celtic lost the final match, it was able to win the heart of its fans, and their merchandising roar as they were able to sell around 45,000 T-shirts to their fans and their merchandising sales increased to £12.5 million from £4.7 million which is a great achievement(Piatti et al., 2012). The progress in merchandising in itself is a great achievement for the club in itself as it also provides support in the growing popularity of the club. In the football, merchandising plays a prominent role since it promotes the popularity of the clubs and team which will have long term benefits and sustainability.
Likewise, another major finding that has been made through the research is the new rule of UEFA that is named co-efficient system. It is found that the new rule that UEFA has brought would be a respite for the Scottish club in term of Champion route. This new rule would not have an impact on the league but to the team itself that will be taking part in the games of Champions league competition. According to the current rule, when any team took part in the competition, another team of the league also gains a certain amount of money, but the new rule has incorporated the system that the co-efficient of the team that took part in the Champions league would be determined by how well the team will perform in the competition. From the secondary research, it is known that this new rule, the co-efficient system of UEFA is to be in implementation from 2018 and it has been assumed that this new rule would favor Celtic as Celtic has good performance and the co-efficient gained will be helpful to uplift the condition of Celtic. In overall, the present research has become able to make findings of football sector in general and about Celtic in specific and has attempted to answer the research question and objectives of the research topic i.e. Celtic is thriving or striving in the football sector by being a big club in a small market.
This part deals with the analysis of the contents that are presented in the literature review chapter. To find out the meaning from the collected source of data, it is necessary to have its proper analysis. In this research, the secondary data and information related to Celtic, the Scottish football club, other football clubs and in general aspects associated with football are presented. Through the literature review, awide range of information (contents) are collected which has allowed the wider understanding and making major findings of the subject matter. Thus, here the content analysis has been done by interpreting, evaluating and analyzing to get a systematic structure for the study.
The secondary source of data has illustrated that UEFA Champions League is one of the major league that have an impact on football sector in whole Europe. The UEFA distributes around 904.6 million Euros as the prize money in the Champions League. It is a big amount which is a concern for any types of team or club, be it a big club or a small one(Berker, 2014). Likewise, the participating team is also provided with a certain amount of money. Thus participating in the Champions League is itself a great achievement for the teams or club as the prize amount would be helpful to boost their financial condition which contributes to in the overall growth and development of the football teams or clubs. And in the case, if they win they are attributed with both name and fame. There has been continuous growth in the craze of the football among people. In the recent time, the football industry is one of the fast growing industries in every part of the world as it preferred and liked by the majority of the population of the world.
In this sector, there have been huge investments and transactions if the football clubs or teams can play well they can achieve high payback from it which comprise of both financial and non-financial rewards. In some sense, football has been commercialized; it has taken the form of business. Some of the clubs want to play in Championship league just to earn money and upgrade the financial position of the club. But at the same time, it is also notable that in the recent time everything has been valued with money, and for growth and innovation, money is the essential factor. This doesn’t mean that teams or clubs only play for money, for them football is everything, and they dedicate their whole life for football. Some of the clubs in UEFA are real Madrid, Barcelona, Juventus, Arsenal, Basel and others. And from Scottish football club, Celtic is the only club that was qualified for the Champions League.
Likewise, another major findings made from this research is about the rules to enter into Champions League. Although 32 teams can participate in the game, they have to meet certain criteria for being qualified for the game. Some of the major rules are Financial Fair Play (FFP) and Bosman rule. FFP rule is made to have control over the financial situation and expenses of the clubs whereas Bosman rule is made to provide power to the players to make a decision about where to play. Although these rules are made for the benefits of the clubs, they are mainly affecting the small clubs and club with the financial crisis, by which it has become complex for them to participate in the Championship league. According to the Bosman rule, players can change their club at the end of the contract without paying a transfer fee(Sugden & Tomlinson, 2007). This rule has allowed the big clubs to sign good players from small clubs in an easy way. This has made animpact on many small clubs who have a financial crisis and can’t afford good players with the high amount of money. In an indirect way, these rules have promoted the big and rich clubs who are stronger from earlier and have ignored the small clubs who are also there to have made distinct position in the industry.
Furthermore, another key finding of this research study is about the financial position of a Celtic football club which is a big club in a small market. Celtic has a good financial position in comparison to other clubs in Scotland which it has acquired by merchandising, ticket sale and by participation in the Championship League. One of its instances is its announcement of 500,000 profit in the FY 2014/15 at the time when other clubs in Scotland were facing financial crisis(Barros, 2007). It has been leading the Scottish football sector by wining Scottish league championship 48 times. By participating in the UEFA Championship League, it has not only earned money for itself but also for the Scottish League. Likewise, it has a good fan following as well as reputation and popularity. Although Celtic is make achieving good financial success and popularity among its fans, it has much more to do for their development and innovations.
Celtic has participated in the UEFA Championship league, but it has not won the title a single time. One of the reasons for this could be the small market of football in Scotland and not appropriate and favorable environment. There are many football clubs in Scotland, but there is not doing intended success in the international arena. The whole football sector in Scotland need growth and innovation for that effort should be made from all sector, with a joint venture from all side, the football sector in Scotland can bring home the international cup(Jaskulowski & Majewski, 2016). In the case of Celtic, it has won European cup in 1966-67, after that it has not won a major international trophy in Europe. It is the Scottish Champions and dominant club in Scotland; it should strive for overall growth and development of football sector. It has to make an analysis of its own position and build strong strategies by which it could reach into designed height in the football sector and contribute to the development of football sector in Scotland and in general towards the football sector of the world.
In this research study, desk research method also known as secondary research has been used. Desk research is a low cost research technique which is conducted by sitting at a desk. Since data is collected from existing resources, this research is quick and inexpensive. It includes summarizing, accumulating and analyzing previous research findings to have a clear insight of the subject matter. Desk research provides answers to the questions, uncertainties and simplifies the research topic.
Desk research technique has been used in this research study. There are four steps of desk research. The first step deals with identifying a research topic and information sources(Trochim et al., 2015). Here, the researcher has defined research topic and listed different sources of information and selected the most relevant and appropriate sources for getting needed information on the challenges faced by big football in a small market. In the second step, the researcher has split the research topic into many keywords and collected previously existing data. The next step is normalization of data which is optional. Here the researcher has normalized the gathered data for making analysis part easier. The final step is data analysis in which the researcher has evaluated all the findings as well as revisits the research questions to ensure that all questions have been answered. Moreover, the researcher has also suggested some future actions be performed.
Basically, there are two types of research method: qualitative method and quantitative method. The qualitative research method is a direct way of collecting data for investigating social phenomenon whereas quantitative research method is based on measurement(Matthews & Ross, 2010). Here the researcher has used qualitative research method to analyze the challenges faced by big club in a small market. For that case study of Celtic has been taken since it has suffered from changing the economics of European football in a small market. Since qualitative research emphasizes on developing detailed knowledge concerning the research questions to obtain research aims and objectives, this method seems appropriate for this research study. By applying this research method, the researcher has been able to gain abroad understanding of various issues faced by big clubs like Celtic in a small market at the time changing economics.
Data collection is the process off collecting needed data and information on the research topic for answering research questions and evaluating the results(Easton, 2010). Data collection is of two types: primary and secondary data collection. Since this research study adopts desk research technique and also secondary data increases validity and reliability of the research study, data has been collected from secondary sources only. Furthermore, secondary data collection method is easy and time saving as the data and information are already collected by others. Secondary data and information in this research study have been obtained from different articles, books, magazines, sports management journals, football club annual reports and relevant websites. From these secondary sources information regarding financial as well as the footballing performance of Celtic over a long time period within the Scottish and European market has been gathered. The then collected information has been critically analyzed for the research purpose.
This research study is based on the case study of Celtic, the Scottish football club. For investigating the position of the Celtic, the big club that is located in a small market, secondary sources of data has been collected to have extensive study in the subject matter(Walliman, 2015). Collected data doesn’t draw a valid conclusion if they are not analyzed properly. Data analysis is the process of interpreting, unfolding and analyzing the collected data or information in a systematic way. In the present study, data are analyzed with the content analysis method(Bryman, 2015). In the content analysis, the textual materials are interpreted, coded and analyzed, and it helps to present broader understanding of the phenomena under the study. In the present study, only secondary sources of information have been collected by the reviews from various literary sources.
The collected information about the issues related to Celtic club position are coded in a systematic way, interpreted and evaluated to get structural frame by identifying theme and pattern for the present study. In the research, content analysis has allowed the researcher to code, interpret and evaluate to find the meaning from the core idea of the collected data from a literature review by which the researcher has become able to generate appropriate findings, thus content analysis has been chosen.
It is necessary to ensure that the collected data and information are valid and reliable as based on them the findings of the whole research are made. In the present research, theresearcher has employed various methods to ensure the validity and reliability. For the validity of data collected from secondary sources, the collected data and information were analyzed in an appropriate manner by the use of systematic coding process. This has ensured the validity of the findings. Likewise, for reliability, the secondary sources of data and information were collected only from authentic sources. This has helped to collect reliable and precise data and information. In overall, the researcher has attempted to ensure the validity and reliability of the findings.
While conducting the research study, it is equally important to ensure if the research ethics are followed or not. Research ethics is the morals and code of conduct that researcher should make consideration of .In the context of present research, the researcher has tried to follow the research ethics throughout the study. The research is not targeted against any group, individual, race, gender, religion or ethnicity and it is done with full honesty and sincerity. The copyright, authorship related to the secondary sources are credited to the original scholars and sources, that has not been claimed as own work in any place. Likewise, the findings from the literature review have not been misinterpreted or misused in any other form; it is solely used for the research purpose only. Moreover, the researcher has ensured that no any harm is done to anyone. Throughout the research, the researcher has made consideration of research ethics in the best possible way.
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