The Valuation of Athletes as Risky Investments: A Theoretical Model

2008 ◽  
Vol 22 (1) ◽  
pp. 50-81 ◽  
Author(s):  
Haim Kedar-Levy ◽  
Michael Bar-Eli
Keyword(s):  
Theoretical Model ◽  
Performance Measures ◽  
Team Performance ◽  
Financial Distress ◽  
Optimal Schedule ◽  
Professional Sport ◽  
Rate Of Return ◽  
Compensation Contracts ◽  
Expected Performance ◽  
Sport Teams

The desire to hire the best athletes and coaches in order to maximize team performance necessitates generous compensation contracts, which in turn increase the risk of financial distress or even bankruptcy for team owners. Indeed, one of the largest expense items in the budget of professional sport teams is the remuneration of players and coaches. Yet an investment made today in a given team yields an uncertain income in the future because team profitability depends on the uncertain performance of each player and the synchronization among players—both influenced by the coach. We present a formal theoretical model that assesses athletes’ valuation and accounts for the aforementioned factors. The optimal compensation schedule is determined empirically by regressing expected performance measures of each player with the aggregate team performance. Once the optimal schedule has been determined, the expected rate of return for the owner is earned at the lowest possible risk.

scholarly journals Performance Expectations of Professional Sport Teams and In-Season Head Coach Dismissals—Evidence from the English and French Men’s Football First Divisions

Economies ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 82
Author(s):  
Yvon Rocaboy ◽  
Marek Pavlik
Keyword(s):  
Team Performance ◽  
Professional Sport ◽  
Professional Football ◽  
Head Coach ◽  
Performance Expectations ◽  
Premier League ◽  
Football Clubs ◽  
Expected Performance ◽  
Sport Teams ◽  
English Premier League

The goals of this paper are first to identify why professional football clubs replace their head coach and, second, to investigate the effect of coach dismissal on team performance. To do that, we propose a new method for assessing the performance expectations of professional sport teams using Monte Carlo simulation. We apply our method to the English Premier league and the French Ligue 1 football teams over the 2015–2016 and 2016–2017 seasons. We find that coach dismissal is the result of a drop in the average expected performance compared with the performance expectations at the beginning of the season. We also show that dismissing a coach may enhance performance only if the team under-performed before the dismissal. There is no obstacle to using the same method for professional teams in other sports. The method is easily reproducible and does not require much information in order to be applied.

scholarly journals Asset Specificity and the Secondary Market for Productive Assets

2020 ◽  
Author(s):  
Simone Boccaletti
Keyword(s):  
Theoretical Model ◽  
Financial Distress ◽  
Financial Constraints ◽  
Secondary Market ◽  
Asset Specificity ◽  
Cost Of Debt ◽  
Debt Contracts ◽  
Trade Off ◽  
Distressed Firms ◽  
Productive Assets

AbstractThe aim of this paper is to explore how debt contracts are affected by investment in asset specialization and by the dynamics of the secondary market for collateralized productive assets. Before applying for a loan, financially constrained firms face a specificity trade-off: asset specialization increases firms’ project returns, but decreases the liquidation value of assets in the secondary market if the firm is in financial distress. To study this trade-off, the paper uses a theoretical model in which the choice of asset specificity and the outcome of the secondary market for distressed firms’ assets are endogenous. High redeployability costs and a small number of participants in the secondary market are associated to low recovery values and to a high cost of debt. The paper shows the conditions under which financial constraints reduce firms’ incentive to invest in asset specificity.

scholarly journals Impact of big data and predictive analytics capability on supply chain sustainability

2018 ◽  
Vol 29 (2) ◽  
pp. 513-538 ◽  
Author(s):  
Shirish Jeble ◽  
Rameshwar Dubey ◽  
Stephen J. Childe ◽  
Thanos Papadopoulos ◽  
David Roubaud ◽  
...  
Keyword(s):  
Big Data ◽  
Supply Chain ◽  
Theoretical Model ◽  
Performance Measures ◽  
Structural Equation ◽  
Predictive Analytics ◽  
Equation Modeling ◽  
Sustainable Supply Chain ◽  
Content Type ◽  
The Impact

PurposeThe purpose of this paper is to develop a theoretical model to explain the impact of big data and predictive analytics (BDPA) on sustainable business development goal of the organization.Design/methodology/approachThe authors have developed the theoretical model using resource-based view logic and contingency theory. The model was further tested using partial least squares-structural equation modeling (PLS-SEM) following Peng and Lai (2012) arguments. The authors gathered 205 responses using survey-based instrument for PLS-SEM.FindingsThe statistical results suggest that out of four research hypotheses, the authors found support for three hypotheses (H1-H3) and the authors did not find support forH4. Although the authors did not find support forH4(moderating role of supply base complexity (SBC)), however, in future the relationship between BDPA, SBC and sustainable supply chain performance measures remain interesting research questions for further studies.Originality/valueThis study makes some original contribution to the operations and supply chain management literature. The authors provide theory-driven and empirically proven results which extend previous studies which have focused on single performance measures (i.e. economic or environmental). Hence, by studying the impact of BDPA on three performance measures the authors have attempted to answer some of the unresolved questions. The authors also offer numerous guidance to the practitioners and policy makers, based on empirical results.

Board Committee Overlap and the Use of Earnings in CEO Compensation Contracts

2022 ◽  
Author(s):  
Mary Ellen Carter ◽  
Luann J. Lynch ◽  
Melissa A. Martin
Keyword(s):  
Earnings Management ◽  
Performance Measures ◽  
Ceo Compensation ◽  
Incentive Contracts ◽  
Audit Committees ◽  
Implicit Relation ◽  
Compensation Contracts ◽  
Potential Alternative ◽  
Larger Sample

Using proxy statement data describing the terms of compensation contracts, we examine how overlapping membership between compensation and audit committees influences the use of earnings metrics in compensation. Although research predicts that such overlap could either increase or decrease the reliance on earnings, we find that firms with overlapping directors rely less on earnings-based performance measures in incentive contracts without altering the overall level of performance-contingent cash bonuses. In addition, we provide evidence that firms substitute earnings measures with measures less subject to earnings management. Our findings are robust to potential alternative explanations, extend to an implicit relation between earnings and compensation for a larger sample, and are not driven by the tendency toward an overlapping committee structure more broadly. This paper was accepted by Suraj Srinivasan, accounting.

Team Incentives and Bonus Floors in Relational Contracts

2020 ◽  
Vol 95 (6) ◽  
pp. 181-212
Author(s):  
Jonathan C. Glover ◽  
Hao Xue
Keyword(s):  
Performance Measures ◽  
Team Performance ◽  
Performance Measure ◽  
Relational Self ◽  
Relational Contracts ◽  
Optimal Contract ◽  
Agent Model ◽  
Strategic Complementarity ◽  
Multi Agent ◽  
The Individual

ABSTRACT Teamwork and team incentives are increasingly prevalent in modern organizations. Performance measures used to evaluate individuals' contributions to teamwork are often non-verifiable. We study a principal-multi-agent model of relational (self-enforcing) contracts in which the optimal contract resembles a bonus pool. It specifies a minimum joint bonus floor the principal is required to pay out to the agents, and gives the principal discretion to use non-verifiable performance measures to both increase the size of the pool and to allocate the pool to the agents. The joint bonus floor is useful because of its role in motivating the agents to mutually monitor each other by facilitating a strategic complementarity in their payoffs. In an extension section, we introduce a verifiable team performance measure that is a noisy version of the individual non-verifiable measures, and show that the verifiable measure is either ignored or used to create a conditional bonus floor.

PACS Contribution to Hospital Strategy via Improved Workflow

2008 ◽  
pp. 1041-1047
Author(s):  
Reeva Lederman ◽  
Rogier van de Wetering ◽  
Lucy Firth
Keyword(s):  
Theoretical Model ◽  
Performance Measures ◽  
For Profit ◽  
Pacs Implementation ◽  
Not For Profit ◽  
Clinical Strategies ◽  
Qualitative Nature ◽  
Hospital Strategy

This chapter investigates the adequacy of BSC for a holistic evaluation of the workflow impacts of a PACS implementation. It asks whether a theoretical model such as BSC adequately captures the reality of how such technology is used. The approach taken is radical in that it is built on a consideration of the fundamentals of hospital strategy. The BSC is then modified to incorporate qualitative themes rather than performance measures to reflect the fundamentally qualitative nature of the clinical values of hospital strategy. In so doing, this chapter develops a framework that is relevant to a hospital’s not-for-profit and clinical strategies.

Chinese Super League stock prices and team performance

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Eric Mao ◽  
Brian P. Soebbing ◽  
Nicholas M. Watanabe
Keyword(s):  
Team Performance ◽  
Stock Prices ◽  
Stock Price ◽  
Field Performance ◽  
Professional Sports ◽  
Capital Asset Pricing ◽  
Content Type ◽  
Field Team ◽  
Sport Teams ◽  
Super League

PurposeUtilizing the capital asset pricing model (CAPM), the purpose is to analyze whether the stock prices of the corporation that owns sport teams fluctuate based on team performance in the Chinese Super League (CSL).Design/methodology/approachSeveral CSL teams are publicly owned corporations. As such, the authors look to see if on-field performance impacts the stock price of the firms. Using the news model from previous research, seemingly unrelated regressions are estimated on CSL games from 2014 through 2017.FindingsThe results from the main models indicate some evidence of a statistical relationship between on-field team performance and stock price. Furthermore, the findings for individual teams across markets did not hold consistent across different markets. More specifically, the authors found some instances where successful on-field performance led to a decline in stock prices.Originality/valueThe present study further contributes to the growing literature related to on-field performance and stock prices. Unlike previous research, the use of the CSL as the empirical setting provides the opportunity to use multiple stock markets which provides an opportunity to further examine this relationship. Finally, the study contributes broadly to the literature on professional sports ownership structures around the world.

scholarly journals Impact of team diversity and conflict on project performance in Indonesian start-ups

2020 ◽  
Vol 13 (1) ◽  
pp. 155
Author(s):  
Budi Hartono ◽  
Luthfi Dzulfikar ◽  
Retno Damayanti
Keyword(s):  
Theoretical Model ◽  
Team Performance ◽  
Statistical Power ◽  
Project Performance ◽  
Partial Least Square ◽  
Least Square ◽  
Mediating Effect ◽  
Team Diversity ◽  
Cultural Aspects ◽  
Start Ups

Purpose: Grounded to social identity and information decision theories, the study develops and empirically verifies a fresh theoretical model on the possible mediating effect of emotional and task conflicts toward the associations between diversity (work, social, and ideology) and project performance.Design/methodology/approach: A survey was performed, and 68 Indonesian start-ups provided positive responses accounting for a 57.6% response rate. In total, 102 Indonesian project teams participated, and since multiple team members were inquired for respective teams, 395 individual respondents were involved. An aggregation protocol was utilized to compute team-level datasets. The partial least square (PLS) method was utilized for the main analysis.Findings: The findings suggest a detrimental effect of heightened ideology polarization towards team performance as mediated by emotional conflict. Moreover, work diversity positively affects task conflict, but it does not positively affect team performance. Possible moderating variables such as cultural aspects may lessen the impact.Research limitations/implications: The study offers an updated theoretical model which pertains to diversity, conflict and performance. It also offers unique empirical evidence to examine the theoretical propositions within the setting of Indonesian start-ups. The sample size is rather limited even though it is substantially larger than similar past studies. This could result in a relatively low statistical power.   Practical implications: It offers useful practical insights for start-ups to improve their project performance by looking at the intricate association between aspects of team diversity, conflict, and project success.Originality/value: This study extends the contemporary knowledge on diversity studies, by focusing on the project context of Indonesian start-ups.

scholarly journals Creating Shared Value and Fan Loyalty in the Korean Professional Volleyball Team

2020 ◽  
Vol 12 (18) ◽  
pp. 7625
Author(s):  
Sang-soo Kim ◽  
Woo-yeul Baek ◽  
Kevin K. Byon ◽  
Sung-bum Ju
Keyword(s):  
Professional Sport ◽  
Shared Value ◽  
Moderating Effects ◽  
Sport Fans ◽  
Creating Shared Value ◽  
Study Results ◽  
Sport Teams ◽  
The Relationship ◽  
Team Trust ◽  
Program Research

Creating shared value has been a new strategic management paradigm for professional sport teams around the world. However, despite the active participation of professional sport teams in creating a shared value program, research that addresses its effectiveness appears to be very limited. The present study investigates the influence of sport fans’ perceived creating shared value on team trust and fan loyalty and the moderating effects of sport fans’ altruism on the relationship between creating shared value and team trust in the Korean professional volleyball league. A total of 198 Korean volleyball fans participated in the present study. Results revealed that sport fans’ perceived economic and social values had significant impacts on team trust and, in turn, team trust significantly affected fan loyalty. However, the moderating effect of sport fans’ altruism was not found on the relationships between creating shared value and team trust. Consequently, the present study’s findings may provide professional sport teams’ marketers with the rationale as to the effectiveness of launching creating shared value programs.

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