Sports Finance: Determining the Value of Financial Contracts in the Soccer Industry

When you watch a soccer team play, the major determinant of success, wins, attributes to the quality of players and coaches, and consequently the actions they make in a game. The commercial success of a sports business, in some fashion, is affected by those same factors. It is the job of an effective sports business to manage financial values in order to maximize the potential for the management of the team. Contracting, in terms of sports management, is a key component for the financial capabilities of every soccer organization, and the valuation of player contracts can be identified as an indicator of success or detriment of a team. The goal of this paper is to explore the current contractual inconsistencies of professional soccer organizations and create a model that projects success based on average player contract and market values. The model summarizes the actual market and contract values from the top 5 leagues over the last 5 years (2018-2023) and segments the data into 4 projections based on UEFA Champions League qualification, top half of total standings, bottom half of total standings, and relegation. This summary is then filtered to establish a range of expected contract and market values for each segment, which in turn can be used as an estimation tool for professional teams to make financial projections for the success of their team.