The trinomial tree and product life cycle theory in footballers' valuation
The trinomial tree and product life cycle theory in footballers' valuation
Sunday, October 11, 2015: 12:15 PM
Nowadays, soccer is not an amateur sport, but a big and a very interesting branch of industry for investors and gamblers. Football clubs start to act like ordinary companies on the market. One of the most important assets in club’s balance are footballers’ performance rights. Every year thousands of players are the subject of sport club transfers (in 2013 there were over 12 thousand such transfers with a total value over 37 billion USD). It means that the monitoring of a footballer’s value could protect a club from the risk of a sudden disadvantageous change.
This article indicates possibilities of using quantitative methods in players’ performance rights value monitoring. The author raised the hypothesis that joining the methods of trinomial tree and product life cycle could give managers of the club a more powerful tool to manage the football company. The trinomial tree usually is used to value the option price giving three paths of a price movement. In this approach the method were used to determine the future hypothetical value of footballers’ performance rights. Using the product life cycle we could observe and analyze moments in the life cycle of football players. In this part of the research non-linear models were used to approximate the best fitted function of the market value of the player. Such information indicates a direction of movement on the trinomial tree.
In the work we use the historical data of market values of chosen football players from the web site http://transfermarkt.de. To make a proper analysis we choose three kinds of players: in the phase of growth, in the phase of stabilization and the phase of decreasing falling down of the value. Such assumptions necessitate choosing players with adequate features: for example age, skills and team where he plays. So the length of the time series depends on the number of years of footballer performance. Opportunities and threats are demonstrated.
This article indicates possibilities of using quantitative methods in players’ performance rights value monitoring. The author raised the hypothesis that joining the methods of trinomial tree and product life cycle could give managers of the club a more powerful tool to manage the football company. The trinomial tree usually is used to value the option price giving three paths of a price movement. In this approach the method were used to determine the future hypothetical value of footballers’ performance rights. Using the product life cycle we could observe and analyze moments in the life cycle of football players. In this part of the research non-linear models were used to approximate the best fitted function of the market value of the player. Such information indicates a direction of movement on the trinomial tree.
In the work we use the historical data of market values of chosen football players from the web site http://transfermarkt.de. To make a proper analysis we choose three kinds of players: in the phase of growth, in the phase of stabilization and the phase of decreasing falling down of the value. Such assumptions necessitate choosing players with adequate features: for example age, skills and team where he plays. So the length of the time series depends on the number of years of footballer performance. Opportunities and threats are demonstrated.