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Financial Performance Analysis in European Football Clubs

Article  in  Entropy · September 2020

DOI: 10.3390/e22091056

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 entropy
Article
Financial Performance Analysis in European
Football Clubs
David Alaminos 1, * , Ignacio Esteban 2 and Manuel A. Fernández-Gámez 3
1 Department of Financial Management, Calle de Alberto Aguilera 23, Universidad Pontificia Comillas,
28015 Madrid, Spain
2 PhD Program in Economics and Business, Campus de El Ejido, s/n, University of Málaga,
29071 Málaga, Spain; [email protected]
3 Department of Finance and Accounting, Campus de El Ejido, s/n, University of Málaga, 29071 Málaga, Spain;
[email protected]
* Correspondence: [email protected]




Received: 21 August 2020; Accepted: 19 September 2020; Published: 21 September 2020


Abstract: The financial performance of football clubs has become an essential element to ensure
the solvency and viability of the club over time. For this, both the theory and the practical and
regulatory evidence show the need to study financial factors, as well as sports and corporate factors
to analyze the possible flow of income and for good management of the club’s accounts, respectively.
Through these factors, the present study analyzes the financial performance of European football
clubs using neural networks as a methodology, where the popular multilayer perceptron and the
novel quantum neural network are applied. The results show the financial performance of the club is
determined by liquidity, leverage, and sporting performance. Additionally, the quantum network as
the most accurate variant. These conclusions can be useful for football clubs and interest groups,
as well as for regulatory bodies that try to make the best recommendations and conditions for the
football industry.

Keywords: financial performance; football clubs; neural networks; multilayer perceptron;

quantum neural network

1. Introduction
Financial performance is the main concern that affects any company, where the importance of
control will increase in the new post-COVID scenario, which will cause major financial performance
problems for companies after large drops in consumption. Typically, these financial performance
analyses and models have been done in a limited way, focusing on certain sectors and types of
companies. This has evidenced the lack of effective and specific models that control the level of
financial performance and its analysis, like in the football industry [1].
Recently, a considerable number of European football clubs showed a difficult financial situation
after suffering declines in their financial performance, declaring losses due to poor performance.
Recently, the Union of European Football Associations (UEFA) investigated roughly 80 clubs for this
matter [2]. Sports competitiveness can be seriously affected by the losses suffered by the club, which
could make it impossible to attract talent in players, as well as make it difficult to plan new investments
in infrastructure [3,4]. Therefore, previous literature has pointed out that the balance of the club’s profit
and loss account is the variable that best explains the financial position of European club football [5,6].
To mitigate these potential future financial problems for clubs, UEFA introduced the financial fair play
(FFP) financial regulation as one more element of its licensing regulations [7]. This concept aims to
reduce the default of debts to other clubs or employees and financial doping with non-organic financing,

Entropy 2020, 22, 1056; doi:10.3390/e22091056 www.mdpi.com/journal/entropy

Entropy 2020, 22, 1056 2 of 16

putting the focus on the control of the financial statements of the clubs. This means that football clubs
must generate their income organically and not receive money from agents outside the football activity
to remain as competitive clubs, as this does not reflect a real financial performance situation.
Different authors have analyzed the financial performance of football clubs, although carrying
out broad objectives and in the same way with the type of variables used to analyze financial
performance and income generation [8]. According to [9], it is the usual to obtain more reliable and
more personalized samples if only a single business sector is focused on, so more robust models can be
created. Existing models on the financial performance analysis have been designed from a reduced
number of financial variables, initially ruling out other combinations of indicators that may be decisive
for studying financial performance. Besides, the literature asks that non-financial variables be added
that show the behavior of the market where the company operates and, therefore, its possible sources
of income [9–12]. However, with the FFP in 2011, concerns about the financial situation of the clubs are
focused on the losses generated, and in the generation of income organically through the activity of
football and related activities. However, there are no models designed to analyze the behavior of the
financial performance of football clubs, and the literature demands this kind of model for analyzing
financial performance to adjust to the financial, marketing, and legal requirements raised in these
years [12–14].
This work creates a new financial performance analysis model for football clubs to respond to
the growing needs regarding the financial situation in the management of football clubs. A sample
of European football clubs was used, which includes two measures of financial performance for
clubs, such as return on net worth (RONW) and return on capital employed (ROCE). This dataset
collects both the sporting performance situation and the financial situation for the years 2016–2018
and has been obtained using multilayer perceptron and quantum neural networks as a methodology.
Neural network techniques are highly popular in financial performance analysis due to their high
robustness [10]. Due to this methodology, the results showed conclusions that can be useful for soccer
administrative bodies and any other interest group in football clubs.
Therefore, this work improves on the previous literature in the improvement and expansion of
explanatory variables to forecast the financial performance of football clubs, considering new types
of variables not yet contrasted previously and that gave good results. This has great implications
for football managers and executives, as they will be able to use this information to perform a more
accurate analysis of financial performance. Along the same lines, we improved the precision of the
analysis compared to what was obtained in the literature after the use of our innovative methodology.
The present study is organized as follows: Section 2 develops a review of the literature on financial
performance in football clubs. In Section 3 explain the methodology applied. Section 4 explains the
data and the variables used in the research and Section 5 the results obtained are analyzed. Lastly,
the conclusions and their implications are explained.

2. Literature Review
Rohde and Breuer [3] constructed an empirical model of financial performance to apply it to a
data set of the top 30 European football clubs in revenue during the period 2004–2013. The conclusions
expose that national and international sporting success assure the financial success, as well as for the
value of the brand; in turn, sporting success is driven by investments in players, and the majority of
investments in players tend to be driven by private and foreign investors. López-Busto et al. [9] studied
the relevant management variables that explain the economic results of Spanish football clubs in the
first division. They performed a regression analysis with panel data to find out how the proposed
models were verified. The work concludes that individually the benefits obtained in the previous
season, the number of games played in European competitions, and the position reached in the league
classification significantly affect the net result. Likewise, the number of European players, the financial
expenses, and the net result of the previous season act as a joint model that would affect the profit
possibilities of the clubs.
Entropy 2020, 22, 1056 3 of 16

Carmichael et al. [14] investigated the relationship between sporting success and commercial
success in European football. They used data from Premier League clubs, applying both
financial variables and skill indicators. They concluded that investment in highly skilled players,
with increasingly wealthy teams capable of sustaining or even building on success by spending more
on players than less successful clubs, maintained a high level of financial performance. To the extent
that the richest clubs succeed in their goal, there is a causal link between the income earned and
the competitive imbalance through investments in players. Giovanni [10] presented an optimization
model with the objective of the expected benefits. The model ensures that the team has the required a
skill mix with other legal requirements such as budget limits. Using data from Premier League clubs,
their results showed that reported team value growth is driven by investments in young players.
Andreff [13] analyzed the connection between the financial and sporting performance of French
football clubs. He examined the financing sources of professional football and the role of the league’s
auditing body. They also analyzed some significant elements of financial performance, highlighting
the soft budget constraint of football clubs, helping to create a circle between the increasing commercial
value of TV broadcasting rights and increasing the salaries of football clubs. players. Galariotis et al. [8]
proposed a two-stage method to conduct a multicriteria analysis to rank clubs on their financial and
business performance dimensions. They found a positive relationship between business performance
and sporting performance, and a one-way inverse relationship where financial performance affects
sporting performance. In other words, more income positively affects athletic achievements, and these
in turn positively impact income. Having a higher level of income does not help financial performance
as this can be subjectively analyzed by stakeholders, prioritizing short-term sporting objectives over
long-term viability [4]. Added to this is the scarcity of data on player salaries, making the econometric
test of the possible connection more complicated. shows that the competition to recruit talent generates
excessive demand from great players and makes the club’s financial performance levels negative.
Dimitropoulos and Limperopoulos [15] analyzed the existence of a possible connection between
sports and financial performance with data from Greek clubs and how investment in recruiting new
players also affects this connection. They used a panel data methodology, obtaining results that
concluded that the greater the investment in players, the more successful the club was on the field.
However, this increased spending on recruiting players made the club less profitable and insolvent,
suggesting that these decisions are not based on economic standards, but rather prioritize sports results.
They also influence a greater investigation of the financial ratios to analyze the financial performance
of the clubs. da Costa Jahara [12] aimed to develop an index to analyze the financial performance
of football clubs in Brazil with data from 2014. They used indicators of liquidity, profitability,
and indebtedness, in addition to the analysis of the solvency of the clubs. As a result, they showed
that the clubs present low financial performance when analyzed individually both in the analysis of
liquidity, indebtedness, profitability, and solvency indicators. However, this result cannot explain the
competitive performance of the teams in this championship, showing problems in the study of financial
variables. Iconomescu [11] studied the sporting and financial performance of various Romanian
clubs for the period 2010–2015. Romanian law classifies football clubs as joint-stock companies or
NGOs, with strict rules and regulations for their creation and management. The conclusions of this
work showed that a good part of the football clubs obtained large losses, which caused a scenario of
low profits and even insolvency. The only football clubs that achieved good sporting and financial
performance are those that are privately established and managed. However, those clubs that are
constituted as NGOs, financed with donations, are not sustainable in the long term, and face possible
economic problems and therefore can cause poor sports performance. Table 1 describes a summary of
the differences and advantages of this study with respect to other previous works.
Entropy 2020, 22, 1056 4 of 16

Table 1. Differences and advantages of this study regarding previous works.

Differences Advantages

• This study uses a data sample of more than 200

European football clubs, while most of the
• This study uses a larger sample geographically,
previous works are focused on a country
which makes it possible to obtain a greater
club’s analysis.
experience on the financial performance of
• Additionally, it uses two perspectives of football clubs.
financial performance such as return on net
• This study uses two neural network
worth and return on capital employed, to verify
methodologies, which have had great results in
the profitability achieved with the club’s funds
finance. One of them is the popular multilayer
as well as the profitability of the club’s activity.
perceptron, easy to implement, and the second
• Ratios of a different nature are used, such as
variant is the quantum neural network, a novel
sports, corporate governance, financial, and
technique that achieves great precision results.
reputation, expanding the types of ratios
• Thanks to this type of methodology and the
normally used in previous literature.
construction of the sample, each club can be
• Two neural network methodologies are applied
analyzed individually and thoroughly from
to model and analyze the financial performance our model.
of any club deeply and individually, while most
• It is possible to identify financial performance
of the previous literature applies multicriteria
weaknesses thanks to the inclusion in the model
methodology where they perform financial
of different types of exploratory ratios.
performance rankings, our study creates a new
model for analyzing the clubs individually.

3. Neural Networks Methods

3.1. Multilayer Perceptron (MLP)

When we talk about neuronal systems, it is important to define the concept of an artificial neuron,
a basic element of this type of system, whose description is inherited from the neurobiological principles
that describe the behavior of neurons in the cerebral cortex. The artificial neuron consists of input and
output elements that are processed in the central unit, as well as the processing elements that will allow
the neuron to generalize and learn concepts. From this basic structure, the neuron can map the inputs
to obtain at the output, the desired response that could belong to a certain function, and that, due to
the activation function that generates it, can fall into two categories. This response depends firstly on
the inputs of the neuron and secondly on the operations carried out within the neuron [16,17].
The design of the multilayer perceptron implies the determination of the activation function to be
used, the number of neurons, and the number of layers of the network. As mentioned above, the choice
of the activation function is usually made based on the desired path, and the fact of choosing one or
the other generally does not influence the ability of the network to solve the problem. Regarding the
number of neurons and layers, some of these parameters are given by the problem and others must be
chosen by the designer. Thus, for example, both the number of neurons in the input layer and the
number of neurons in the output layer are given by the variables that define the problem. In some
practical applications, there is no question about the number of inputs and outputs. However, there are
problems where the number of input variables relevant to the problem is not exactly known. In these
cases, many variables are available, some of which may not provide relevant information to the
network, and their use may complicate learning since it will involve large architectures with high
connectivity. In these situations, it is convenient to carry out a prior analysis of the most relevant
input variables to the problem and discard those that do not provide information to the network.
This analysis can become a complicated task and require advanced techniques, such as techniques based
on correlation analysis, principal component analysis, relative importance analysis, and sensitivity
analysis, or techniques based on genetic algorithms, among others. The number of hidden layers and
the number of neurons in these layers must be chosen by the designer. No method or rule determines
the optimal number of hidden neurons to solve a given problem. In most practical applications, these
Entropy 2020, 22, 1056 5 of 16

parameters are determined by trial and error. Starting from an architecture that has already been
trained, changes are made by increasing or decreasing the number of hidden neurons and the number
of layers until an adequate architecture is achieved for the problem to be solved, which may not be
optimal, but which provides a solution.
Let it be a multilayer perceptron with C layers—C 2 hidden layers—and nc neurons in layer
c, for c = 1,2, . . . , C. Let Wc = (wcij ) be the weight matrix where wcij represents the weight from the
connection of neuron i of layer c to c = 2, . . . , C. We will denote as aci to the activation of neuron i of
layer c. These activations are calculated as follows:
First, the activation of input layer neurons (a1i ). The neurons of the input layer are responsible for
transmitting the signals received from the outside to the network. So:

a1i = xi f or i = 1, 2, . . . , ni (1)

where X = (x1 ; x2 ;::::; xn1 ) represents the vector or pattern of input to the network.
Second, activation of the neurons of the hidden layer c (aci ): The hidden neurons of the network
process the information received by applying the activation function f to the sum of the products of the
activations received by their corresponding weights, that is:
 
nXc−1 
aci =  c−1 c−1 c
w ji a ji + ui  f or i = 1, 2, . . . , nc ; c = 2, 3, . . . ., C − 1 (2)

 
j=1

where Y = (y1 , y2 , . . . , ynC ). The function f is the so-called activation function. For this multilayer
perceptron, we used the sigmoidal function. These functions have as an image a continuous interval of
values within the intervals [0; 1]:
1
fsigm (x) = (3)
1 + e−x
The neural networks used in this project used the supervised learning paradigm and the error
correction algorithm, sometimes known as the delta rule. When we speak of supervised learning,
we refer to the type of training in which the system is provided with information on the inputs as
well as the expected outputs or destinations corresponding to said inputs so that the system has the
destinations as a point reference to evaluate its performance based on the difference of these values
and modify the free parameters based on this difference.
The equation of the minimization of error is composed of learning patters {(x1 , y1 ), (x2 , y2 ) . . .
(xp , yp )} and an error function ε (W, X, Y), where the training process tries to seek the weights that
minimize the learning error E (W), as is shown in (4).
p
X
min
w E (W ) = min
w ε(W, xi , yi ) (4)
i=1

Regarding the number of neurons and layers, some of these parameters are given by the problem
and others must be chosen by the designer. Thus, for example, both the number of neurons in the
input layer and the number of neurons in the output layer are given by the variables that define the
problem. In some practical applications, there is no room for doubt about the number of inputs and
outputs. However, there are problems where the number of input variables relevant to the problem is
not exactly known. In these cases, a large number of variables are available, some of which may not
provide relevant information to the network, and their use could complicate learning since it would
imply large-scale architectures with high connectivity. In these situations, it is convenient to carry out
a preliminary analysis of the input variables most relevant to the problem and discard those that do
not provide information to the network. This analysis can become a complicated task and requires
advanced techniques, where the main technique is the sensitivity analysis [17]. Furthermore, and for
MLP to be able to report on the importance of each variable in the results of the constructed model,
Entropy 2020, 22, 1056 6 of 16

it is possible to perform a sensitivity analysis [18]. This sensibility analysis starts from the total data
to divide this database into groups, and each group works on the network as many times as there
are model variables. As soon as the value of one of the variables changes, a value of zero is placed.
This can be done because the network works by evaluating your responses against already known
ranking values, after defining the expression (5).
n 
X 2
Sxi = Φxij (0) − Φxij (5)
j=1

where Φxij (0) is the value of the network output when the variable Xi is zero, Φxij is the known
classification value, Xi is the significant variable, and Sxi is the sensitivity result of each variable.

3.2. Quantum Neural Networks (QNN)

The QNN is built from quantum computation techniques. Qubit is defined as the smallest unit of
information in quantum computation, which is a probabilistic representation. A qubit may either be in
the “1” or “0” or any superposition of the two [19]. The state of the qubit can be defined as follows:
 
|Ψi = α|0i + β1 (6)

where α and are the numbers that point out the amplitude of the corresponding states such that
 2
|α|2 + β = 1. A qubit is defined as the smallest unit of information in quantum computation. It is
α
" #
determined as a pair of numbers . An angle θ is a specification that represents geometrical aspects
β
and is defined such that: cos(θ) =|α| and sin(θ) =|β|. Quantum gates may be applied for adjusting the
probabilities because of weight upgrading [19]. An example of a rotation gate can be:

cos(∆θ) −sin(∆θ)
" #
U (∆θ) = (7)
sin(∆θ) cos(∆θ)

A state of the qubit can be upgraded by applying the quantum gate explained previously.
The application of the rotation gate on a qubit is defined as follows:

α0 cos(∆θ) −sin(∆θ) α
" #" #" #
(8)
α0 sin(∆θ) cos(∆θ) β

The hybrid quantum-inspired neural network is begun with a quantum hidden neuron from the
state |0i, preparing the superposition as:
√ p  
p|0 + 1 − p|1 with 0 ≤ p ≤ 1 (9)

where p represents the random probability of initializing the system in the state |0i. The desired state
can be reached by using rotation gate R:

cos(∆θ) −sin(∆θ)
" #
R(θ) = (10)
sin(∆θ) cos(∆θ)
r
p
tan(θ) = (11)
1−p
r
p
θ = arctan = (12)
1−p
Entropy 2020, 22, 1056 7 of 16

" p √ #
1−p − p
R(θ) = √ p (13)
p 1−p
√ #" #
α
" # " p
1−p − p 1
= √ (14)
β
p
p 1−p 0
The classical neurons are initiated by random number generation. The output from the quantum
neuron is determined as follows:  n 
X 
v j = f  wij ∗ xi  (15)
i=1

where f is a problem-dependent sigmoid or Gaussian function. The output from the network is
represented as:  
Xl 
yk = f  w jk ∗ v j  (16)
 
 
j=1

The desired output is the ok corresponding squared error, which is:

1  2
E2k =  yk − ok  (17)
2
The learning follows the rules of the feedforward backpropagation algorithm. The upgrading of
the output layer weight is defined as follows:

∆w jk = ηek f 0 v j (18)

The weights are upgraded by a quantum gate as appears in Equation (6), so in this case, the equation
would be:
 αij 
 0  "
 = cos(∆θ) −sin(∆θ) αij
#" #
 (19)
βij sin(∆θ) cos(∆θ) βij
 0 

∂E ∂E ∂yk ∂v j
    
where ∆θij = − ∂θ = − ∂y = −Ek f 0 w jk v j xi cos γij − sin γij obtaining this result using the
∂v j ∂θij
ij k
  
 cos γij 
 E 
 E
chain rule. The variable γij is a step of Ψij such that:  Ψij =     to develop the last step of
sin γ  ij
γij should be γ0ij = γij + η∆θij ; η is the learning rate [19]. This ratio usually takes the value 0.1.

3.3. Sensitivity Analysis

For machine learning techniques it is necessary to quantify the significance of the variables that
can complete the information offered by the results. For this, a sensitivity analysis was applied,
which attempts to quantify the relative importance of the independent variables concerning the
dependent variable [20]. As an important step, this analysis eliminates the least important variables,
after considering as more important those that show a variance greater than the total variance of the
set of varials used. This type of sensitivity analysis is also known by the Sobol method [20] where the
variance of total V (Y) obtained by the equations defined in (20) is decomposed.
X XX
V (Y ) = Vi + > 1Vij + . . . + V1,2,...,k (20)
i i j

where Vi = V(E(Y|Xi ) and Vij = V(E(Y|Xi , Xj )) − Vi − Vj .

Si = Vi /V and Sij = Vij /V define the sensitivity indexes, Sij being the effect of interaction between
two variables. The Sobol method performs the computing of a sensitivity index STi, measuring the
sum of the sensitivity effects related to the independent variable.
Entropy 2020, 22, 1056 8 of 16

4. Data and Variables

This study employed a sample of 234 European professional football clubs that have participated
in the first and second division of the national league in 2016 (Appendix A). As dependent variables to
study the financial performance of football clubs, two measures widely used by the literature were
chosen [8,10,12]. RONW is represented as profits available to equity shareholders/equity shareholders’
funds of corporate, and ROCE is represented as earnings before interest and tax (EBIT)/capital employed.
The financial and corporate governance data of the clubs in the sample were extracted from the Amadeus
database of Bureau Van Dijk, according to the criteria used in the previous literature [10,13–15]. The sporting
performance information was extracted from the Transfermarkt web portal (see: https://www.transfermarkt.
com/) [3]. The corporate reputation information was extracted from the clubs’ official accounts of the social
networks [8,9,11]. Table 1 displays the concept of the independent variables.
Additionally, to verify the level of reliability of the built models, different test samples were created,
and not related to those used in the estimation of the models with data from 2016. The collected data set
was classified into three groups to perform the training step with 70% of the observations, the validation
step with 10% of the observations, and the testing step with 20% of the observations. The data dedicated
to the training step was used to create the model. The validation step was dedicated to evaluating the
existence of excessive training. The last step, the testing process, was dedicated to assessing the precision
of the models [21]. The sample data for 2017 (t + 1) and 2018 (t + 2) were reserved for the later estimates
section. Table 2 points out the set of independent variables used in this study.

Table 2. Independent variables.

Attribute Code Variables Expected Sign

I1 Institutional Ownership (binary) −
I2 Nº of Shareholders +
Corporate Governance Factors
Nº of Members of the Board of
I3 +
Directors
I4 CEO Duality (binary) −
R1 Facebook (number of followers) +
Corporate Reputation Factors R2 Instagram (number of followers) +
R3 Twitter (number of followers) +
P1 Main Club of the City (binary) +
P2 Population of the City +
Average Attendance at the
P3 +
Stadium
Sporting Performance Factors
P4 Accumulated points +
P5 Promotion/Relegation +
P6 Division −
Performance Ratio (Szymanski
P7 +
Ranking 1 )
P8 Wage Bill (in EUR million) +
Current Liabilities/Current
F1 −
Assets
F2 Total Debt/Total Assets −
F3 Total Debt/Total Revenue −
Expenses on Players/Operating
F4 −
Revenue
F5 Working Capital/Total Assets +
F6 Retained Earnings/Total Assets +
F7 EBIT/Total Assets +
F8 Sales/Total Assets +
Financial Factors F9 Total Liabilities/Total Assets −
F10 Total Liabilities/Equity −
F11 Short-term Liabilities/Equity −
F12 Fixed Assets/Equity +/−
F13 Net Profit/Number of Shares +
F14 Net Capital/Equity +
F15 EBIT/Sales +
F16 Net Income Growth +
F17 Net Sale Growth +
F18 Asset Growth +/−
F19 Liabilities Growth −
F20 Debt Coverage Ratio +
1 Szymanski Ranking = −ln(p/43 − p). The total of clubs that participate in the first and second division is 42,
adding one more counting to the club with which you are working. The term “p” defines the final position the club
achieved at the end of the season.
Entropy 2020, 22, 1056 9 of 16

5. Results

5.1. Descriptive Statistics

Table 3 shows the descriptive statistics for the dependent and independent variables. The RONW
value of the sample stood at 10.4%, showing a standard deviation of 9.2%. For its part, the ROCE stood
at 2.3%, showing a standard deviation of 3.7%. The differences in terms of RONW and ROCE implied
that the sample was characterized by profitability heterogeneity among the countries. On the other
hand, the mean reputational variables sampled was 1,974,872 (standard deviation 55,865), with some
heterogeneity between social networks. Finally, the financial variables also show some differences
between different factors depending on their nature (liquidity, leverage, assets, etc.), but a relatively
low standard deviation.

Table 3. Descriptive statistics.

Mean SD
RONW 0.104 0.092
ROCE 0.023 0.037
I1 0.417 0.489
I2 6.509 9.18
I3 18.516 11.683
I4 0.5 0.575
R1 3,114,528 82,693.391
R2 1,835,685 57,959.198
R3 974,404 26,942.458
P1 0.575 0.494
P2 927,451.696 2378.519
P3 21,393.802 158.461
P4 54.865 15.841
P5 −0.004 0.435
P6 1.499 0.674
P7 1.514 0.961
P8 183.567 15.019
F1 2.989 4.004
F2 0.683 0.395
F3 2.186 1.721
F4 1.206 1.38
F5 0.499 0.626
F6 −0.093 0.515
F7 −0.024 0.259
F8 0.735 0.924
F9 0.943 0.907
F10 15.808 10.854
F11 13.372 7.411
F12 4.457 5.328
F13 0.787 2.077
F14 13.267 12.291
F15 −0.012 0.774
F16 −0.015 0.567
F17 0.437 1.104
F18 0.116 0.793
F19 0.109 0.893
F20 0.151 0.567

5.2. Estimated Results

Tables 4 and 5, and Figures 1–3 show the adjustment level using accuracy, the root mean square
error (RMSE), and the mean absolute percentage error (MAPE). In all models, the level of accuracy
always exceeded 90.57% for testing data. For its part, the RMSE and MAPE levels were adequate.
Entropy 2020, 22, 1056 10 of 16
Entropy 2020, 22, x FOR PEER REVIEW 10 of 16
Entropy 2020, 22, x FOR PEER REVIEW 10 of 16

The model
always
always with the90.57%
exceeded
exceeded highest
90.57% foraccuracy
for testing was For
testing data.
data. thatits
For ofpart,
its quantum
part, neural
the RMSE
the RMSE and
andnetworks
MAPE levels
MAPE (QNN)
levels were
werewith 96.17% The
adequate.
adequate. for the
The
model
ROCE with
variable,the highest
followed accuracy
by the was
model that
of of
deep quantum
neural neural
decision networks
trees (QNN)
(DNDT)
model with the highest accuracy was that of quantum neural networks (QNN) with 96.17% for the with
method 96.17%
with for
95.38%the for
ROCE
the RONW
ROCE variable,
variable, followed
variable. Taken
followed by the model
bytogether, of
the modelthese deep
of deep neural
results decision
provide
neural decision trees
a level (DNDT)
of accuracy
trees (DNDT) method with 95.38%
far superior
method for of
to that
with 95.38% for
the RONW
the RONW
previous variable.
studies. Taken
Thus,Taken
variable. together,
in thetogether, these
work of these
[8], results
anresults provide
accuracy aa level
of around
provide level of accuracy
77%
of accuracy far in
is revealed,
far superior to that
the work
superior to that
of [8]ofit is
of
previous
close to studies.
72%, and Thus,
in the in the
study work
of of
[11], it [8], an accuracy
approaches 68%.of around
Finally, 77%
Table is6revealed,
shows
previous studies. Thus, in the work of [8], an accuracy of around 77% is revealed, in the work of [8] in
the the
mostwork of [8]
significative
it is
is close
close
variables
it to
by to 72%, and
methods
72%, and in applying
after
in the study
the studytheof Sobol
of [11], it
[11], itmethod
approaches
for the
approaches 68%. Finally, analysis.
sensitivity
68%. Finally, Table 66 shows
Table shows the
the most
most
significative variables by methods after applying the Sobol method for the sensitivity
significative variables by methods after applying the Sobol method for the sensitivity analysis. analysis.
Table 4. Results of accuracy evaluation: return on net worth (RONW).
Table 4. Results of accuracy evaluation: return on net worth (RONW).
Table 4. Results of accuracy evaluation: return on net worth (RONW).
MLP QNN
Sample MLP QNN
MLP QNN
Sample Accuracy
Accuracy(%) RMSE MAPE Accuracy Accuracy (%) RMSE MAPE
Sample Accuracy RMSE MAPE Accuracy RMSE MAPE
Training (%)
92.11 RMSE0.68 MAPE0.31 (%) RMSE MAPE
(%) (%) 95.38 0.49 0.22
Training
Validation 92.11
91.34 0.68
0.74 0.31
0.38 95.38 0.49 0.22
Training 92.11 0.68 0.31 95.38 94.41 0.49 0.550.22 0.28
Validation
Testing 91.34
90.57 0.74
0.79 0.38
0.42 94.41 93.53 0.55 0.580.28 0.34
Validation 91.34 0.74 0.38 94.41 0.55 0.28
Testing 90.57 0.79 0.42 93.53 0.58 0.34
Testing 90.57 0.79 0.42 93.53 0.58 0.34
Table 5. Results of accuracy evaluation: return on capital employed (ROCE).
Table 5. Results of accuracy evaluation: return on capital employed (ROCE).
Table 5. Results of accuracy evaluation: return on capital employed (ROCE).
MLP
MLP QNN QNN
Sample MLP QNN
Sample Accuracy Accuracy
Sample Accuracy
Accuracy
(%) RMSE
RMSE
MAPE Accuracy
MAPE
Accuracy (%)
RMSE
RMSE
MAPE
MAPE
(%) RMSE MAPE (%) RMSE MAPE
Training 93.27
(%) 0.61 0.27 (%) 96.17 0.42 0.18
Training
Validation 93.27
92.58 0.61
0.67 0.27
0.32 96.17 0.42 0.18
Training 93.27 0.61 0.27 96.17 95.41 0.42 0.460.18 0.24
Validation
Testing 92.58
91.46 0.67
0.75 0.32
0.39 95.41 0.46 0.24
Validation 92.58 0.67 0.32 95.41 94.53 0.46 0.510.24 0.30
Testing 91.46 0.75 0.39 94.53 0.51 0.30
Testing 91.46 0.75 0.39 94.53 0.51 0.30

Figure 1. Results
Figure Results of accuracy
of accuracy evaluation:
accuracyevaluation: classification
evaluation:classification (%).
classification (%).
Figure 1.
1. Results of (%).

Figure 2. Results of accuracy evaluation: the root mean square error (RMSE).
Figure 2. Results of accuracy evaluation: the root mean square error (RMSE).
Figure 2. Results of accuracy evaluation: the root mean square error (RMSE).
Entropy 2020, 22, 1056 11 of 16
Entropy 2020, 22, x FOR PEER REVIEW 11 of 16

Figure3.3.Results
Figure Results of
of accuracy
accuracy evaluation:
evaluation:mean
meanabsolute
absolutepercentage
percentageerror (MAPE).
error (MAPE).

Table6.6.Results
Table Resultsof
ofaccuracy
accuracy evaluation: significantvariables
evaluation: significant variablesand
andnormalized
normalized impact.
impact.

MLP MLP QNN

QNN
Dependent Significant Normalized Impact Significant Normalized Impact
Dependent Significant Normalized Significant Normalized
Variable Variables (%) Variables (%)
Variable Variables Impact (%) Variables Impact (%)
I1 54 I4 42
R1 I1 39 54 R1I4 4251
P1 R1 76 39 R1
P2 5164
P8 P1 47 76 P2
P8 6434
RONW P8
RONW F1 42 47 P8
F1 3438
F2 F1 64 42 F1
F2 3872
F4 F2 52 64 F2
F5 7263
F14 F4 58 52 F5
F14 6344
F14 58 F14 44
I4 62 I4 51
I4 62 I4 51
R1 47 R2 60
R1 47 R2 60
P7 82 P7 73
P7 82 P7 73
P8 38 P8 42
P8 38 P8 42
ROCE F1 34 F1 35
ROCE F1 34 F1 35
F3 73 F3 63
F3 73 F3 63
F7 56 F7 47
F7 56 F7 47
F14 F14 63 63 F12
F12 5757
F20 F20 48 48 F20
F20 3636

Table 5 shows additional information on the significant variables. Wage Bill (P8) and Current
Table 5 shows additional
Liabilities/Current Assets (F1) information on the significant
have been significant in the twovariables.
models forWageeach Bill (P8) used.
method and Current
This
Liabilities/Current Assets (F1) have been significant in the two models
demonstrates that the importance shows a higher average expenditure on salaries in football clubs for each method used.
This
thatdemonstrates
have a high levelthat the importance
of financial shows a higher
performance, differentaverage
from the expenditure on salaries
previous literature in football
in financial
clubs that have[9].
performance a high level of
Although financial
other performance,
theoretical differentthat
studies indicate from the who
those previous
spend literature
more onin financial
salaries
performance
are teams that [9].compete
Although other
better totheoretical
attract talentstudies indicatetheir
and improve that sports
those who spend more
and marketing on salaries
results [8,12].are
For its
teams thatpart, the variable
compete better toF1 shows
attract the and
talent importance
improvefor a club
their sportsof and
maintaining
marketing a results
liquidity margin,
[8,12]. For its
showing
part, itself asF1anshows
the variable important variable in for
the importance previous
a club studies, where some
of maintaining research
a liquidity studies
margin, observed
showing itself
asthe existence of
an important a significant
variable negative
in previous relationship
studies, where somebetween liquidity
research studiesand financialthe
observed performance
existence of a
[10,13]. The
significant best results
negative were obtained
relationship between byliquidity
the QNNand method, where
financial in addition [10,13].
performance to the variables,
The bestCEO results
(Chief Executive Officer) duality (I4) and the number of followers on
were obtained by the QNN method, where in addition to the variables, CEO (Chief Executive Facebook (R1), among others,
Officer)
were also
duality (I4) significant
and the numberfor RONW. This shows
of followers that the decision-making
on Facebook (R1), among others, powerwere
of thealso
club’s CEO can for
significant
be detrimental to the club if it is excessive, while the number of followers on social networks such as
RONW. This shows that the decision-making power of the club’s CEO can be detrimental to the club
Facebook is positively correlated with a higher level of income. These results have been shown by
if it is excessive, while the number of followers on social networks such as Facebook is positively
previous theoretical works [12,15], but they had not yet been confirmed in empirical studies on
correlated with a higher level of income. These results have been shown by previous theoretical
financial performance in the football industry [3,10,15]. For its part, for the ROCE model built with
works [12,15], but they had not yet been confirmed in empirical studies on financial performance in
QNN, the variable I4 has also been significant, but there are other important variables such as, for
the football industry [3,10,15]. For its part, for the ROCE model built with QNN, the variable I4 has
example, EBIT/total assets (F7) and debt coverage ratio (F20). These variables show the importance
also been significant, but there are other important variables such as, for example, EBIT/total assets (F7)
Entropy 2020, 22, 1056 12 of 16

and debt coverage ratio (F20). These variables show the importance of profitability on assets of the
clubs, while it is also shown that those clubs that do not show difficulties in paying their debts and
are concerned about it have a stable level of financial performance. These variables had not yet been
shown as significant in previous empirical studies [8,11,14].
On the other hand, the models built by the MLP method show high levels of precision,
although lower than those obtained by QNN. Furthermore, these methods show some different
significant variables. Such is the case for RONW of the variables of the performance ratio (P7),
a variable popularly used to measure the relative sporting performance of a club concerning the rest of
the professional clubs in its national league. In this case, it shows that the clubs with the highest sports
performance had a higher financial performance. Along the same lines, the variable of the main club in
the city (P1) shows the importance of being the most important club in the city, since the club enjoys a
greater share of the local market and therefore, a higher level of income. These variables were only
significant in studies where other financial concerns of football clubs were studied [21]. For the case of
the ROCE model with the MLP method, for the level of the future trend that financial performance could
have, although with divergences in previous works regarding its significance to analyze the financial
performance, there were some works that show that this variable is not significant [10,13]. Finally,
the variable net capital/equity (F14) demonstrated the importance of keeping available and using its
capital with which to generate income, which increases the profitability of the club, something already
analyzed by other recent works [10,12].
This set of variables observed as being significant represents a group of novel factors that
determine the financial performance in football clubs and therefore, different from that shown in the
previous literature.
Finally, our methodologies show a precision of a range of 90.57–94.53% of correctness globally
for the two dependent variables used. While other works such as [10] achieved an accuracy of 76%
in the analysis of the stochastic programming method. For its part, [1] obtained a precision of 73%
applying a panel regression. Additionally, using panel methodology, [16] reached an accuracy of 78%
for the financial performance analysis with Greek clubs. For the French case provided with the work
of [8], after using various methodologies such as the multicriteria analysis and the partial least squares
structural equation modeling approach, where they showed a precision of 77% and 87%, respectively.
Continuing with the French case, [4] used linear regression to also analyze financial performance in
the French league, obtaining an accuracy of 75%. Concerning the Spanish experience, [9] obtained a
71% precision through regression analysis. Finally, [1] used a discriminating analysis with data from
Turkey, where they achieved an 81.2% precision capacity.

5.3. Post-Estimations
To perform multiple-step-ahead prediction to obtain a greater robustness of results, we applied an
iterative strategy. For this, we trained the models for the prediction of one step and two forward steps,
that is, of the moments t + 1 and t + 2 [22]. These projected data for t + 1 and t + 2 were included in the
data sample as actual observations. Table 7, and Figures 4–6 pointed out the accuracy and residual
results (RMSE and MAPE) for one-year and two-year forecasting horizons. For t + 1, the range of
precision for the two techniques was 88.32–91.85% on overall, being in the model of QNN where the
percentage of accuracy was higher (91.85%) for the RONW dependent variable. Along the same lines,
for the ROCE variable, the precision range was 89.67–92.38%, with QNN being again the methodology
with the highest precision (92.38%). For t + 2, this range of precision was 86.16–89.41%, being also
the method of QNN that the percentage of accuracy was higher (89.41%) for the RONW variable.
Additionally, in t + 2 for variable ROCE, it again confirmed the predictive superiority of QNN (89.41%)
over MLP (87.21%). These results show the high precision and great robustness of the models.
Entropy 2020, 22, 1056 13 of 16

Table 7. Multiple-step ahead forecasts in forecast horizon = t+1 and t + 2.

Entropy 2020, 22, x FOR PEER REVIEW 13 of 16
Entropy 2020, 22, x FOR PEER REVIEW RONW 13 of 16
MLP
Table 7. Multiple-step QNN
ahead forecasts in forecast horizon = t+1 and t + 2.
Horizon Table 7. Multiple-step ahead forecasts in forecast horizon = t+1 and t + 2.
Accuracy (%) RMSE MAPE Accuracy (%) RMSE MAPE
RONW
t+1 88.32 0.95 RONW
0.56 91.85 0.87 0.59
MLP QNN
Horizon MLP QNN
t+2 Horizon86.16
Accuracy (%) 1.14
RMSE MAPE 0.78 Accuracy 89.41
(%) RMSE MAPE 1.03 0.67
Accuracy (%) RMSE MAPE Accuracy (%) RMSE MAPE
t+1 88.32 0.95 0.56 ROCE 91.85 0.87 0.59
t+1 88.32 0.95 0.56 91.85 0.87 0.59
t+2 86.16 1.14 0.78 89.41 1.03 0.67
t+2 86.16 MLP 1.14 0.78 89.41 1.03 QNN 0.67
Horizon ROCE
Accuracy (%) RMSE ROCE
MAPE Accuracy (%) RMSE MAPE
MLP QNN
Horizon MLP QNN
t+1 Horizon89.67
Accuracy (%) 0.84
RMSE MAPE 0.49 Accuracy 92.38
(%) RMSE MAPE 0.80 0.52
Accuracy (%) RMSE MAPE Accuracy (%) RMSE MAPE
t+2 t + 1 87.21 89.67 0.84
0.91 0.49
0.72 92.38 0.80 0.52
t+1 89.67 0.84 0.49 92.38 89.41 0.80 0.92
0.52 0.63
t+2 87.21 0.91 0.72 89.41 0.92 0.63
t+2 87.21 0.91 0.72 89.41 0.92 0.63

Figure
Figure4. Multiple-step
Multiple-stepahead
aheadforecasts
forecastsin the
theforecast
forecasthorizon:
horizon:accuracy.
Figure 4.4.Multiple-step ahead forecasts ininthe forecast horizon: accuracy.
accuracy.

Figure 5. Multiple-step ahead forecasts in the forecast horizon: RMSE.

Figure
Figure5.5.Multiple-step
Multiple-stepahead
aheadforecasts
forecastsininthe
theforecast
forecasthorizon:
horizon:RMSE.
RMSE.
Entropy 2020, 22, 1056 14 of 16
Figure 5. Multiple-step ahead forecasts in the forecast horizon: RMSE.

Figure 6. Multiple-step ahead forecasts in the forecast horizon: MAPE.

6. Conclusions
This study developed a new financial performance analysis model for football clubs. Using data
from the period 2016–2018, and applying two different neural network methods in the creation of the
financial performance analysis model to achieve a robust model, such as multilayer perceptron and
the quantum neural network, this last methodology was the one that obtained the highest levels of
precision. The most significant factors to explain financial performance were the variables of liquidity,
leverage, and sporting performance. Some of them were the most common variables in our results.
However, the reputation variable also showed some significance, which appeared on several occasions.
On the other hand, it was possible to increase the predictive capacity shown by the previous
literature after the use of different neural network methodologies, after obtaining precisions from a
precision range of 90.57–94.53%. Regarding the determining factors of financial performance, it detected
new significant variables to consider in financial performance models for football clubs, allowing a
high level of stability in the models developed over forecasting horizons of t + 1 and t + 2. In contrast
to previous research, this study was able to expand the analysis of financial performance in football
clubs beyond the accuracy and error results. The results identified a set of significant variables for
each methodology applied and for each standard dependent variable, but some of these variables
were recurrent in most models. This made an essential contribution to the field of corporate finance in
football clubs. The conclusions were relevant to central executives, investors, managers, and other
stakeholders in the football industry, who were generally interested in knowing which indicators
provide reliable, accurate, and potential forecasts of performance evolution. Our study suggests new
explanatory significant variables to allow these agents to analyze financial performance phenomena in
football clubs. This research also provided a new financial performance analysis model developed
for the football industry using two neural networks methods, being the QNN the most accurate,
thus contributing to existing knowledge in the field of empirical corporate finance, and especially,
neural networks. This new model can be used as a reference to improve decision-making in football
club management.
In summary, this study provides a significant opportunity to contribute to the field of corporate
finance’ football clubs, since the results obtained had significant implications for the future decisions
of football club managers, making it possible to avoid big change events of the trend of financial
performance and the potential associated risks. It also helps these agents send warning signals to football
clubs and avoid massive losses derived from a decrease in the performance of the club. Further research
in this field includes the financial performance models other new variables as macroeconomic and
regulatory considering credit conditions and financial fair play UEFA’s regulations.

Author Contributions: This study has been designed and performed by all of the authors. D.A. collected the data.
D.A., I.E., and M.A.F.-G. analyzed the data. The introduction and literature review were written by D.A. and
Entropy 2020, 22, 1056 15 of 16

I.E. All of the authors wrote the discussion and conclusions. All authors have read and agreed to the published
version of the manuscript.
Funding: This research was funded by Cátedra de Economía y Finanzas Sostenibles, Universidad de Málaga, Spain.
Conflicts of Interest: The authors declare no conflict of interest.

Appendix A

Table A1. Clubs by National League.

National League Number

Belgium 12
Bulgaria 3
Croatia 2
Cyprus 1
Czech Republic 2
Denmark 7
England 41
France 22
Germany 29
Greece 5
Italy 27
Netherlands 12
Norway 3
Poland 5
Portugal 7
Romania 2
Russia 1
Scotland 6
Spain 37
Sweden 2
Switzerland 1
Turkey 2
Ukraine 4

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