Real option valuation methods: application in the football sector
by Rania El Modni; Mounime Elkabbouri; Tariq Morchid
International Journal of Sport Management and Marketing (IJSMM), Vol. 21, No. 5/6, 2021

Abstract: This paper aims to offer a practical example of applying the real option pricing method in the football sector. This paper makes two significant contributions in this context. Firstly, it provides a formal theoretical basis for the validity of the Black-Scholes option pricing model in the valuation of buy-back options included in player transfer agreements. Secondly, it presents the first application of the Black-Scholes model using a real player contract situation as its testbed. Our application focuses on comparing the buy-back option price obtained from the Black-Scholes model with the price estimated by the Monte Carlo simulation. Results show that the Black-Scholes model, generally used for pricing financial options, can also be applied to estimating buy-back options, but with some limitations.

Online publication date: Mon, 10-Jan-2022

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Sport Management and Marketing (IJSMM):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com