Title: Modelling options on football players using individual rankings and club market value: evidence from Italy

Authors: Marco Cucculelli; Paritosh Navinchandra Jha; Francesca Mariani; Simone Orazi

Addresses: Department of Economic and Social Sciences, Università Politecnica delle Marche, P.le Martelli 8, Ancona, 60100, Italy ' Department of Economic and Policy Research, Reserve Bank of India, Shahid Bhagat Singh Road, Fort, Mumbai, Maharashtra, 400001, India ' Department of Economic and Social Sciences, Università Politecnica delle Marche, P.le Martelli 8, Ancona, 60100, Italy ' PAD Multienergy S.p.A., Via M. L. King, 8/B – 60027, Osimo, Italy

Abstract: The paper develops a theoretical model for the valuation of options on players using individual player performance and club market value as value drivers. The paper also provides a test of the model by using data on individual rankings (from Squawka) to determine the value of players. For the team, the market value of listed clubs net of fixed assets is used. To account for the influence of player age on the ranking, the value is modelled using a mean reversion process. The model provides estimates that are consistent with the actual values on the transfer market in the case of three Italian football players. The empirical analysis is complemented by a predictive approach to check the robustness, generalisation and consistency of the proposed model.

Keywords: option pricing; football player; club; rankings; data analysis; sport; Italy.

DOI: 10.1504/IJFMD.2024.140655

International Journal of Financial Markets and Derivatives, 2024 Vol.10 No.1, pp.47 - 69

Received: 09 Nov 2023
Accepted: 25 Mar 2024
Published online: 29 Aug 2024 *

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