Sports failures and stock returns between rationality and emotionality: evidence from the UEFA Champions League

The paper explores the relationships between sports performance and financial performance in football, with a focus on the UEFA Champions League competition games. Conducting an Event Study Analysis on games of eighteen listed football companies taking part in the UEFA Champions League from 2006, the paper finds that the exit from the competition produced a negative statistically significant impact on the stock returns of listed football companies. A double, mixed and contrasting effect co-exists: the rational and the emotional (sentiment). On the one hand, investors rationally evaluate the sports failures by considering the teams' realistic chances of success. On the other hand, certain emotional aspects are important in investors' decisions. The emotional part is also present in variables originally expected to be rational.