The Impact of Staff Costs and Equity on Financial Performance in Professional Ice Hockey: an analysis of Liiga and the SHL

Abstract

Ice hockey is one of the most competitive sports in the Nordic countries, both athletically and financially. As of recent years, there is a surplus of data but a lack of research on the correlation between the financial management practises and the financial performance of hockey teams. There are many variables and theories that affect the financial performance of the team. There are the broader practises of budgeting, revenue management, cost management and risk management. The more specific theories include, but are not limited to, Kulikova’s and Goshunova’s theories on how to calculate efficiency, Principal Component Analysis and Data envelopment analysis. The aim of this research was to investigate the relationship between staff costs, equity and revenue in the Finnish hockey league and the Swedish hockey league, and to which extent this relationship impacted the financial performance of the teams. This thesis covered all the 15 teams in the Finnish hockey league and all the 14 teams in the Swedish hockey league during the 2021/2022 season. The chosen method to calculate these to separate analyses was a regression analysis to see how staff costs and the equity of a team impacts the revenue, and how important the role of a baseline revenue is. The results showed us that in most cases both staff costs and equity had an impact on revenue, validating Kulikova’s and Goshunova’s theories on efficiency. The regression also laid out the importance of a good baseline revenue, while excluding staff costs and revenue.