When Pep Comes Calling, the Oil Market Answers: The Effect of Football Player Transfer Movements on Abnormal Fluctuations in Oil Price Futures

78 Pages Posted: 28 Jan 2021

See all articles by Hung Xuan Do

Hung Xuan Do

Massey University, Albany campus; University of Technology, Sydney

Quan M. P. Nguyen

Massey University

Rabindra Nepal

School of Accounting, Economics, and Finance, University of Wollongong

Russell Smyth

Monash University - Department of Economics

Date Written: November 22, 2020

Abstract

We examine the effect of player-transfers entered into by football clubs owned, or financed, by individuals who are key players in the oil market on abnormal returns in oil futures. In oil-financed football clubs the sums expended buying players frequently far exceeds the amount received from selling players in the player-transfer market. We find that in order to finance these deficits in the player-transfer market, the owners exercise their market power to adjust the oil spot market, resulting in higher abnormal oil spot returns. We also find that these spot price adjustments are reflected in abnormal returns in the futures market. The exception is when the deficit in the player-transfer market is above a very high threshold, which is typically only the case when the highest profile players in football are transferred. The high-profile transfers attract widespread media attention, making oil futures investors aware of the potential transmission from the player-transfer market to the oil market on a wide-scale, which dissipates the effect of a deficit in the player transfer market on abnormal returns in oil futures.

Keywords: Crude oil; Futures markets; Football economy; Player-transfer market; Media coverage

JEL Classification: Q41; Z21; Z23;

Suggested Citation

Do, Hung Xuan and Nguyen, Quan M. P. and Nepal, Rabindra and Smyth, Russell, When Pep Comes Calling, the Oil Market Answers: The Effect of Football Player Transfer Movements on Abnormal Fluctuations in Oil Price Futures (November 22, 2020). Available at SSRN: https://ssrn.com/abstract=3735300 or http://dx.doi.org/10.2139/ssrn.3735300

Hung Xuan Do (Contact Author)

Massey University, Albany campus ( email )

Auckland
New Zealand
+64 92136160 (Phone)
+64 92136160 (Fax)

HOME PAGE: http://www.massey.ac.nz/massey/expertise/profile.cfm?stref=972450

University of Technology, Sydney ( email )

PO Box 123
Broadway, 2007
Australia

Quan M. P. Nguyen

Massey University ( email )

Private Bag 11 222
Palmerston North, Manawatu 4442
New Zealand

Rabindra Nepal

School of Accounting, Economics, and Finance, University of Wollongong ( email )

Northfields Avenue
Wollongong, New South Wales 2522
Australia

Russell Smyth

Monash University - Department of Economics ( email )

Wellington Road
Clayton, Victoria 3
Australia

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