Determinants of financial performance of Portuguese football clubs

Purpose This study aims to investigate the factors influencing the financial performance of football clubs in Portugal, focusing on institutional and contextual variables – such as the impact of COVID-19 or the league in which clubs compete – which remain underexplored in Portuguese football and, in some cases, in broader contexts such as legal status. Design/methodology/approach Panel data from 29 Portuguese football clubs competing in the professional league in the 2023/2024 season were analysed over the period 2018 to 2023. Estimations were conducted using a generalized least squares random effects approach, and robustness was tested with Prais–Winsten regression with panel-corrected standard errors. Findings Leverage, personnel expenses and club size are key determinants of financial performance in the Portuguese context. The results show that only professional clubs experienced a statistically significant decline during COVID-19, compared with non-professional clubs outside the pandemic. Leverage had a strongly negative effect on professional and second-division clubs, although this impact was mitigated during COVID-19. The legal framework of clubs did not show a significant effect. Originality/value To the best of our knowledge, this is one of the first studies to analyse the profitability of Portuguese football. It is also innovative in examining how contextual and institutional dynamics jointly influence the traditional determinants of financial performance. Furthermore, it is among the first works to assess the differentiated impact of COVID-19 across competition levels, filling a gap in the literature, which has focused almost exclusively on major professional leagues.