Insolvency in French soccer: The case of payment failure

This paper examines insolvency (payment failure) in the top three divisions of French soccer. Between 1970 and 2014 we observed 79 cases of insolvency arising from participation in the top two or three (since 1993) divisions. We find that demand (attendance) shocks can account for insolvency to a significant degree. We also find that insolvency can be explained by club status and ownership structure, with professional status and the Association structure being more likely to lead to insolvency. We also examine the post-insolvency performance of soccer clubs and find that the adverse consequences of insolvency are long lasting