Stadium Investments and Club Performance: Evidence From the English Premier League

John Nowland and Jomo Sankara

Many professional football clubs have big plans for new stadiums or stadium expansions. Bigger stadiums are a sign of status, help to increase and diversify revenue streams, and enhance the fan experience. So how should a football club go about getting a bigger stadium? Should they build a new one or expand their existing stadium? And how are these stadium investments associated with club performance? Using an event study approach, we analyze sporting performance in the years around stadium investments in the English Premier League from 1992/1993 to 2021/2022. We find that clubs with stadium expansions have better subsequent sporting performance while clubs with new stadiums do not. Further analysis indicates that investments in new stadiums are associated with a temporary decrease in transfer expenditure. This decrease is not the case for stadium expansions as transfer expenditure is maintained and performance on the field subsequently improves. In summary, our analysis indicates that stadium expansions are the better option for professional football clubs as they increase both stadium capacity and sporting performance in the short-term.