A Corporate Bond Indexed to the Changes in Football Players' Performance

Abstract Over the years, the football industry has progressively adopted financial support to facilitate organizational growth and optimize risk management. However, raising money to acquire players or construction of infrastructure frequently encounters challenges related to financial limitations and uncertainty about achieving sporting objectives that can repay the investments made. In this context, the need to explore innovative financial solutions becomes evident, linking the risk-return profile to the actual competitive capabilities of football players.This paper proposes a corporate bond indexed to football player's performance quality, measured through a composite performance indicator (CPI) developed using a hierarchical PLS-SEM model, which allows for estimating latent relationships between performance dimensions and optimizing the overall explanatory power. The CPI is further adjusted for the team's league position using an exponential decay function, with the optimal decay constant selected through a sensitivity analysis. The proposed bond allows investors to obtain returns in line with the players' increased performance, thereby ensuring the safeguarding of capital in the event of underperformance. The bond structure and its risk-return profile are assessed through a Monte Carlo simulation, allowing for a detailed analysis of uncertainty and risk. The work opens up application prospects in terms of new financing tools for sports clubs and athletes, as well as expanding the universe of asset classes linked to the sports sector.