Application of a Financial Statement-based Rating Method for the 1st and 2nd German Soccer League: Data, Techniques, and Results

The financial situation of professional football clubs has dramatically deteriorated during the COVID-19 pandemic, and hence there are ever- louder demands for early risk detection. This paper uses the internationally recognized Altman Z"- score model to capture the financial viability of pro-fessional clubs in the 1st and 2nd Bundesliga. Limitations are known; consequently, model calibrati-on is proposed based on a recommendation by Altman. Finally, this rating model is applied to pro-fessional football clubs in the first and second Bundesliga as a risk measurement tool, and the financial situation is critically assessed. The model can be considered for the debate on risk ma-nagement systems, and based on its results, 14 out of 36 football clubs have ratings with a high probability of default within one season.