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Arbitrage

In economics and finance, arbitrage (, UK also ) is the practice of taking advantage of a difference in prices in two or more markets – striking a combination of matching deals to capitalize on the difference, the profit being the difference between the market prices at which the unit is traded. When used by academics, an arbitrage is a transaction that involves no negative cash flow at any probabilistic or temporal state and a positive cash flow in at least one state; in simple terms, it is the possibility of a risk-free profit after transaction costs. For example, an arbitrage opportunity is present when there is the possibility to instantaneously buy something for a low price and sell it for a higher price.

In principle and in academic use, an arbitrage is risk-free; in common use, as in statistical arbitrage, it may refer to expected profit, though losses may occur, and in practice, there are always risks in arbitrage, some minor (such as fluctuation of prices decreasing profit margins), some major (such as devaluation of a currency or derivative). In academic use, an arbitrage involves taking advantage of differences in price of a single asset or identical cash-flows; in common use, it is also used to refer to differences between similar assets (relative value or convergence trades), as in merger arbitrage.

The term is mainly applied to trading in financial instruments, such as bonds, stocks, derivatives, commodities, and currencies. People who engage in arbitrage are called arbitrageurs.

Arbitrage has the effect of causing prices of the same or very similar assets in different markets to converge.

Etymology
"Arbitrage" is a French word and denotes a decision by an arbitrator or arbitration tribunal (in modern French, "arbitre" usually means referee or umpire). In the sense used here, it was first defined in 1704 by Mathieu de la Porte in his treatise "La science des négociants et teneurs de livres" as a consideration of different exchange rates to recognise the most profitable places of issuance and settlement for a bill of exchange ("L'arbitrage est une combinaison que l’on fait de plusieurs changes, pour connoitre [connaître, in modern spelling] quelle place est plus avantageuse pour tirer et remettre".)

Arbitrage-free
If the market prices do not allow for profitable arbitrage, the prices are said to constitute an arbitrage equilibrium, or an arbitrage-free market. An arbitrage equilibrium is a precondition for a general economic equilibrium. The "no arbitrage" assumption is used in quantitative finance to calculate a unique risk neutral price for derivatives.

Arbitrage-free pricing approach for bonds
Arbitrage-free pricing for bonds is the method of valuing a coupon-bearing financial instrument by discounting its future cash flows by multiple discount rates. By doing so, a more accurate price can be obtained than if the price is calculated with a present-value pricing approach. Arbitrage-free pricing is used for bond valuation and to detect arbitrage opportunities for investors.

For the purpose of valuing the price of a bond, its cash flows can each be thought of as packets of incremental cash flows with a large packet upon maturity, being the principal. Since the cash flows are dispersed throughout future periods, they must be discounted back to the present. In the present-value approach, the cash flows are discounted with one discount rate to find the price of the bond. In arbitrage-free pricing, multiple discount rates are used.

The present-value approach assumes that the bond yield will stay the same until maturity. This is a simplified model because interest rates may fluctuate in the future, which in turn affects the yield on the bond. For this reason, the discount rate may differ for each cash flow. Each cash flow can be considered a zero-coupon instrument that pays one payment upon maturity. The discount rates used should be the rates of multiple zero-coupon bonds with maturity dates the same as each cash flow and similar risk as the instrument being valued. By using multiple discount rates, the arbitrage-free price is the sum of the discounted cash flows. Arbitrage-free price refers to the price at which no price arbitrage is possible.

The idea of using multiple discount rates obtained from zero-coupon bonds and discounting a similar bond's cash flow to find its price is derived from the yield curve, which is a curve of the yields of the same bond with different maturities. This curve can be used to view trends in market expectations of how interest rates will move in the future. In arbitrage-free pricing of a bond, a yield curve of similar zero-coupon bonds with different maturities is created. If the curve were to be created with Treasury securities of different maturities, they would be stripped of their coupon payments through bootstrapping. This is to transform the bonds into zero-coupon bonds. The yield of these zero-coupon bonds would then be plotted on a diagram with time on the x-axis and yield on the y-axis.

Since the yield curve displays market expectations on how yields and interest rates may move, the arbitrage-free pricing approach is more realistic than using only one discount rate. Investors can use this approach to value bonds and find price mismatches, resulting in an arbitrage opportunity. If a bond valued with the arbitrage-free pricing approach turns out to be priced higher in the market, an investor could have such an opportunity:
 * 1) Investor shorts the bond at price at time t1.
 * 2) Investor longs the zero-coupon bonds making up the related yield curve and strips and sells any coupon payments at t1.
 * 3) As t>t1, the price spread between the prices will decrease.
 * 4) At maturity, the prices will converge and be equal. Investor exits both the long and short positions, realising a profit.

If the outcome from the valuation were the reverse case, the opposite positions would be taken in the bonds. This arbitrage opportunity comes from the assumption that the prices of bonds with the same properties will converge upon maturity. This can be explained through market efficiency, which states that arbitrage opportunities will eventually be discovered and corrected. The prices of the bonds in t1 move closer together to finally become the same at tT.

Conditions for arbitrage
Arbitrage may take place when:

 * the same asset does not trade at the same price on all markets ("the law of one price").

 * two assets with identical cash flows do not trade at the same price.

 * an asset with a known price in the future does not today trade at its future price discounted at the risk-free interest rate (or the asset has significant costs of storage; so this condition holds true for something like grain but not for securities).

Arbitrage is not simply the act of buying a product in one market and selling it in another for a higher price at some later time. The transactions must occur simultaneously to avoid exposure to market risk, or the risk that prices may change in one market before both transactions are complete. In practical terms, this is generally possible only with securities and financial products that can be traded electronically, and even then, when each leg of the trade is executed, the prices in the market may have moved. Missing one of the legs of the trade (and subsequently having to trade it soon after at a worse price) is called 'execution risk' or more specifically 'leg risk'.

In the simplest example, any good sold in one market should sell for the same price in another. Traders may, for example, find that the price of wheat is lower in agricultural regions than in cities, purchase the good, and transport it to another region to sell at a higher price. This type of price arbitrage is the most common, but this simple example ignores the cost of transport, storage, risk, and other factors. "True" arbitrage requires that there is no market risk involved. Where securities are traded on more than one exchange, arbitrage occurs by simultaneously buying in one and selling on the other.

See rational pricing, particularly § arbitrage mechanics, for further discussion.

Mathematically it is defined as follows:

 * $$P(V_t \geq 0) = 1 \text{ and } P(V_t \neq 0) > 0, \,0 0, \,0<t\le T$$

and occurs naturally in arbitrage relations as the seller view as opposed to the buyer view.

Price convergence
Arbitrage has the effect of causing prices in different markets to converge. As a result of arbitrage, the currency exchange rates, the price of commodities, and the price of securities in different markets tend to converge. The speed at which they do so is a measure of market efficiency. Arbitrage tends to reduce price discrimination by encouraging people to buy an item where the price is low and resell it where the price is high (as long as the buyers are not prohibited from reselling and the transaction costs of buying, holding, and reselling are small, relative to the difference in prices in the different markets).

Arbitrage moves different currencies toward purchasing power parity. Assume that a car purchased in the United States is cheaper than the same car in Canada. Canadians would buy their cars across the border to exploit the arbitrage condition. At the same time, Americans would buy US cars, transport them across the border, then sell them in Canada. Canadians would have to buy American dollars to buy the cars and Americans would have to sell the Canadian dollars they received in exchange. Both actions would increase demand for US dollars and supply of Canadian dollars. As a result, there would be an appreciation of the US currency. This would make US cars more expensive and Canadian cars less so until their prices were similar. On a larger scale, international arbitrage opportunities in commodities, goods, securities, and currencies tend to change exchange rates until the purchasing power is equal.

In reality, most assets exhibit some difference between countries. These, transaction costs, taxes, and other costs provide an impediment to this kind of arbitrage. Similarly, arbitrage affects the difference in interest rates paid on government bonds issued by the various countries, given the expected depreciation in the currencies relative to each other (see interest rate parity).

Risks
Arbitrage transactions in modern securities markets involve fairly low day-to-day risks, but can face extremely high risk in rare situations, particularly financial crises, and can lead to bankruptcy. Formally, arbitrage transactions have negative skew – prices can get a small amount closer (but often no closer than 0), while they can get very far apart. The day-to-day risks are generally small because the transactions involve small differences in price, so an execution failure will generally cause a small loss (unless the trade is very big or the price moves rapidly). The rare case risks are extremely high because these small price differences are converted to large profits via leverage (borrowed money), and in the rare event of a large price move, this may yield a large loss.

The principal risk, which is typically encountered on a routine basis, is classified as execution risk. This transpires when an aspect of the financial transaction does not materialize as anticipated. Infrequent, albeit critical, risks encompass counterparty and liquidity risks. The former, counterparty risk, is characterized by the failure of the other participant in a substantial transaction, or a series of transactions, to fulfill their financial obligations. Liquidity risk, conversely, emerges when an entity is necessitated to allocate additional monetary resources as margin, but encounters a deficit in the required capital.

In the academic literature, the idea that seemingly very low-risk arbitrage trades might not be fully exploited because of these risk factors and other considerations is often referred to as limits to arbitrage.

Execution risk
Generally, it is impossible to close two or three transactions at the same instant; therefore, there is the possibility that when one part of the deal is closed, a quick shift in prices makes it impossible to close the other at a profitable price. However, this is not necessarily the case. Many exchanges and inter-dealer brokers allow multi legged trades (e.g. basis block trades on LIFFE).

Competition in the marketplace can also create risks during arbitrage transactions. As an example, if one was trying to profit from a price discrepancy between IBM on the NYSE and IBM on the London Stock Exchange, they may purchase a large number of shares on the NYSE and find that they cannot simultaneously sell on the LSE. This leaves the arbitrageur in an unhedged risk position.

In the 1980s, risk arbitrage was common. In this form of speculation, one trades a security that is clearly undervalued or overvalued, when it is seen that the wrong valuation is about to be corrected. The standard example is the stock of a company, undervalued in the stock market, which is about to be the object of a takeover bid; the price of the takeover will more truly reflect the value of the company, giving a large profit to those who bought at the current price, if the merger goes through as predicted. Traditionally, arbitrage transactions in the securities markets involve high speed, high volume, and low risk. At some moment a price difference exists, and the problem is to execute two or three balancing transactions while the difference persists (that is, before the other arbitrageurs act). When the transaction involves a delay of weeks or months, as above, it may entail considerable risk if borrowed money is used to magnify the reward through leverage. One way of reducing this risk is through the illegal use of inside information, and risk arbitrage in leveraged buyouts was associated with some of the famous financial scandals of the 1980s, such as those involving Michael Milken and Ivan Boesky.

Mismatch
Another risk occurs if the items being bought and sold are not identical and the arbitrage is conducted under the assumption that the prices of the items are correlated or predictable; this is more narrowly referred to as a convergence trade. In the extreme case this is merger arbitrage, described below. In comparison to the classical quick arbitrage transaction, such an operation can produce disastrous losses.

Counterparty risk
As arbitrages generally involve future movements of cash, they are subject to counterparty risk: the risk that a counterparty fails to fulfill their side of a transaction. This is a serious problem if one has either a single trade or many related trades with a single counterparty, whose failure thus poses a threat, or in the event of a financial crisis when many counterparties fail. This hazard is serious because of the large quantities one must trade in order to make a profit on small price differences.

For example, if one purchases many risky bonds, then hedges them with CDSes, profiting from the difference between the bond spread and the CDS premium, in a financial crisis, the bonds may default and the CDS writer/seller may fail, due to the stress of the crisis, causing the arbitrageur to face steep losses.

Liquidity risk
Arbitrage trades are necessarily synthetic, leveraged trades, as they involve a short position. If the assets used are not identical (so a price divergence makes the trade temporarily lose money), or the margin treatment is not identical, and the trader is accordingly required to post margin (faces a margin call), the trader may run out of capital (if they run out of cash and cannot borrow more) and be forced to sell these assets at a loss even though the trades may be expected to ultimately make money. In effect, arbitrage traders synthesise a put option on their ability to finance themselves.

Prices may diverge during a financial crisis, often termed a "flight to quality"; these are precisely the times when it is hardest for leveraged investors to raise capital (due to overall capital constraints), and thus they will lack capital precisely when they need it most.

Gray market
Grey market arbitrage is the sale of goods purchased through informal channels to earn the difference in price. Excessive gray market arbitrage will lead to arbitrage behaviors in formal channels, which will reduce returns due to factors such as price confusion, and may even cause prices to plummet in severe cases.

Spatial arbitrage
Also known as geographical arbitrage, this is the simplest form of arbitrage. In spatial arbitrage, an arbitrageur looks for price differences between geographically separate markets. For example, there may be a bond dealer in Virginia offering a bond at 100-12/23 and a dealer in Washington bidding 100-15/23 for the same bond. For whatever reason, the two dealers have not spotted the difference in the prices, but the arbitrageur does. The arbitrageur immediately buys the bond from the Virginia dealer and sells it to the Washington dealer.

Crypto arbitrage
Also known as interexchange arbitrage, this is the form of arbitrage that takes advantage of the difference between two or more crypto exchanges. For example, on HTX token like LSK could be priced at $1.39 while on Gate it could be sold for $1.5. Although there are some risks involved in that type of arbitrage, such as network and exchange fees, blockchain overload, and inability to deposit or withdraw funds, this activity remains one of the most profitable ventures in crypto.

Latency arbitrage
For very short amounts of time, the prices of two assets that are either fungible or related by a strict pricing relationship may temporarily go out of sync as the market makers are slow to update the prices. This momentary mispricing creates the opportunity for an arbitrageur to capture the difference between the two prices. For example, the price of calls and puts on an underlying should be related by put-call parity. If these prices are misquoted relative to the put-call parity relationship, it provides an arbitrageur the opportunity to profit from the mispricing.

Latency arbitrage is often mentioned especially in an electronic trading environment, where the use of fast server hardware allows an arbitrageur to capture realize opportunities that may exist for as little as nanoseconds. A study by the Financial Conduct Authority of the United Kingdom found that this practice generates as much as $5 billion per year in profit.

Merger arbitrage
Also called risk arbitrage, merger arbitrage generally consists of buying/holding the stock of a company that is the target of a takeover while shorting the stock of the acquiring company.

Usually, the market price of the target company is less than the price offered by the acquiring company. The spread between these two prices depends mainly on the probability and the timing of the takeover being completed as well as the prevailing level of interest rates.

The bet in a merger arbitrage is that such a spread will eventually be zero, if and when the takeover is completed. The risk is that the deal "breaks" and the spread massively widens.

Municipal bond arbitrage
Also called municipal bond relative value arbitrage, municipal arbitrage, or just muni arb, this hedge fund strategy involves one of two approaches. The term "arbitrage" is also used in the context of the Income Tax Regulations governing the investment of proceeds of municipal bonds; these regulations, aimed at the issuers or beneficiaries of tax-exempt municipal bonds, are different and, instead, attempt to remove the issuer's ability to arbitrage between the low tax-exempt rate and a taxable investment rate.

Generally, managers seek relative value opportunities by being both long and short municipal bonds with a duration-neutral book. The relative value trades may be between different issuers, different bonds issued by the same entity, or capital structure trades referencing the same asset (in the case of revenue bonds). Managers aim to capture the inefficiencies arising from the heavy participation of non-economic investors (i.e., high income "buy and hold" investors seeking tax-exempt income) as well as the "crossover buying" arising from corporations' or individuals' changing income tax situations (i.e., insurers switching their munis for corporates after a large loss as they can capture a higher after-tax yield by offsetting the taxable corporate income with underwriting losses). There are additional inefficiencies arising from the highly fragmented nature of the municipal bond market which has two million outstanding issues and 50,000 issuers, in contrast to the Treasury market which has 400 issues and a single issuer.

Second, managers construct leveraged portfolios of AAA- or AA-rated tax-exempt municipal bonds with the duration risk hedged by shorting the appropriate ratio of taxable corporate bonds. These corporate equivalents are typically interest rate swaps referencing Libor or SIFMA. The arbitrage manifests itself in the form of a relatively cheap longer maturity municipal bond, which is a municipal bond that yields significantly more than 65% of a corresponding taxable corporate bond. The steeper slope of the municipal yield curve allows participants to collect more after-tax income from the municipal bond portfolio than is spent on the interest rate swap; the carry is greater than the hedge expense. Positive, tax-free carry from muni arb can reach into the double digits. The bet in this municipal bond arbitrage is that, over a longer period of time, two similar instruments—municipal bonds and interest rate swaps—will correlate with each other; they are both very high quality credits, have the same maturity and are denominated in the same currency. Credit risk and duration risk are largely eliminated in this strategy. However, basis risk arises from use of an imperfect hedge, which results in significant, but range-bound principal volatility. The end goal is to limit this principal volatility, eliminating its relevance over time as the high, consistent, tax-free cash flow accumulates. Since the inefficiency is related to government tax policy, and hence is structural in nature, it has not been arbitraged away.

However, many municipal bonds are callable, and this adds substantial risks to the strategy.

Convertible bond arbitrage
A convertible bond is a bond that an investor can return to the issuing company in exchange for a predetermined number of shares in the company.

A convertible bond can be thought of as a corporate bond with a stock call option attached to it.

The price of a convertible bond is sensitive to three major factors:

 * interest rate. When rates move higher, the bond part of a convertible bond tends to move lower, but the call option part of a convertible bond moves higher (and the aggregate tends to move lower).
 * stock price. When the price of the stock the bond is convertible into moves higher, the price of the bond tends to rise.
 * credit spread. If the creditworthiness of the issuer deteriorates (e.g. rating downgrade) and its credit spread widens, the bond price tends to move lower, but, in many cases, the call option part of the convertible bond moves higher (since credit spread correlates with volatility).

Given the complexity of the calculations involved and the convoluted structure that a convertible bond can have, an arbitrageur often relies on sophisticated quantitative models in order to identify bonds that are trading cheap versus their theoretical value.

Convertible arbitrage consists of buying a convertible bond and hedging two of the three factors in order to gain exposure to the third factor at a very attractive price.

For instance an arbitrageur would first buy a convertible bond, then sell fixed income securities or interest rate futures (to hedge the interest rate exposure) and buy some credit protection (to hedge the risk of credit deterioration). Eventually what he or she would be left with is something similar to a call option on the underlying stock, acquired at a very low price. He or she could then make money either selling some of the more expensive options that are openly traded in the market or delta hedging his or her exposure to the underlying shares.

Depository receipts
A depositary receipt is a security that is offered as a "tracking stock" on another foreign market. For instance, a Chinese company wishing to raise more money may issue a depository receipt on the New York Stock Exchange, as the amount of capital on the local exchanges is limited. These securities, known as ADRs (American depositary receipt) or GDRs (global depository receipt) depending on where they are issued, are typically considered "foreign" and therefore trade at a lower value when first released. Many ADR's are exchangeable into the original security (known as fungibility) and actually have the same value. In this case, there is a spread between the perceived value and real value, which can be extracted. Other ADR's that are not exchangeable often have much larger spreads. Since the ADR is trading at a value lower than what it is worth, one can purchase the ADR and expect to make money as its value converges on the original. However, there is a chance that the original stock will fall in value too, so by shorting it one can hedge that risk.

Cross-border arbitrage
Cross-border arbitrage exploits different prices of the same stock in different countries:

Example: Apple is trading on NASDAQ at US$108.84. The stock is also traded on the German electronic exchange, XETRA. If 1 euro costs US$1.11, a cross-border trader could enter a buy order on the XETRA at €98.03 per Apple share and a sell order at €98.07 per share.

Some brokers in Germany do not offer access to the U.S. exchanges. Hence if a German retail investor wants to buy Apple stock, he needs to buy it on the XETRA. The cross-border trader would sell the Apple shares on XETRA to the investor and buy the shares in the same second on NASDAQ. Afterwards, the cross-border trader would need to transfer the shares bought on NASDAQ to the German XETRA exchange, where he is obliged to deliver the stock.

In most cases, the quotation on the local exchanges is done electronically by high-frequency traders, taking into consideration the home price of the stock and the exchange rate. This kind of high-frequency trading benefits the public, as it reduces the cost to the German investor and enables them to buy U.S. shares.

Dual-listed companies
A dual-listed company (DLC) structure involves two companies incorporated in different countries contractually agreeing to operate their businesses as if they were a single enterprise, while retaining their separate legal identity and existing stock exchange listings. In integrated and efficient financial markets, stock prices of the twin pair should move in lockstep. In practice, DLC share prices exhibit large deviations from theoretical parity. Arbitrage positions in DLCs can be set up by obtaining a long position in the relatively underpriced part of the DLC and a short position in the relatively overpriced part. Such arbitrage strategies start paying off as soon as the relative prices of the two DLC stocks converge toward theoretical parity. However, since there is no identifiable date at which DLC prices will converge, arbitrage positions sometimes have to be kept open for considerable periods of time. In the meantime, the price gap might widen. In these situations, arbitrageurs may receive margin calls, after which they would most likely be forced to liquidate part of the position at a highly unfavorable moment and suffer a loss. Arbitrage in DLCs may be profitable, but is also very risky.

A good illustration of the risk of DLC arbitrage is the position in Royal Dutch Shell—which had a DLC structure until 2005—by the hedge fund Long-Term Capital Management (LTCM, see also the discussion below). Lowenstein (2000) describes that LTCM established an arbitrage position in Royal Dutch Shell in the summer of 1997, when Royal Dutch traded at an 8 to 10 percent premium. In total, $2.3 billion was invested, half of which was long in Shell and the other half was short in Royal Dutch (Lowenstein, p. 99). In the autumn of 1998, large defaults on Russian debt created significant losses for the hedge fund and LTCM had to unwind several positions. Lowenstein reports that the premium of Royal Dutch had increased to about 22 percent and LTCM had to close the position and incur a loss. According to Lowenstein (p. 234), LTCM lost $286 million in equity pairs trading and more than half of this loss is accounted for by the Royal Dutch Shell trade. (See further under Limits to arbitrage.)

Private to public equities
The market prices for privately held companies are typically viewed from a return on investment perspective (such as 25%), whilst publicly held and or exchange listed companies trade on a price to earnings ratio (P/E) (such as a P/E of 10, which equates to a 10% ROI). Thus, if a publicly traded company specialises in the acquisition of privately held companies, from a per-share perspective there is a gain with every acquisition that falls within these guidelines. E.g., Berkshire Hathaway. Private to public equities arbitrage is a term that can arguably be applied to investment banking in general. Private markets to public markets differences may also help explain the overnight windfall gains enjoyed by principals of companies that just did an initial public offering (IPO).

Regulatory arbitrage
Regulatory arbitrage "is an avoidance strategy of regulation that is exercised as a result of a regulatory inconsistency". In other words, where a regulated institution takes advantage of the difference between its real (or economic) risk and the regulatory position. For example, if a bank, operating under the Basel I accord, has to hold 8% capital against default risk, but the real risk of default is lower, it is profitable to securitise the loan, removing the low-risk loan from its portfolio. On the other hand, if the real risk is higher than the regulatory risk then it is profitable to make that loan and hold on to it, provided it is priced appropriately. Regulatory arbitrage can result in parts of entire businesses being unregulated as a result of the arbitrage.

This process can increase the overall riskiness of institutions under a risk insensitive regulatory regime, as described by Alan Greenspan in his October 1998 speech on The Role of Capital in Optimal Banking Supervision and Regulation.

The term "Regulatory Arbitrage" was used for the first time in 2005 when it was applied by Scott V. Simpson, a partner at law firm Skadden, Arps, to refer to a new defence tactic in hostile mergers and acquisitions where differing takeover regimes in deals involving multi-jurisdictions are exploited to the advantage of a target company under threat.

In economics, regulatory arbitrage (sometimes, tax arbitrage) may refer to situations when a company can choose a nominal place of business with a regulatory, legal or tax regime with lower costs. This can occur particularly where the business transaction has no obvious physical location. In the case of many financial products, it may be unclear "where" the transaction occurs.

Regulatory arbitrage can include restructuring a bank by outsourcing services such as IT. The outsourcing company takes over the installations, buying out the bank's assets and charges a periodic service fee back to the bank. This frees up cashflow usable for new lending by the bank. The bank will have higher IT costs, but counts on the multiplier effect of money creation and the interest rate spread to make it a profitable exercise.

Example: Suppose the bank sells its IT installations for US$40 million. With a reserve ratio of 10%, the bank can create US$400 million in additional loans (there is a time lag, and the bank has to expect to recover the loaned money back into its books). The bank can often lend (and securitize the loan) to the IT services company to cover the acquisition cost of the IT installations. This can be at preferential rates, as the sole client using the IT installation is the bank. If the bank can generate 5% interest margin on the 400 million of new loans, the bank will increase interest revenues by 20 million. The IT services company is free to leverage their balance sheet as aggressively as they and their banker agree to. This is the reason behind the trend towards outsourcing in the financial sector. Without this money creation benefit, it is actually more expensive to outsource the IT operations as the outsourcing adds a layer of management and increases overhead.

According to PBS Frontline 's 2012 four-part documentary, "Money, Power, and Wall Street", regulatory arbitrage, along with asymmetric bank lobbying in Washington and abroad, allowed investment banks in the pre- and post-2008 period to continue to skirt laws and engage in the risky proprietary trading of opaque derivatives, swaps, and other credit-based instruments invented to circumvent legal restrictions at the expense of clients, government, and publics.

Due to the Affordable Care Act's expansion of Medicaid coverage, one form of Regulatory Arbitrage can now be found when businesses engage in "Medicaid Migration", a maneuver by which qualifying employees who would typically be enrolled in company health plans elect to enroll in Medicaid instead. These programs that have similar characteristics as insurance products to the employee, but have radically different cost structures, resulting in significant expense reductions for employers.

Telecom arbitrage
Telecom arbitrage companies allow phone users to make international calls for free through certain access numbers. Such services are offered in the United Kingdom; the telecommunication arbitrage companies get paid an interconnect charge by the UK mobile networks and then buy international routes at a lower cost. The calls are seen as free by the UK contract mobile phone customers since they are using up their allocated monthly minutes rather than paying for additional calls.

Such services were previously offered in the United States by companies such as FuturePhone.com. These services would operate in rural telephone exchanges, primarily in small towns in the state of Iowa. In these areas, the local telephone carriers are allowed to charge a high "termination fee" to the caller's carrier in order to fund the cost of providing service to the small and sparsely populated areas that they serve. However, FuturePhone (as well as other similar services) ceased operations upon legal challenges from AT&T and other service providers.

Statistical arbitrage
Statistical arbitrage is an imbalance in expected nominal values. A casino has a statistical arbitrage in every game of chance that it offers, referred to as the house advantage, house edge, vigorish, or house vigorish.

Gray market
To accomplish arbitrage, the grey market buys items through marketing channels that sell them without the permission of the product trademark owner and sells them in the legitimate market.

A Swiss watch sold by an approved dealer for £42,600 is an excellent example of a grey market product; customers can buy the identical watch for £27,227 on the Chrono24 website, which is an unlicensed 'grey market.'

The fall of Long-Term Capital Management
Long-Term Capital Management (LTCM) lost 4.6 billion U.S. dollars in fixed income arbitrage in September 1998. LTCM had attempted to make money on the price difference between different bonds. For example, it would sell U.S. Treasury securities and buy Italian bond futures. The concept was that because Italian bond futures had a less liquid market, in the short term Italian bond futures would have a higher return than U.S. bonds, but in the long term, the prices would converge. Because the difference was small, a large amount of money had to be borrowed to make the buying and selling profitable.

The downfall in this system began on August 17, 1998, when Russia defaulted on its ruble debt and domestic dollar debt. Because global markets were already nervous due to the 1997 Asian financial crisis, investors began selling non-U.S. treasury debt and buying U.S. treasuries, which were considered a safe investment. As a result, the price on US treasuries began to increase and the return began decreasing because there were many buyers, and the return (yield) on other bonds began to increase because there were many sellers (i.e. the price of those bonds fell). This caused the difference between the prices of U.S. treasuries and other bonds to increase, rather than to decrease as LTCM was expecting. Eventually this caused LTCM to fold, and their creditors had to arrange a bail-out. More controversially, officials of the Federal Reserve assisted in the negotiations that led to this bail-out, on the grounds that so many companies and deals were intertwined with LTCM that if LTCM actually failed, they would as well, causing a collapse in confidence in the economic system. Thus LTCM failed as a fixed income arbitrage fund, although it is unclear what sort of profit was realised by the banks that bailed LTCM out.

Types of financial arbitrage

 * Arbitrage betting
 * Covered interest arbitrage
 * Fixed income arbitrage
 * Political arbitrage
 * Options arbitrage
 * Risk arbitrage
 * Statistical arbitrage
 * Triangular arbitrage
 * Uncovered interest arbitrage
 * Volatility arbitrage

Related concepts

 * Airline booking ploys
 * Algorithmic trading
 * Arbitrage pricing theory
 * Coherence (philosophical gambling strategy), analogous concept in Bayesian probability
 * Cointelation
 * Drop shipping
 * Efficient-market hypothesis
 * Immunization (finance)
 * Interest rate parity
 * Intermediation
 * No free lunch with vanishing risk
 * TANSTAAFL
 * Ticket resale
 * Value investing

title: Arbitrage


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ACF Fiorentina

ACF Fiorentina, commonly referred to as Fiorentina, is an Italian professional football club based in Florence, Tuscany. The original team was founded by a merger in August 1926, while the current club was refounded in August 2002 following bankruptcy. Fiorentina have played at the top level of Italian football for the majority of their existence; only four clubs have played in more Serie A seasons.

Fiorentina has won two Italian league titles, in 1955–56 and again in 1968–69, as well as six Coppa Italia trophies and one Supercoppa Italiana. On the European stage, Fiorentina won the UEFA Cup Winners' Cup in 1960–61. They also lost five finals, finishing runners-up in the 1956–57 European Cup (the first Italian team to reach the final in the top continental competition), the 1961–62 Cup Winners' Cup, the 1989–90 UEFA Cup, and in the 2022–23 and 2023–24 editions of the UEFA Europa Conference League, being the first club to record two consecutive final appearances and two consecutive defeats in the competition's history.

Fiorentina is one of fifteen European teams that have played in the finals of all three major continental competitions (the European Cup/Champions League, the UEFA Cup Winners' Cup and the UEFA Cup/Europa League) and in 2023, by reaching the Conference League final, Fiorentina became the first team to reach all four major European club competition finals (excluding the one-off match of the UEFA Super Cup).

Since 1931, the club have played at the Stadio Artemio Franchi, which currently has a capacity of 43,147. The stadium has used several names over the years and has undergone several renovations. Fiorentina are known widely by the nickname Viola, a reference to their distinctive purple colours.

Foundation prior to World War II

Associazione Calcio Fiorentina was founded in the autumn of 1926 by local noble and National Fascist Party member Luigi Ridolfi Vay da Verrazzano, who initiated the merger of two older Florentine clubs, CS Firenze and PG Libertas. The aim of the merger was to give Florence a strong club to rival those of the more dominant Italian Football Championship sides of the time from Northwest Italy. Also influential was the cultural revival and rediscovery of Calcio Fiorentino, an ancestor of modern football that was played by members of the Medici family.

After a rough start and three seasons in lower leagues, Fiorentina reached Serie A in 1931. That same year saw the opening of the new stadium, originally named after Giovanni Berta, a prominent fascist, but now known as Stadio Artemio Franchi. At the time, the stadium was a masterpiece of engineering, and its inauguration was monumental. To be able to compete with the best teams in Italy, Fiorentina strengthened their team with some new players, notably the Uruguayan Pedro Petrone, nicknamed el Artillero. Despite enjoying a good season and finishing in fourth place, Fiorentina were relegated the following year, although they would return quickly to Serie A. In 1941, they won their first Coppa Italia, but the team were unable to build on their success during the 1940s due to World War II and other troubles.

First scudetto and '50–'60s

In 1950, Fiorentina started to achieve consistent top-five finishes in the domestic league. The team consisted of players such as well-known goalkeeper Giuliano Sarti, Sergio Cervato, Francesco Rosella, Guido Gratton, Giuseppe Chiappella, Aldo Scaramucci, Brazilian Julinho, and Argentinian Miguel Montuori. This team won Fiorentina's first scudetto (Italian championship) in 1955–56, 12 points ahead of second-place Milan. Milan beat Fiorentina to top spot the following year. Fiorentina became the first Italian team to play in a European Cup final, when a disputed penalty led to a 2–0 defeat at the hands of Alfredo Di Stéfano's Real Madrid. Fiorentina were runners-up again in the three subsequent seasons. In the 1960–61 season, the club won the Coppa Italia again and was also successful in Europe, winning the first Cup Winners' Cup against Scottish side Rangers.

After several years of runner-up finishes, Fiorentina dropped away slightly in the 1960s, bouncing from fourth to sixth place, although the club won the Coppa Italia and the Mitropa Cup in 1966.

Second scudetto and '70s
While the 1960s did result in some trophies and good Serie A finishes for Fiorentina, nobody believed that the club could challenge for the title. The 1968–69 season started with Milan as frontrunners, but on matchday 7, they lost to Bologna and were overtaken by Gigi Riva's Cagliari. Fiorentina, after an unimpressive start, then moved to the top of the Serie A, but the first half of their season finished with a 2–2 draw against Varese, leaving Cagliari as outright league leader. The second half of the season was a three-way battle between the three contending teams, Milan, Cagliari and Fiorentina. Milan fell away, instead focusing their efforts on the European Cup, and it seemed that Cagliari would retain top spot. After Cagliari lost against Juventus, however, Fiorentina took over at the top. The team then won all of their remaining matches, beating rivals Juve in Turin on the penultimate matchday to seal their second, and last, national title. In the European Cup competition the following year, Fiorentina had some good results, including a win in the Soviet Union against Dynamo Kyiv, but they were eventually knocked out in the quarter-finals after a 3–0 defeat in Glasgow to Celtic.

Viola players began the 1970s decade with scudetto sewed on their breast, but the period was not especially fruitful for the team. After a fifth-place finish in 1971, they finished in mid-table almost every year, even flirting with relegation in 1972 and 1978. The Viola did win the Anglo-Italian League Cup in 1974 and won the Coppa Italia again in 1975. The team consisted of young talents like Vincenzo Guerini and Moreno Roggi, who suffered bad injuries, and above all Giancarlo Antognoni, who would later become an idol to Fiorentina's fans. The young average age of the players led to the team being called "Fiorentina Ye-Ye".

Pontello era
In 1980, Fiorentina was bought by Flavio Pontello, who came from a rich housebuilding family. He quickly changed the team's anthem and logo, leading to some complaints by the fans, but he started to bring in high-quality players such as Francesco Graziani and Eraldo Pecci from Torino; Daniel Bertoni from Sevilla; Daniele Massaro from Monza; and a young Pietro Vierchowod from Como. The team was built around Giancarlo Antognoni, and in 1982, Fiorentina were involved in an exciting duel with rivals Juventus. After a bad injury to Antognoni, the league title was decided on the final day of the season when Fiorentina were denied a goal against Cagliari and were unable to win. Juventus won the title with a disputed penalty and the rivalry between the two teams erupted.

The following years were strange for Fiorentina, who vacillated between high finishes and relegation battles. Fiorentina also bought two interesting players, El Puntero Ramón Díaz and, most significantly, the young Roberto Baggio.

In 1990, Fiorentina fought to avoid relegation right up until the final day of the season, but did reach the UEFA Cup final, where they again faced Juventus. The Turin team won the trophy, but Fiorentina's tifosi once again had real cause for complaint: the second leg of the final was played in Avellino (Fiorentina's home ground was suspended), a city with many Juventus fans, and emerging star Roberto Baggio was sold to the rival team on the day of the final. Pontello, suffering from economic difficulties, was selling all the players and was forced to leave the club after serious riots in Florence's streets. The club was then acquired by the famous filmmaker Mario Cecchi Gori.

Cecchi Gori era: from Champions League to bankruptcy

The first season under Cecchi Gori's ownership was one of stabilisation, after which the new chairman started to sign some good players like Brian Laudrup, Stefan Effenberg, Francesco Baiano and, most importantly, Gabriel Batistuta, who became an iconic player for the team during the 1990s. In 1993, however, Cecchi Gori died and was succeeded as chairman by his son, Vittorio. Despite a good start to the season, Cecchi Gori fired the coach, Luigi Radice, after a defeat against Atalanta, and replaced him with Aldo Agroppi. The results were dreadful: Fiorentina fell into the bottom half of the standings and were relegated on the last day of the season.

Claudio Ranieri was brought in as coach for the 1993–94 season, and that year, Fiorentina dominated Serie B, Italy's second division. Upon their return to Serie A, Ranieri put together a good team centred around new top scorer Batistuta, signing the young talent Rui Costa from Benfica and the new world champion Brazilian defender Márcio Santos. The former became an idol to Fiorentina fans, while the second disappointed and was sold after only a season. The Viola finished the season in tenth place.

The following season, Cecchi Gori bought other important players, namely Swedish midfielder Stefan Schwarz. The club again proved its mettle in cup competitions, winning the Coppa Italia against Atalanta and finishing joint-third in Serie A. In the summer, Fiorentina became the first non-national champions to win the Supercoppa Italiana, defeating Milan 2–1 at the San Siro.

Fiorentina's 1996–97 season was disappointing in the league, but they did reach the Cup Winners' Cup semi-final by beating Gloria Bistrița, Sparta Prague and Benfica. The team lost the semi-final to the eventual winner of the competition, Barcelona (away 1–1; home 0–2). The season's main signings were Luís Oliveira and Andrei Kanchelskis, the latter of whom suffered from many injuries.

At the end of the season, Ranieri left Fiorentina for Valencia in Spain, with Cecchi Gori appointing Alberto Malesani as his replacement. Fiorentina played well but struggled against smaller teams, although they did manage to qualify for the UEFA Cup. Malesani left Fiorentina after only a season and was succeeded by Giovanni Trapattoni. With Trapattoni's expert guidance and Batistuta's goals, Fiorentina challenged for the title in 1998–99 but finished the season in third, earning them qualification for the Champions League. The following year was disappointing in Serie A, but Viola played some historical matches in the Champions League, beating Arsenal 1–0 at the old Wembley Stadium and Manchester United 2–0 in Florence. They were ultimately eliminated in the second group stage.

At the end of the season, Trapattoni left the club and was replaced by Turkish coach Fatih Terim. More significantly, however, Batistuta was sold to Roma, who eventually won the title the following year. Fiorentina played well in 2000–01 and stayed in the top half of Serie A, despite the resignation of Terim and the arrival of Roberto Mancini. They also won the Coppa Italia for the sixth and last time.

The year 2001 heralded major changes for Fiorentina, as the terrible state of the club's finances was revealed: they were unable to pay wages and had debts of around US$50 million. The club's owner, Vittorio Cecchi Gori, was able to raise some more money, but this soon proved to be insufficient to sustain the club. Fiorentina were relegated at the end of the 2001–02 season and went into judicially-controlled administration in June 2002. This form of bankruptcy (sports companies cannot exactly fail in this way in Italy, but they can suffer a similar procedure) meant that the club was refused a place in Serie B for the 2002–03 season, and as a result effectively ceased to exist.

Della Valle era: from fourth tier to Europe (2000s and 2010s)
The club was promptly re-established in August 2002 as Associazione Calcio Fiorentina e Florentia Viola with shoe and leather entrepreneur Diego Della Valle as new owner and the club was admitted into Serie C2, the fourth tier of Italian football. The only player to remain at the club in its new incarnation was Angelo Di Livio, whose commitment to the club's cause further endeared him to the fans. Helped by Di Livio and 30-goal striker Christian Riganò, the club won its Serie C2 group with considerable ease, which would normally have led to a promotion to Serie C1. Due to the bizarre Caso Catania (Catania Case), the club skipped Serie C1 and was admitted into Serie B, something that was only made possible by the Italian Football Federation (FIGC)'s decision to resolve the Catania situation by increasing the number of teams in Serie B from 20 to 24 and promoting Fiorentina for "sports merits". In the 2003 off-season, the club also bought back the right to use the Fiorentina name and the famous shirt design, and re-incorporated itself as ACF Fiorentina. The club finished the 2003–04 season in sixth place and won the playoff against Perugia to return to top-flight football.

In their first season back in Serie A, the club struggled to avoid relegation, only securing survival on the last day of the season on head-to-head record against Bologna and Parma. In 2005, Della Valle decided to appoint Pantaleo Corvino as new sports director, followed by the appointment of Cesare Prandelli as head coach in the following season. The club made several signings during the summer transfer market, most notably Luca Toni and Sébastien Frey. This drastic move earned them a fourth-place finish with 74 points and a Champions League qualifying round ticket. Toni scored 31 goals in 38 appearances, the first player to pass the 30-goal mark since Antonio Valentin Angelillo in the 1958–59 season, for which he was awarded the European Golden Boot. On 14 July 2006, Fiorentina were relegated to Serie B due to their involvement in the Calciopoli scandal and given a 12-point penalty. The team was reinstated to the Serie A on appeal, but with a 19-point penalty for the 2006–07 season. The team's 2006–07 Champions League place was also revoked. After the start of the season, Fiorentina's penalisation was reduced from 19 points to 15 on appeal to the Italian courts. In spite of this penalty, they managed to secure a place in the UEFA Cup.

Despite Toni's departure to Bayern Munich, Fiorentina had a strong start to the 2007–08 season and were tipped by Italy national team head coach Marcello Lippi, among others, as a surprise challenger for the scudetto, and although this form tailed off towards the middle of the season, the Viola managed to qualify for the Champions League. In Europe, the club reached the semi-final of the UEFA Cup, where they were ultimately defeated by Rangers on penalties. The 2008–09 season continued this success, a fourth-place finish assuring Fiorentina's spot in 2010's Champions League playoffs. Their European campaign was also similar to that of the previous run, relegated to the 2008–09 UEFA Cup and were eliminated by Ajax in the end.

In the 2009–10 season, Fiorentina started their domestic campaign strongly before steadily losing momentum and slipped to mid-table positions at the latter half of the season. In Europe, the team proved to be a surprise dark horse: after losing their first away fixture against Lyon, they staged a comeback with a five-match streak by winning all their remaining matches (including defeating Liverpool home and away). The Viola qualified as group champions, but eventually succumbed to Bayern Munich due to the away goals rule. This was controversial due to a mistaken refereeing decision by Tom Henning Øvrebø, who allowed a clearly offside goal for Bayern in the first leg. Bayern eventually finished the tournament as runners-up, making a deep run all the way to the final. The incident called into attention the possible implementation of video replays in football. Despite a good European run and reaching the semi-finals in the Coppa Italia, Fiorentina failed to qualify for Europe.

During this period, on 24 September 2009, Andrea Della Valle resigned from his position as chairman of Fiorentina, and announced all duties would be temporarily transferred to Mario Cognini, Fiorentina's vice-president until a permanent position could be filled.

In June 2010, the Viola bid farewell to long-time manager Cesare Prandelli, by then the longest-serving coach in the team's history, who was departing to coach the Italy national team. Catania manager Siniša Mihajlović was appointed to replace him. The club spent much of the early 2010–11 season in last place, but their form improved and Fiorentina ultimately finished ninth. Following a 1–0 defeat to Chievo in November 2011, Mihajlović was sacked and replaced by Delio Rossi. After a brief period of improvements, the Viola were again fighting relegation, prompting the sacking of Sporting Director Pantaleo Corvino in early 2012 following a 0–5 home defeat to Juventus. Their bid for survival was kept alive by a number of upset victories away from home, notably at Roma and Milan. During a home game against Novara, trailing 0–2 within half an hour, manager Rossi decided to substitute midfielder Adem Ljajić early. Ljajić sarcastically applauded him in frustration, whereupon Rossi retaliated by physical assaulting his player, an action that ultimately prompted his termination by the club. His replacement, caretaker manager Vincenzo Guerini, then guided the team away from the relegation zone to a 13th-place finish to end the turbulent year.

To engineer a resurrection of the club after the disappointing season, the Della Valle family invested heavily in the middle of 2012, buying 17 new players and appointing Vincenzo Montella as head coach. The team began the season well, finishing the calendar year in joint third place and eventually finishing the 2012–13 season in fourth, enough for a position in the 2013–14 Europa League.

The club lost fan favourite Stevan Jovetić during the middle of 2013, selling him to English Premier League club Manchester City for a €30 million transfer fee. They also sold Adem Ljajić to Roma and Alessio Cerci to Torino, using the funds to bring in Mario Gómez, Josip Iličić and Ante Rebić, among others. During the season, Fiorentina topped their Europa League group, moving on to the round of 32 to face Danish side Esbjerg fB, which Fiorentina defeated 4–2 on aggregate. In the following round of 16, however, they then lost to Italian rivals Juventus 2–1 on aggregate, ousting Fiorentina from the competition. At the end of the season, the team finished fourth again in the league, and also finishing the year as Coppa Italia runners-up after losing 3–1 to Napoli in the final.

In 2014–15, during the 2015 winter transfer window, the team club sold star winger Juan Cuadrado to Chelsea for €30 million but were able to secure the loan of Mohamed Salah in exchange, who was a revelation in the second half of the season. Their 2014–15 Europa League campaign saw them progress to the semi-finals, where they were knocked-out by Spanish side Sevilla, the eventual champions. In the 2014–15 domestic season, Fiorentina once again finished fourth, thus qualifying for the 2015–16 Europa League. In June 2015, Vincenzo Montella was sacked as manager after the club grew impatient with the coaches inability to prove his commitment to the club, and was replaced by Paulo Sousa, who lasted until June 2017 and the appointment of Stefano Pioli. Club captain Davide Astori died suddenly at the age of 31 in March 2018. Astori had suffered a cardiac arrest while in a hotel room before an away game. The club subsequently retired Astori's kit number, 13. Fiorentina suffered during the 2018–19 Serie A campaign and ended the season on a 14 match winless streak, finishing in 16th place with only 41 points, 3 points from the relegation zone. On 9 April 2019, Pioli resigned as manager and was replaced by Montella.

Commisso era
On 6 June 2019, the club was sold to Italian-American billionaire Rocco Commisso for around 160 million euros. The sale marked the end of the Della Valle family's seventeen-year association with the club. Vincenzo Montella was confirmed as coach for the first season of the new era despite the team's poor end to the previous campaign, which saw them finish only three points clear of the relegation zone. Fiorentina continued their struggles from the previous year, spending the majority of the season in lower midtable. Montella was sacked on 21 December after a 7 match winless run which left the club in 15th place, and was replaced by Giuseppe Iachini. In November 2020 Cesare Prandelli returned to Fiorentina, replacing Giuseppe Iachini as coach.

Under coach Vincenzo Italiano, who arrived in 2021, Fiorentina reached and lost two consecutive finals of the UEFA Europa Conference League, in the 2022–23 and 2023–24 editions, being the first club to record two consecutive final appearances in the competition's history, and becoming the first team to lose two consecutive European finals since Benfica in 2013 and 2014 UEFA Europa League finals.

Fiorentina Youth
ACF Fiorentina Youth Sector

Retired numbers

 * 13 🇮🇹 Davide Astori, defender (2015–18) – posthumous honour

Managerial history
Fiorentina have had many managers and head coaches throughout their history. Below is a chronological list from the club's foundation in 1926 to the present day.

Badge
The official emblem of the city of Florence, a red fleur-de-lis on a white field, has been the staple in the all-round symbolism of the club.

Over the course of the club's history, they have had several badge changes, all of which incorporated Florence's fleur-de-lis in some way. The first one was nothing more than the city's coat of arms, a white shield with the red fleur-de-lis inside. It was soon changed to a very stylised fleur-de-lis, always red, and sometimes even without the white field. The most common symbol, adopted for about 20 years, had been a white lozenge with the flower inside. During the season they were Italian champions, the lozenge disappeared and the flower was overlapped with the scudetto.

The logo introduced by owner Flavio Pontello in 1980 was particularly distinct, consisting of one-half of the city of Florence's emblem and one-half of the letter "F", for Fiorentina. People disliked it when it was introduced, believing it was a commercial decision and, above all, because the symbol bore more of a resemblance to a halberd than a fleur-de-lis.

Until the 2022–23 season, when the club unveiled a new, stylistically simplified badge, the logo was a kite shaped double lozenge bordered in gold. The outer lozenge had a purple background with the letters "AC" in white and the letter "F" in red, standing for the club's name. The inner lozenge was white with a gold border and the red Giglio of Florence. This logo had been in use from 1992 to 2002, but after the financial crisis and resurrection of the club the new one couldn't use the same logo. Florence's comune instead granted Florentia Viola use of the stylised coat of arms used in other city documents. Diego Della Valle acquired the current logo the following year in a judicial auction for a fee of €2.5 million, making it the most expensive logo in Italian football.

Kit and colours
When Fiorentina was founded in 1926, the players wore red and white halved shirts derived from the colour of the city emblem. The more well-known and highly distinctive purple kit was adopted in 1928 and has been used ever since, giving rise to the nickname La Viola ("The Purple (team)"). Tradition has it that Fiorentina got their purple kit by mistake after an accident washing the old red and white coloured kits in the river.

The away kit has always been predominantly white, sometimes with purple and red elements, sometimes all-white. The shorts had been purple when the home kit was with white shorts. In the 1995–96 season, it was all-red with purple borders and two lilies on the shoulders. The red shirt has been the most worn 3rd shirt by Fiorentina, although they also wore rare yellow shirts ('97–'98, '99–'00 and '10–'11) and a sterling version, mostly in the Coppa Italia, in 2000–01.

For the 2017–18 season and the first time in its history, the club used five kits during the season, composing of one home kit (all-purple) and four away kits, each one representing one historic quartiere of the city of Florence: all-blue (Santa Croce), all-white (Santo Spirito), all-green (San Giovanni) and all-red (Santa Maria Novella).

Anthem
"Canzone Viola" (Purple Song) is the title of the Fiorentina'a song, nowadays better known as "Oh Fiorentina". It is the oldest official football anthem in Italy and one of the oldest in the world. Dated 1930 and born only four years after the creation of the club, the song was written by a 12-year-old child, Enzo Marcacci, and musically arranged by maestro Marco Vinicio. It was published for the first time by the publisher Marcello Manni, who later became the owner of the rights. It soon achieved notoriety thanks to the printed media and the Ordine del Marzocco, a sort of original viola-club, which printed the lyrics of the song and distributed it to a home match on November 22, 1931.

The song was recorded by Narciso Parigi in 1959 and again in 1965; the latter version replaced the original edition as the Fiorentina anthem. Subsequently, Narciso Parigi himself acquired the ownership of the rights, which he donated in 2002 to the supporter club Collettivo Autonomo Viola.

Kit manufacturer

 * 1978–1981: Adidas
 * 1981–1983: J.D.Farrow's
 * 1983–1988: Ennerre (it)
 * 1988–1991: ABM Diffusion (it)
 * 1991–1993: Lotto
 * 1993–1995: Uhlsport
 * 1995–1997: Reebok
 * 1997–2000: Fila
 * 2000–2001: Diadora
 * 2001–2002: Mizuno
 * 2002–2003: Mizuno, Garman, Puma
 * 2003–2005: Adidas
 * 2005–2012: Lotto
 * 2012–2015: Joma
 * 2015–2020: Le Coq Sportif
 * 2020–present: Kappa

Shirt sponsors

 * 1981–1983: J.D.Farrow's
 * 1983–1986: Opel
 * 1986–1989: Crodino
 * 1989–1991: La Nazione
 * 1991–1992: Giocheria (it)
 * 1992–1994: 7up
 * 1994–1997: Sammontana
 * 1997–1999: Nintendo
 * 1999–2002: Toyota
 * 2002–2004: Fondiaria-Sai
 * 2004–2010: Toyota
 * 2010–2011: Save The Children
 * 2011–2014: Mazda
 * 2014–2016: Volkswagen, Save The Children
 * 2016–2019: Vorwerk Folletto, Save The Children, Dream Loud
 * 2019–present: Mediacom

Official partners

 * EA Sports – Football video gaming partner
 * Montezemolo – Fashion partner
 * Gruppoaf – Official partner
 * Sammontana – Official ice cream
 * Synlab – Health partner
 * OlyBet.tv – Infotainment partner

National titles
Serie A:
 * Winners (2): 1955–56; 1968–69
 * Runners-up (5): 1956–57; 1957–58; 1958–59; 1959–60; 1981–82

Coppa Italia:
 * Winners (6): 1939–40; 1960–61; 1965–66; 1974–75; 1995–96; 2000–01
 * Runners-up (5): 1958, 1959–60, 1998–99, 2013–14, 2022–23

Supercoppa Italiana:
 * Winners (1): 1996
 * Runners-up (1): 2001

European titles
European Cup:
 * Runners-up (1): 1956–57

UEFA Cup Winners' Cup:
 * Winners (1): 1960–61
 * Runners-up (1): 1961–62

UEFA Europa League:
 * Runners-up (1): 1989–90

UEFA Conference League:
 * Runners-up (2): 2022–23, 2023–24

Other titles
Serie B
 * Winners: 1930–31, 1938–39, 1993–94

Serie C2
 * Winners: 2002–03

Coppa Grasshoppers
 * Winners: 1957

Mitropa Cup
 * Winners: 1966

Anglo-Italian League Cup
 * Winners: 1975

Fiorentina as a company
A.C. Fiorentina S.p.A. was unable to register for 2002–03 Serie B due to financial difficulties, and then the sports title was transferred to a new company thanks to Article 52 of N.O.I.F., while the old company was liquidated. At that time the club was heavily relying on windfall profit from selling players, especially in pure player swap or cash plus player swap that potentially increased the cost by the increase in amortisation of player contracts (an intangible assets). For example, Marco Rossi joined Fiorentina for Lire 17 billion in 2000, but at the same time Lorenzo Collacchioni moved to Salernitana for Lire 1 billion, meaning the club had a player profit of Lire 997 million and extra Lire 1 billion to be amortised in 5-years. In 1999, Emiliano Bigica also swapped with Giuseppe Taglialatela, which the latter was valued for Lire 10 billion. The operating income (excluding windfall profit from players trading) of 2000–01 season was minus Lire 113,271,475,933 (minus €58,499,835). It was only boosted by the sales of Francesco Toldo and Rui Costa in June 2001 (a profit of Lire 134.883 billion; €69.661 million). However, it was alleged they were to transfer to Parma for a reported Lire 140 million. The two players eventually joined Inter Milan and A.C. Milan in 2001–02 financial year instead, for undisclosed fees. Failing to have financial support from the owner Vittorio Cecchi Gori, the club was forced to windup due to its huge imbalance in operating income.

Since re-established in 2002, ACF Fiorentina S.p.A. are yet to self-sustain to keep the team in top division as well as in European competitions. In the 2005 financial year, which cover the first Serie A season, the club made a net loss of €9,159,356, followed by a net loss of €19,519,789. In 2006 (2005–06 Serie A and 2006–07 Serie A), Fiorentina heavily invested on players, meaning the amortisation of intangible asset (the player contract) had increased from €17.7 million to €24 million. However the club suffered from the 2006 Italian football scandal, which meant the club did not qualify for Europe. In 2007 Fiorentina almost broke-even, with a net loss of just €3,704,953. In the 2007 financial year the TV revenue increased after they qualified to the 2007–08 UEFA Cup. Despite qualifying to the 2008–09 UEFA Champions League, Fiorentina made a net loss of €9,179,484 in 2008 financial year after the increase in TV revenue was outweighed by the increase in wage. In the 2009 financial year, Fiorentina made a net profit of €4,442,803, largely due to the profit on selling players (€33,631,489 from players such as Felipe Melo, Giampaolo Pazzini and Zdravko Kuzmanović; increased from about €3.5 million in 2008). However it was also offset by the write-down of selling players (€6,062,545, from players such as Manuel da Costa, Arturo Lupoli and Davide Carcuro).

After the club failed to qualify to Europe at the end of 2009–10 Serie A, as well as lack of player profit, Fiorentina turnover was decreased from €140,040,713 in 2009 to just €79,854,928, despite the wage bill also falling, la Viola still made a net loss of €9,604,353. In the 2011 financial year, the turnover slipped to €67,076,953, as the club's lack of capital gains from selling players and 2010 financial year still included the instalments from UEFA for participating 2009–10 UEFA Europa League. Furthermore, the gate income had dropped from €11,070,385 to €7,541,260. The wage bill did not fall much and in reverse the amortisation of transfer fee had sightly increased due to new signings. La Viola had savings in other costs but counter-weighted by huge €11,747,668 write-down for departed players, due to D'Agostino, Frey and Mutu, but the former would counter-weight by co-ownership financial income, which all made the operating cost remained high as worse as last year. Moreover, in 2010 the result was boosted by acquiring the asset from subsidiary (related to AC Fiorentina) and the re-valuation of its value in separate balance sheet. If deducting that income (€14,737,855), 2010 financial year was net loss 24,342,208 and 2011 result was worse with €8,131,876 only in separate balance sheet. In 2012, the club benefited from the sales of Matija Nastasić and Valon Behrami, followed by Stevan Jovetić and Adem Ljajić in 2013. In 2014, due to €28.4 million drop from the windfall profit of selling players, the club recorded their worst financial results since re-foundation, despite the fact the club maintained the same level of windfall profit, the result was still worse than in 2013. Moreover, Fiorentina also revealed that the club had a relevant football net income of minus €19.5 million in the first assessment period of UEFA Financial Fair Play Regulations in the 2013–14 season (in May 2014). (aggregate of 2012 and 2013 results), which within the limit of minus €45 million, as well as minus €25.5 million in assessment period 2014–15 (aggregate of 2012, 2013 and 2014 results). However, as the limit was reduced to minus €30 million in assessment period 2015–16, 2016–17 and 2017–18 season, the club had to achieve a relevant net income of positive €5.6 million in 2015 financial year. La Viola sold Juan Cuadrado to Chelsea in January 2015 for €30 million fee, to make the club eligible to 2016–17 edition of UEFA competitions.

League history

 * 1926–1928: Prima Divisione (2nd tier)
 * 1928–1929: Divisione Nazionale (1st tier)
 * 1929–1931: Serie B (2nd tier) – Champions: 1931
 * 1931–1938: Serie A (1st tier)
 * 1938–1939: Serie B (2nd tier) – Champions: 1939
 * 1939–1943: Serie A (1st tier)
 * 1943–1946: no contests (WW II)
 * 1946–1993: liga 1 (1st tier) – Champions: 1956, 1969
 * 1993–1994: Serie B (2nd tier) – Champions: 1994
 * 1994–2002: Serie A (1st tier)
 * 2002–2003: Serie C2 (4th tier) – Champions: 2003
 * 2003–2004: Serie B (2nd tier)
 * 2004–present: Serie A (1st tier)

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/

title: ACF Fiorentina


text:
Talk:Albert Spalding

Ended the NA?
Could somebody explain why "Due to Spalding signing with the White Stockings, he effectively ended the NA"? Stephengeis (talk) 10:16, 3 July 2009 (UTC)

Wins
www.spalding.com credits AG with 52 wins in 1876. The Hall Of Fame figure, used here, is 47.

Moving to A. G. Spalding, or ..?
Most often my great-great uncle was referred to as A. G. Spalding, or his full name Albert Goodwill Spalding. His nephew, Albert Spalding was a world-renown violinist and composer (also served in WWI with Fiorello H. LaGuardia in the US Army Air Service in Italy). Wikipedia doesn't yet have a bio page for him, but in preparation of such a page, this page needs moving. It apparently has previously existed under a different name, and so I don't want to regress the database. Comments or suggestions welcome and hereby solicited. (BTW, yes, I have personal connections to this topic, so I have both some expertise in both men's bios, but also reason to take others' feedback to maintain NPOV.)
 * It makes everything work better if you end with some kind of a signature. If you have registered, you can use the 4 tildes ~, and a timestamp will automatically be generated.  rags (talk) 13:40, 12 July 2018 (UTC)

Birth Year
What is the reference for a birth year of 1849? All references I can find list 1850, including http://www.baseball-reference.com/players/s/spaldal01.shtml Thisdaytrivia (talk) 22:53, 14 March 2017 (UTC)

Uniforms
I remember reading a story as a child about the man in early years who decided to provide uniforms for his baseball team, and came up with elaborate suits, different for each player position on the field, resulting in chaos on the field. The result was new uniforms which all looked the same. I first thought the designer was Abner Doubleday (it's been 50 years, and I really don't remember who it was), but there's no mention of such on his article. AG Spalding would make more sense, as a supplier of equipment, except that one would expect him to know better than to make such an error, with his years on the mound. I don't believe it to be an apocryphal story, but then I have no source to cite. Anyone else remember? rags (talk) 13:36, 12 July 2018 (UTC)

 * This sounds like a garbled version of the 1882 National League's decision, abandoned halfway through the season, to use uniform colors to denote position instead of team.
 * https://protoball.org/Clipping:The_argument_for_parti-colored_uniforms has an 1882 newspaper article attributing the idea to Spalding, who was indeed the National League's supplier of uniforms at the time.
 * 146.115.84.237 (talk) 23:51, 6 June 2023 (UTC)

title: Talk:Albert Spalding


text:
Afrobeat

Afrobeat (also known as Afrofunk ) is a Nigerian music genre that involves the combination of West African musical styles from mainly Nigeria, such as the traditional Yoruba and Igbo music and highlife, with American funk, jazz, and soul influences. With a focus on chanted vocals, complex intersecting rhythms, and percussion, the style was pioneered in the 1960s by Nigerian multi-instrumentalist and bandleader Fela Kuti, who popularised it both within and outside Nigeria. At the height of his popularity, he was referred to as one of Africa's most "challenging and charismatic music performers."

Distinct from Afrobeat is Afrobeats, a combination of sounds originating in West Africa in the 21st century. This takes on diverse influences and is an eclectic combination of genres such as hip hop, house, jùjú, ndombolo, R&B, soca, and dancehall. The two genres, though often conflated, are not the same, as Afrobeats is rather just the amalgamation of Afrobeat.

History
Afrobeat evolved in Nigeria in the late 1960s by Fela Anikulapo Kuti, (born Olufela Olusegun Oludotun) who, with drummer Tony Allen, experimented with different contemporary music of that time. Afrobeat was influenced by a combination of different genres, such as highlife, fuji, and jùjú, as well as Yoruba vocal traditions, rhythm, and instruments. In the late 1950s, Kuti left Lagos to study abroad at the London School of Music, where he took lessons in piano and percussion and was exposed to jazz. Fela Kuti returned to Lagos and played a highlife-jazz hybrid, albeit, without commercial success.

In 1969, Kuti and his band went on a trip to the U.S. and met a woman by the name of Sandra Smith, a singer and former Black Panther. Sandra Smith (now known as Sandra Izsadore or Sandra Akanke Isidore) introduced Kuti to many writings of activists such as Martin Luther King Jr., Angela Davis, Jesse Jackson, and his biggest influence of all, Malcolm X.

As Kuti was interested in African-American politics, Smith would make it her duty to inform Kuti of current events; in return, Kuti would fill her in on African culture. Since Kuti stayed at Smith's house and spent so much time with her, he started to re-evaluate his music genre. That was when Kuti realized that he was not playing African music. From that day forward, Kuti changed his sound and the message behind his music.

Upon arriving in Nigeria, Kuti had also changed the name of his group to "Africa '70". The new sound hailed from a club he established called the Afrika Shrine. The band maintained a five-year residency at the Afrika Shrine from 1970 to 1975 while Afrobeat thrived among Nigerian youth. Another influential person Ray Stephen Oche, a Nigerian musician touring from Paris, France, with his Matumbo orchestra in the 1970s.

The name was partially born out of an attempt to distinguish Fela Kuti's music from the soul music of American artists such as James Brown.

Prevalent in his and Lagbaja's music are native Nigerian harmonies and rhythms, taking contrasting elements and combining, modernizing, and improvising upon them. Politics is essential to Afrobeat, due to Kuti using social criticism to pave the way for change. His message can be described as confrontational and controversial, which relates to the political climate of most of the African countries in the 1970s, many of which were dealing with political injustice and military corruption while recovering from the transition from colonial governments to self-determination. As the genre spread throughout the African continent, many bands took up the style. The recordings of these bands and their songs were rarely heard or exported outside the originating countries but many can now be found on compilation albums and CDs from specialist record shops.

Influence
Many jazz musicians have been attracted to the aromatic genre of Afrobeat. From Roy Ayers in the 1970s to Randy Weston in the 1990s, there have been collaborations that resulted in albums such as Africa: Centre of the World by Roy Ayers, released on the Polydore label in 1981. In 1994, Branford Marsalis, the American jazz saxophonist, included samples of Fela's "Beasts of No Nation" on his Buckshot LeFonque album.

Afrobeat has also profoundly influenced various contemporary producers and musicians, such as Brian Eno and David Byrne, who credit Fela Kuti as an essential influence. Both worked on Talking Heads' highly acclaimed 1980 album Remain in Light, which brought polyrhythmic Afrobeat influences to Western music. The new generation of DJs and musicians of the 2000s who have fallen in love with both Kuti's material and other rare releases have made compilations and remixes of these recordings, thus re-introducing the genre to new generations of listeners and fans of afropop and groove.

In the late 1990s and early 2000s, a small Afrobeat scene began in Brooklyn, New York, with projects including Antibalas, The Daktaris and the Kokolo Afrobeat Orchestra. Since then, other artists like Zongo Junction have come onto the scene. Many others have cited Afrobeat as an influence, like Daptone Records-adjacent groups The Budos Band and El Michels Affair. The horn section of Antibalas have been guest musicians on TV on the Radio's highly acclaimed 2008 album Dear Science, as well as on British band Foals' 2008 album Antidotes. Further examples are Val Veneto, Radio Bantu, Tam Tam Afrobeat, Combo Makabro, Marabunta Orquesta, Minga!, Antropofonica, Guanabana Afrobeat Orquesta, El Gran Capitan, Morbo y Mambo, Luka Afrobeat Orquesta or NikiLauda. Some Afrobeat influence can also be found in the music of Vampire Weekend and Paul Simon. In 2020, Antibalas was nominated for the Grammy Award for Best Global Music Album.

Afrobeat artists of the 2000s and present continue to follow in the footsteps of Fela Kuti. Some examples of these artists are his sons Femi Kuti and Seun Kuti, Franck Biyong & Massak (from Cameroon), London Afrobeat Collective (from London, UK), Segun Damisa & the Afro-beat Crusaders, Shaolin Afronauts (from Adelaide, Australia), Newen Afrobeat (from Santiago, Chile), Eddy Taylor & the Heartphones (from Cologne, Germany), Bantucrew, the Albinoid Afrobeat Orchestra / Albinoid Sound System (from Strasbourg, France), Underground System / Underground System Afrobeat (from Brooklyn, New York), Abayomy Afrobeat Orquestra, Chicago Afrobeat Orchestra, Warsaw Afrobeat Orchestra, Karl Hector & the Malcouns (from Munich, Germany), Ojibo Afrobeat (from Vilnius, Lithuania), Afrodizz and Dele Sosimi and the ex-Africa '70 members Oghene Kologbo (guitar) with Afrobeat Academy, Nicholas Addo-Nettey (percussion), who is also known as Pax Nicholas, with Ridimtaksi (both based in Berlin, Germany). Namibian artist EES (Eric Sell) associates Afrobeat with reggae and kwaito.

In 2009, the music label Knitting Factory Records (KFR) produced the Broadway musical Fela! The story showcased Kuti's "courage and incredible musical mastery" along with the story of his life. The show had 11 Tony nominations, receiving three for Best Costumes, Best Sound and Best Choreography. Fela! was on Broadway for 15 months and was produced by notables such as Shawn "Jay-Z " Carter and Will and Jada Pinkett-Smith. Many celebrities were noted as attending the shows, including Denzel Washington, Madonna, Sting, Spike Lee (who saw it eight times), Kofi Annan, and Michelle Obama. Michelle Williams, former singer of girl group Destiny's Child, was cast as the role of Sandra Izsadore.

Fela Kuti's music has been sampled by various hip-hop musicians such as Missy Elliott, J. Cole, and Kanye West, as well as other popular acts such as Beyoncé.

The "Festival de Afrobeat Independiente" (FAI) takes place regularly in Buenos Aires, where regional bands as well as renown Afrobeat acts perform.

title: Afrobeat