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Financial fair play in European football

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  • Thomas Peeters
  • Stefan Szymanski

Abstract

type="main" xml:id="ecop12031-abs-0001"> In 2010 UEFA, the governing body of European football, announced a set of financial restraints, which clubs must observe when seeking to enter its competitions, notably the UEFA Champions League. We analyse the financial and sporting impact of these ‘Financial Fair Play’ (FFP) regulations in four major European football leagues. We first discuss the details of FFP and frame these regulations in the institutional set-up of the European football industry. We then show how the break-even constraint embedded in FFP could substantially reduce average payrolls and wage-to-turnover ratios, while strengthening the position of the traditional top teams. Since the benefits of the break-even rule to consumers remain unclear, we argue that these rent-shifting regulations might fall foul of European competition law. — Thomas Peeters and Stefan Szymanski

Suggested Citation

  • Thomas Peeters & Stefan Szymanski, 2014. "Financial fair play in European football," Economic Policy, CEPR;CES;MSH, vol. 29(78), pages 343-390, April.
  • Handle: RePEc:bla:ecpoli:v:29:y:2014:i:78:p:343-390
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    File URL: http://hdl.handle.net/10.1111/ecop.2014.29.issue-78
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    References listed on IDEAS

    as
    1. Stefan Szymanski, 2012. "Insolvency in English professional football: Irrational Exuberance or Negative Shocks?," Working Papers 1202, International Association of Sports Economists;North American Association of Sports Economists.
    2. Jeffery Borland, 2003. "Demand for Sport," Oxford Review of Economic Policy, Oxford University Press, vol. 19(4), pages 478-502, Winter.
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    6. Egon Franck & Markus Lang, 2014. "A Theoretical Analysis of the Influence of Money Injections on Risk Taking in Football Clubs," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(4), pages 430-454, September.
    7. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
    8. Thomas Hoehn & Stefan Szymanski, 1999. "The Americanization of European football," Economic Policy, CEPR;CES;MSH, vol. 14(28), pages 203-240, April.
    9. Rivers, Douglas & Vuong, Quang H., 1988. "Limited information estimators and exogeneity tests for simultaneous probit models," Journal of Econometrics, Elsevier, vol. 39(3), pages 347-366, November.
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    Cited by:

    1. Barth Michael, 2015. "Contemporary Research in Sports Economics: Proceedings of the 5th ESEA Conference: Besprechung des von Oliver Budzinski und Arne Feddersen herausgegebenen gleichnamigen Tagungsbandes," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 66(1), pages 353-359, January.
    2. Thomas Peeters & Steven Salaga & Matthew Juravich, 2015. "Matching and Winning? The Impact of Upper and Middle Managers on Team Performance," Tinbergen Institute Discussion Papers 15-115/VII, Tinbergen Institute.
    3. Budzinski, Oliver, 2017. "Market-internal financial regulation in sports as an anticompetitive institution," Ilmenau Economics Discussion Papers 110, Ilmenau University of Technology, Institute of Economics.
    4. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
    5. Colin Green & Fernando Lozano & Rob Simmons, 2015. "Rank-Order Tournaments, Probability of Winning and Investing in Talent: Evidence from Champions' League Qualifying Rules," National Institute Economic Review, National Institute of Economic and Social Research, vol. 232(1), pages 30-40, May.
    6. Stefan Szymanski, 2016. "Professional Asian Football Leagues and the Global Market," Asian Economic Policy Review, Japan Center for Economic Research, vol. 11(1), pages 16-38, January.
    7. repec:bla:scotjp:v:64:y:2017:i:4:p:419-444 is not listed on IDEAS
    8. repec:oup:jcomle:v:11:y:2015:i:2:p:409-429. is not listed on IDEAS
    9. Paul Madden, 2014. "Does Break-Even Regulation of Soccer Clubs Make Sense?," The School of Economics Discussion Paper Series 1405, Economics, The University of Manchester.
    10. Egon Franck, 2016. " A comment on the newly revised “2015 version” of the UEFA Club Licensing and Financial Fair Play Regulations," Working Papers 362, University of Zurich, Department of Business Administration (IBW).
    11. Budzinski, Oliver, 2017. "Sind Wettbewerbe im Profisport Rattenrennen?," Ilmenau Economics Discussion Papers 104, Ilmenau University of Technology, Institute of Economics.
    12. repec:kap:jproda:v:48:y:2017:i:1:d:10.1007_s11123-017-0508-4 is not listed on IDEAS
    13. Angelo D’Andrea & Donato Masciandaro, 2016. "Financial Fair Play in European Football: Economics and Political Economy a Review Essay," BAFFI CAREFIN Working Papers 1615, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    14. Ariela Caglio & Angelo D’Andrea & Donato Masciandaro & Gianmarco Ottaviano, 2016. "Does Fair Play Matter? UEFA Regulation and Financial Sustainability in the European Football Industry," BAFFI CAREFIN Working Papers 1638, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    15. Gilles Paché, 2015. "Governance of Professional Sport Leagues: Towards a Convergence Between North America and Europe?," Post-Print hal-01436436, HAL.
    16. Oliver Budzinski & Stefan Szymanski, 2015. "Are Restrictions Of Competition By Sports Associations Horizontal Or Vertical In Nature?," Journal of Competition Law and Economics, Oxford University Press, vol. 11(2), pages 409-429.
    17. Costanza Torricelli & Maria Cesira Urzì Brancati & Luca Mirtoleni, 2014. "The impact of skill and management structure on Serie A Clubs’ performance," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 14107, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    18. Szymanski, Stefan & Wilkinson, Guy, 2016. "Testing the O-Ring theory using data from the English Premier League," Research in Economics, Elsevier, vol. 70(3), pages 468-481.

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