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Financial Fair Play in European Club Football What is it all about?

Author

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  • Egon Franck

    () (Department of Business Administration (IBW), University of Zurich)

Abstract

The new UEFA Club Licensing and Financial Fair Play Regulations have encountered stiff criticism. The concerns are that the new regulations may harm football in three different ways: By forgoing the potential benefits from substantial injections of external money into payrolls, by restricting competition in the player market without at the same time achieving benefits from more balanced competition, and by creating some sort of barrier to entry which could freeze the current hierarchy of clubs. It is the purpose of this paper to take these concerns as a starting point for discussing the likely effects of the new regulations. As a by-product it will become obvious why and in which points the concerns are unfounded.

Suggested Citation

  • Egon Franck, 2014. "Financial Fair Play in European Club Football What is it all about?," Working Papers 328, University of Zurich, Department of Business Administration (IBW).
    • Handle: RePEc:zrh:wpaper:328
    as

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    References listed on IDEAS

    as
    1. Egon Franck, 2010. "Private Firm, Public Corporation or Member’s Association Governance Structures in European Football," International Journal of Sport Finance, Fitness Information Technology, vol. 5(2), pages 108-127, May.
    2. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    3. M. Dewatripont & E. Maskin, 1995. "Credit and Efficiency in Centralized and Decentralized Economies," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 541-555.
    4. Helmut M. Dietl & Egon Franck & Markus Lang, 2008. "Overinvestment In Team Sports Leagues: A Contest Theory Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(3), pages 353-368, July.
    5. J. Kornai & E. Maskin & G. Roland., 2004. "Understanding the Soft Budget Constraint," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 12.
    6. PEETERS, Thomas & SZYMANSKI, Stefan, 2012. "Vertical restraints in soccer: Financial fair play and the English Premier League," Working Papers 2012028, University of Antwerp, Faculty of Business and Economics.
    7. Maskin, Eric S., 1996. "Theories of the soft budget-constraint," Japan and the World Economy, Elsevier, vol. 8(2), pages 125-133, June.
    8. Wladimir Andreff, 2011. "Some comparative economics of the organization of sports: competition and regulation in north American vs. European professional team sports leagues," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(1), pages 3-27, June.
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    Citations

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    Cited by:

    1. Budzinski, Oliver & Pawlowski, Tim, 2014. "The behavioural economics of competitive balance: Implications for league policy and championship management," Ilmenau Economics Discussion Papers 89, Ilmenau University of Technology, Institute of Economics.
    2. 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.
    3. 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.
    4. Santiago-Caballero, Carlos & Fernández-Roldán Díaz, Alejandro, 2017. "Decomposing competitive balance in the major European football leagues : a Rawlsian approach," IFCS - Working Papers in Economic History.WH 24658, Universidad Carlos III de Madrid. Instituto Figuerola.
    5. Grabar, Vsevolod & Sonin, Konstantin, 2018. "Financial Restrictions and Competitive Balance in Sports Leagues," CEPR Discussion Papers 13154, C.E.P.R. Discussion Papers.
    6. 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.
    7. 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.
    8. 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.
    9. Bernd Frick & Rob Simmons, 2014. "The footballers’ labour market after the Bosman ruling," Chapters,in: Handbook on the Economics of Professional Football, chapter 13, pages 203-226 Edward Elgar Publishing.
    10. repec:gam:jijfss:v:6:y:2018:i:4:p:97-:d:190206 is not listed on IDEAS
    11. Wladimir Andreff, 2014. "Building Blocks for a Disequilibrium Model of a European Team Sports League," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00971782, HAL.
    12. 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.
    13. Gasparetto, Thadeu & Barajas, Angel, 2016. "Reanalisando a competitividade na indústria do futebol: diferença acumulada de pontos," RAE - Revista de Administração de Empresas, FGV-EAESP Escola de Administração de Empresas de São Paulo (Brazil), vol. 56(3), May.
    14. 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.
    15. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
    16. repec:eee:spomar:v:21:y:2018:i:5:p:563-581 is not listed on IDEAS
    17. repec:bla:scotjp:v:64:y:2017:i:4:p:419-444 is not listed on IDEAS
    18. 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).
    19. Budzinski, Oliver, 2017. "Sind Wettbewerbe im Profisport Rattenrennen?," Ilmenau Economics Discussion Papers 104, Ilmenau University of Technology, Institute of Economics.
    20. Raphael Flepp & Egon Franck, 2019. " The role of boards' misperceptions in the relation between managerial turnover and performance: Evidence from European football," Working Papers 380, University of Zurich, Department of Business Administration (IBW).

    More about this item

    Keywords

    Financial Fair Play; Soft Budget Constraints; Hard Budget Constraints; Moral Hazard; Rent-Seeking; Sugar Daddies; Competitive Balance; Ossification;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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