The Effects of the UEFA Financial Fair Play Regulation on Earnings Management in the European Football Industry

Institutional and legal reforms applied in the context of sports competitions often provoke structural changes that can be empirically investigated. Using a data set of 560 observations (20 teams per season, from 2009/10 to 2015/16, of teams playing in the Premier League, La Liga, Serie A and Ligue 1), this paper examines how the UEFA Financial Fair Play (FFP) regulations may have altered the football clubs’ decisions concerning their sport and financial priorities. Moreover, based on a simple theoretical description, the paper shows that the increasing financial stability promoted by the FFP rules might actually imply – as an undesired side effect – a declined competitive balance affecting the European football leagues. Finally, the paper discusses some policy issues and recommendations.

Download Full-text

Ownership in European Soccer, Financial Fair Play, and Performance in UEFA’s 2006–2018 Champions League Tournaments

Journal of Sport Management ◽

10.1123/jsm.2020-0217 ◽

2020 ◽

pp. 1-11

Author(s):

Gidon Jakar ◽

Stephanie Gerretsen

Keyword(s):

Random Effects ◽

Ownership Structure ◽

Logistic Model ◽

Fair Play ◽

Private Ownership ◽

The Public ◽

Financial Fair Play ◽

Before And After ◽

European Football ◽

And Performance

European soccer clubs have different ownership models, some of which are still dependent on or controlled by the public sector. The authors investigate club performance in the 2006–2018 Union of European Football Associations’ Champions League seasons, using a random-effects and ordered logistic model, to identify how different ownerships are associated with performance and what other factors, such as Financial Fair Play, determine the likelihood of European soccer clubs progressing through the tournament and increasing their revenues. The private ownership structure is statistically significant and positively associated with the probability of qualifying for later rounds in the Champions League and consequently leading to increased revenues. These results, however, vary before and after Financial Fair Play was implemented. It is apparent that the objective to implement a policy designed to increase competitiveness requires a more in-depth approach than Financial Fair Play as wealthier clubs, despite their ownership model, are more likely to be more successful and widen the gap.

Download Full-text

The unintended consequence of Financial Fair Play

Sport Business and Management An International Journal ◽

10.1108/sbm-03-2018-0025 ◽

2019 ◽

Vol 9 (2) ◽

pp. 118-133 ◽

Cited By ~ 3

Author(s):

Daniel Plumley ◽

Girish Mohan Ramchandani ◽

Robert Wilson

Keyword(s):

Financial Stability ◽

Causal Link ◽

Unintended Consequences ◽

Fair Play ◽

Competitive Balance ◽

Content Type ◽

Financial Fair Play ◽

Before And After ◽

European Football ◽

English Premier League

Purpose The purpose of this paper is to examine competitive balance in European football leagues before and after the inception of Financial Fair Play (FFP) regulations by Union of European Football Associations in 2011, designed to bring about financial stability and improve competitive balance in the European game. Design/methodology/approach The research focuses on the top division football leagues in England (English Premier League), Germany (Bundesliga), France (Ligue 1), Italy (Serie A) and Spain (La Liga). The paper is organised into two distinct time periods: pre-FFP, comprising the six seasons between 2005/2006 and 2010/2011; and post-FFP, comprising the six seasons between 2011/2012 and 2016/2017. The paper uses recognised measures of concentration and dominance to measure competitive balance. Findings The results show a statistically significant decline in competitive balance post-FFP for leagues in Spain, Germany and France but not for England and Italy. Furthermore, the results report significantly higher levels of concentration and dominance by a select number of clubs in Germany. Originality/value The paper is one of the first to analyse competitive balance in this way both pre- and post-FFP. Whilst the paper cannot demonstrate a causal link between FFP and competitive balance, there are strong indications that competitive balance has been adversely affected (for some leagues) since the regulations have been imposed. To that end, the paper argues that FFP has had “unintended consequences” in respect of competitive balance.

Download Full-text

Financial fair play and competitive balance in the Premier League

Sport Business and Management An International Journal ◽

10.1108/sbm-10-2016-0058 ◽

2017 ◽

Vol 7 (2) ◽

pp. 175-196 ◽

Cited By ~ 5

Author(s):

Christopher John Freestone ◽

Argyro Elisavet Manoli

Keyword(s):

Fair Play ◽

Competitive Balance ◽

Content Type ◽

Premier League ◽

Financial Fair Play ◽

Financial Strength ◽

European Football ◽

Financial Power ◽

English Premier League ◽

Positive Effect

Purpose The introduction of financial fair play (FFP) regulations in 2011 was accompanied by criticism that they would have an adverse effect on competitive balance in European football. Counter-points were also expressed, suggesting that the opposite would occur; that they would actually increase competitive balance through reducing the importance of financial power. The lack of clarity and cohesion on this issue prompted this paper. The purpose of this paper is to examine the effect FFP has had on competitive balance in the English Premier League. Design/methodology/approach The analysis conducted uses the Herfindahl Index of Competitive Balance as the primary method, and is supported by standard deviation of points analysis and a Scully-Noll ratio analysis, which together provide an indication of the level of competitive balance for each of the past 21 seasons, from 1995/1996 to 2015/2016. This examination allows for the trends in competitive balance to be identified, with emphasis drawn on the seasons after the introduction of the regulations. Findings The results provide no indication that FFP regulations have resulted in a decline in competitive balance in the EPL, instead hinting that a positive effect may have been caused. This positive effect exceeds the primary aim of the regulations and underlines their importance in the future stability of club football. Originality/value While underlining the need for further research on the topic, this study provides the first insights into the effects of FFP regulations on competitive balance in the EPL. These insights would support the view that FFP initiatives have begun to shift the focus of sporting competition away from financial strength towards more natural means of competition such as efficiency, innovation and good management.

Download Full-text