Analyzing the effectiveness of UEFA's financial fair play regulations: A comparative study of the French Ligue 1 and the English Premier League

This article assesses the effectiveness of the UEFA Financial Fair Play (FFP) regulations, one of the few financial regulatory tools for open leagues in Europe in two top divisions in Europe. The objective of FFP borrows from the theoretical concept of ‘soft budget constraint’ in sport finance and regulation literature. Introduced by UEFA in 2011 and fully implemented from 2013, FFP requires clubs qualifying for European competitions to comply with the financial concept of “break-even”, where football expenses should not exceed football revenues. This study uses the French Ligue 1 (L1) and the English Premier League (PL) as a case study for analysing the effectiveness of FFP and includes thirteen clubs (seven French and six English) in total. The selection of clubs was guided firstly by data access but was also restricted to clubs regularly participating in European competitions between 2011, when FFP came into effect, and 2018. The scope of the study enabled us to measure the effect of FFP with regard to the break-even rule and the payroll ratios before and after its full application by comparing the periods 2008-2013 and 2013-2018 using descriptive statistics and tests of comparisons. The results are contrasted according to the national context of the clubs studied and the indicators analysed. First, they show a general improvement in the profitability of the clubs in the sample, although the results are statistically significant only in the case of the PL. Concerning the payroll ratios, the first measure (payroll/operating expenses) decreased significantly for all clubs, with significant differences found comparatively in the case of the L1. The second measure (payroll/operating income) also decreased, but the decrease was only significant at the sample level when the trading activity was included in operating income. From a theoretical perspective, this contribution makes it possible to compare the conclusions obtained with existing works, be it predictive or empirical in nature. From a managerial point of view, it calls for UEFA to remain vigilant in respect of FFP. While the results appear to suggest that FFP has been effective in improving the financial equilibrium of clubs and their payroll ratios, the link between better financial health and good governance remains a key challenge for the industry moving forward. Cet article ambitionne d’évaluer l’efficacité du système de Fair-play financier (FPF), un des rares outils de régulation des ligues ouvertes en Europe. Elle s’inscrit dans le cadre de la régulation financière des ligues de sports collectifs en empruntant des éléments théoriques au concept de « contrainte budgétaire lâche ». Instauré par l’UEFA en 2011 et pleinement appliqué à partir de 2013, le FPF impose aux clubs qualifiés en coupes d’Europe de respecter une règle d’équilibre financier limitant leurs montants de dépenses issues de l’activité football à ceux de leurs recettes, sans l’aide d’apports extérieurs. Pour parvenir à cet objectif, nous avons retenu sept clubs évoluant en Ligue 1 française (L1) et six en Premier League anglaise (PL). Cette sélection a d’abord été guidée par l’accès aux données et a été restreinte aux clubs participant régulièrement aux compétitions européennes entre 2011, année d’entrée en vigueur du FPF, et 2018. Le périmètre ainsi constitué nous a permis de mesurer l’effet du FPF au regard de la règle d’équilibre et des ratios de masse salariale avant et après sa pleine application en comparant les périodes 2008-2013 et 2013-2018 à partir de statistiques descriptives et de tests de comparaisons. Les résultats sont contrastés en fonction du contexte national des clubs étudiés et des indicateurs analysés. Ils montrent d’abord une amélioration générale de la profitabilité des clubs sur l’ensemble de l’échantillon même si, au niveau national, les résultats ne sont statistiquement significatifs que dans le cas de la PL. Concernant les ratios de masse salariale, le premier étudié (masse salariale/charges d’exploitation) a diminué de façon significative sur l’ensemble des clubs même si la significativité des tests de comparaison n’a été constatée, cette fois-ci, que dans le cas de la L1. Le second (masse salariale/revenus d’exploitation) a également diminué mais la baisse n’est significative à l’échelle de l’échantillon que lorsque l’activité de transfert est intégrée aux revenus d’exploitation. D’un point de vue théorique, cette contribution permet de confronter les conclusions obtenues aux travaux existants qu’ils soient de nature prédictive ou empirique. D’un point de vue managérial, elle invite l’UEFA à rester vigilante car, si les résultats sont plutôt flatteurs laissant à penser que le FPF a été efficace dans l’amélioration de l’équilibre financier des clubs et de leurs ratios de masse salariale, le lien entre meilleure santé financière et bonne gouvernance est toutefois interrogé en fin d’article.

The effectiveness of UEFA Financial Fair Play: evidence from England and France, 2008–2018

PurposeThis paper analyses the effectiveness of UEFA's Financial Fair Play (FFP) under the break-even requirement.Design/methodology/approachData was collected from English and French football clubs competing in the English Premier League (EPL) and in Ligue 1 (L1) for the financial years 2008–2018. Our sample includes 395 club-year observations. Relevant statistical tests have been conducted with the aim of analysing the effects of pre (2008–2012) and post (2012–2018) FFP enforcement under both profitability and cost-efficiency assumptions.FindingsIn the EPL, an increase is observed in clubs' profitability through both operating and break-even results. In L1, this improvement is only significant for break-even results of clubs not participating regularly in European competitions (non Euro-oriented clubs). Player expenditures, measured through two wage-to-revenue ratios excluding trading activity for one and including it for the other, have significantly decreased in the EPL except for the Euro-oriented clubs for this latter. Conversely, in L1, this decrease is only significant in both wage-to-revenue ratios for non Euro-oriented clubs and for the whole sample when trading is included.Practical implicationsIn addition to evidencing contrasting results in FFP effectiveness across countries, our results suggest it is not the sole cause of such an improvement in clubs' finances. We suggest that UEFA should pursue its efforts to scrutinise the level of clubs' player expenditures and that there is a need for a wider look at the FFP regulations.Originality/valueThis article provides further contribution to empirical studies on FFP effectiveness that have often been focused on a single country.

Transparency and Accountability in Sports: Measuring the Social and Financial Performance of Spanish Professional Football

This study reviews the impact of the Spanish Transparency Law (TL) 19/2013 and the Union of European Football Associations’ (UEFA) Financial Fair Play (FFP) regulations, on the transparency and accountability of Spanish professional football clubs, and examines the influence of financial performance on the transparency of Spanish football clubs. The study uses a Panel Data methodology (FGLS) to compare the international transparency index for football clubs (INFUT) with the criteria of UEFA’s FFP as a measure of the social and financial performance, respectively, on a sample of 28 Spanish professional teams of first and second division during the periods of 2015, 2016, and 2019. The study reveals that the implementation of TL 19/2013 and UEFA’s FFP has improved the transparency and accountability of clubs. On the one hand, the TL has facilitated access to financial information, and, on the other, the FFP regulations have contributed to improving the balance and financial viability of the clubs. The study also reveals that financial performance directly influences the transparency of clubs.

Responsibility, ethics and regulation: An impact assessment of Financial Fair Play Regulations in Spanish professional football.

<p>Since the end of the 20th century football has become an ever-expanding business, especially in European economies. It has created internal pressures in the systemization of processes, regulatory control, professionalization of tasks and organizational modernization in general. In addition, the increasing social weight of football has led to calls for more ethical and responsible business practice, more consistent with the contemporary social values currently gaining ground in other sectors. From this perspective, we assess the reactions of the Spanish professional football sector to the compulsory application of responsible corporate management criteria (Economic Control Regulation). We carried out a study of the coming into effect of such regulation in professional clubs financial performance in two seasons, 2010-11 and 2014-15 (before and after, respectively, the imposition of the ECR). Our findings show a marked improvement in financial indicators. The central discussion of this paper focuses on ways that responsible management improves company profitability. </p>

Responsibility, ethics and regulation: An impact assessment of Financial Fair Play Regulations in Spanish professional football.

<p>Since the end of the 20th century football has become an ever-expanding business, especially in European economies. It has created internal pressures in the systemization of processes, regulatory control, professionalization of tasks and organizational modernization in general. In addition, the increasing social weight of football has led to calls for more ethical and responsible business practice, more consistent with the contemporary social values currently gaining ground in other sectors. From this perspective, we assess the reactions of the Spanish professional football sector to the compulsory application of responsible corporate management criteria (Economic Control Regulation). We carried out a study of the coming into effect of such regulation in professional clubs financial performance in two seasons, 2010-11 and 2014-15 (before and after, respectively, the imposition of the ECR). Our findings show a marked improvement in financial indicators. The central discussion of this paper focuses on ways that responsible management improves company profitability. </p>

5.6. OPTIMIZATION OF THE EXPENDITURE PART OF THE BUDGET OF PROFESSIONAL CLUBS AS A MECHANISM FOR INCREASING THE PROFITABILITY OF THE SPORTS INDUSTRY

Заработная плата, выплачиваемая субъектами футбольной индустрии своим работникам, поглощает очень большую долю их доходов, что оказывает существенное воздействие на итоговый финансовый результат клубов. Таким образом, контроль заработной платы является ключом к устойчивому финансовому здоровью клубов. В данной статье рассмотрены основные тенденции в области зарплат в отечественной футбольной отрасли в сравнении с европейскими лигами, выявлены отклонения данного показателя от среднерыночных и рекомендуемых значений, определен алгоритм оптимизации данного показателя. Управление затратами спортивного клуба на основе операционного анализа позволит повысить финансовые показатели и улучшить положение в отрасли за счет снижения издержек и увеличения рентабельности производимого продукта (спортивного зрелища). Гибкая финансовая политика спортивного клуба, учитывающая влияние различных факторов на итоговый результат, позволит им сэкономить финансовые ресурсы, а также снизить издержки финансирования, тем самым повысив рентабельность и уровень их соответствия критериям Союза европейских футбольных ассоциаций (УЕФА) в части финансовой честной игры. The wages paid by football industry entities to their employees absorb a very large percentage of their income, which has a significant impact on the final financial result of clubs. Wage control is therefore key to the clubs ' sustainable financial health. This article examines the main trends in the field of salaries in the domestic football industry in comparison with European leagues, identifies deviations of this indicator from the average market and recommended values, and defines an algorithm for optimizing this indicator. Cost management of a sports club based on operational analysis will improve financial performance and improve the position in the industry by reducing costs and increasing the profitability of the product (sports spectacle). A flexible financial policy of a sports club that takes into account the impact of various factors on the final result will allow them to save financial resources, as well as reduce financing costs, thereby increasing their profitability and their level of compliance with the UEFA criteria for financial fair play.