Does Financial Fair Play Matter? The Real Effects of UEFA Regulation for European Football Clubs

Abstract

We provide the first detailed quantitative assessment of the effects of the Financial Fair Play Regulation (FFPR) introduced by the Union of European Football Associations (UEFA) on the income statements and balance sheets of European football clubs. While other studies exist documenting the financial challenges of the European football industry, to the best of our knowledge none has yet analyzed the implications of the FFPR. Our analysis relies on two two sources of information, one we assembled using information from Amadeus (Bureau van Dijk) and the other collected by the UEFA for the specific purpose of implementing the FFPR. Drawing on Amadeus data and regression outputs provided by the UEFA, we consistently find that the introduction of the FFPR has been followed by a significant improvement in the clubs’ income statements, which is consistent with the new accounting rules having ‘real effects’ on the clubs’ management. However, this positive development has yet to be paralleled also in the club’s balance sheets (notably in terms of debt) and cash flow statements, which may call for the FFPR to be further extended in that direction.