Financial fair play and competitive balance in European football: a long term perspective

Abstract

PurposeThe paper analyzes the effects of financial fair play (FFP) in the competitive balance of European football industry throughout a long-term perspective.Design/methodology/approachThe authors analyze the evolution of the competitive balance in the European football industry through a time-series analysis from season 1992/93 to 2018/19.FindingsResults indicate an industry by nature dominated by a few clubs showing a general stationary behavior. FFP has had very little impact in local competitions. Just in some leagues, such as the Spanish, German, and French leagues, we can observe an increase in the imbalance in some indicators, but these results are not very robust. The improvement on the financial situation happens especially in a small group of firms that coincide with the big leagues with a strong European market orientation and strict local financial control standards.Research limitations/implicationsAlthough the study covered 17 European Leagues, there are several leagues not accounted for and thus results should be generalized with caution.Practical implicationsThe authors observe heterogeneity of the results of FFP in the competitive balance, associated to how the standard has been implemented in each market. This opens opportunities to study and deepen the local codes and their influence, especially in the recommendations of future financial control standards.Originality/valueThe authors’ main contribution to the literature is to examine the impact of the FFP rules in the competitive balance utilizing a very broad study of 17 European markets with a rich and unusual overview and long-term perspective.