Abstract
This paper provides some empirical foundation in support of the observation that the men's UEFA Champions League (CL) reduces competitive balance in domestic football leagues. It relies on the assumption that clubs' optimal budgets result from win-maximising strategies, accounting for similarly driven budget decisions from competitors in the domestic league and are thus ultimately determined through a Nash equilibrium process. Using a panel of 23 professional French clubs over nine consecutive seasons (2004/2005-2012/2013), we estimate such optimal budgets, and measure the extent to which access to the Champions League amplifies budget inequalities between clubs. Our results suggest that the CL amplifies inequalities by a magnitude significantly larger than the direct income received from UEFA for participating in the CL.
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