Financial Fair Play Regulations Research Articles

Effectiveness of UEFA's regulation for European football financial management: A comprehensive systematic review and meta-analysis

BackgroundThe Union of European Football Association's (UEFA) Financial Fair Play (FFP) regulations are a topic of ongoing debate. This study aims to evaluate and quantify the FFP's effect on clubs' financial performance and critically review the regulatory changes introduced by the UEFA in 2022 through the new Financial Sustainability Regulations (FSR). MethodsA systematic review and meta-analysis were conducted using the Web of Science and Scopus databases up to December 31, 2023, following the Preferred Reporting Items for Systematic Reviews and Meta-Analysis (PRISMA) statement. ResultsThis systematic review included 22 articles; a meta-analysis was conducted on 52 financial measures derived from 20 studies of 11 articles. The meta-analysis’ main result—obtained by comparing two different financial measures (profitability versus solvency)—revealed that FFP's effect on profitability measures was significant, with a value of 0.151 (p = 0.050); however, the effect size for solvency measures was not significant, with a value of 0.049 (p = 0.639). ContributionsThis systematic review revealed variability in the results of the studies analysed, reflecting contextual factors' influence, which underlines the need for a more adaptive and specific approach to clubs’ financial control policies. The meta-analysis found that the type of financial measure employed (profitability versus solvency) was a notable source of variability among the studies, as its moderating effect was significant. Consequently, the FFP exerted contrasting effects on profitability and solvency. LimitationsA significant level of heterogeneity was observed in the financial measures analysed, predominantly because of the different samples and periods across the included studies. ConclusionsThis study corroborates FFP's mixed and limited impact on financial performance, highlighting the need for stricter control in European football, which aligns with the new FSR. Our study underscores aspects that future research should address to deepen knowledge of UEFA regulations' efficiency in enhancing football's financial sustainability.

Financial fair play and competitive (im)balance in the Greek Super League

The inception of financial fair play (FFP) regulations in 2011 prompted debates about their potential impact on competitive balance within European football. Divisive arguments emerged: some anticipated a negative influence, foreseeing a decline in competitive balance, while others posited a contrary viewpoint, suggesting that these regulations could actually enhance competitive balance by diminishing the significance of financial supremacy. Amidst this discrepancy in perspectives, and unlike existing studies on major European football leagues, this investigation was prompted to scrutinize the influence of FFP on competitive balance within the Greek Super League. Utilizing the Herfindahl Index of Competitive Balance as the primary assessment tool, complemented by analyses involving the standard deviation of points, this study evaluated competitive balance within the league across 15 seasons, equally spread before and after the introduction of the FFP regulations. Echoing and even amplifying the concerns, the findings unveiled indications that FFP had engendered a decline in competitive balance within the Greek Super League, with a previously noted improvement abruptly halted and in fact reversed after the introduction of the FFP. This auspicious impact surpasses the intended primary objective of the regulations and underscores the influence they can have regarding the future (in)stability of club football. While acknowledging the imperative need for further exploration in this domain, this study represents an initial foray into understanding the effects of FFP regulations on competitive balance in medium and smaller sized European football.

Assessing the influence of financial fair play on sporting performance: A study of the Spanish league using a data envelopment analysis model

AbstractThe football industry stands as an important economic sector in numerous countries, sparking scholarly discussions on the multifaceted nature of interconnected objectives and the influence of financial, accounting, and management elements on athletic performance. This discussion has gained prominence following the implementation of Financial Fair Play (FFP) regulations, which have substantially reshaped industry management practices. This study introduces two innovative models—financial and sporting—that employ data envelopment analysis (DEA) to evaluate the performance of Spanish league football clubs within the context of FFP regulations. These models illuminate a crucial aspect of sports economic theory: the balancing act between financial and sporting objectives. Moreover, our analysis explores the influence of FFP on the efficiency of the Spanish league by comparing club proximity to the best practice frontier before and after FFP implementation. Our findings uncover intriguing differentiations within the proposed models and across various club clusters, providing valuable insights into the nuanced interplay among finance, accounting, and sports management.

The financial impact of financial fair play regulation: Evidence from the English premier league

In response to the ailing financial situation of European football clubs, UEFA introduced Financial Fair Play (FFP) regulation in 2011 to guide clubs towards profitability and sustainability. In this study, we empirically test whether the break-even requirement (BER) of FFP has improved the financial performance of English Premier League (EPL) clubs exposed to the regulation. We find strong evidence that FFP has positively impacted the profitability of clubs exposed to the regulation as they are less loss-making than those not exposed to FFP. The improvement is attributed to better management of the income and expenses ratio rather than a fall in expenses. However we do not find evidence of an improvement in the clubs' sustainability. The results suggest that FFP has so far improved the profitability of EPL clubs exposed to the regulation by encouraging better financial management and business model modification for clubs. Therefore, club owners should maintain a financially prudent wage-to-revenue ratio and look to be more efficient in player trading.

Has financial fair play changed European football?

In 2011 UEFA, the governing body of European football, introduced the Financial Fair Play Regulation (FFPR), consisting of a set of financial restraints to be met by clubs as a prerequisite for participation to its competitions. The aim of the FFPR was to introduce financial discipline into the clubs’ decision-making processes, and ultimately protect the long-term viability of the European football industry. The reform was criticized because of possible unintended detrimental consequences. In particular, Peeters and Szymanski (2014) provided a model-based ex-ante simulation analysis showing that the reform would increase the profitability of clubs, but also tilt the competitive balance in favor of the top teams, thus reducing the interest of fans and investors as one of the main attractions in sports is precisely that the best team does not always win. Exploiting an original dataset between the seasons 2007–2008 and 2019–2020, we provide an ex-post econometric evaluation of the effects of the introduction of the FFPR revealing causal evidence that largely vindicates those ex-ante predictions.

The Fairness Competition Under UEFA Financial Fair Play

Financial Fair Play (FFP) is a regulation made by UEFA so that club finances remain sustainable and stable. Current conditions show that the implementation of FFP is still considered sub-optimal because the dominance of the club that won the league still exists. This study aims to determine the effectiveness of Financial Fair Play regulations by looking at Financial Performance, Capital Structure, and Transfer Player Expenses on Competitive Balance under the Union Europe Football Association. By using theoretical review of several articles related to research produce a hypothesis that the relationship between Financial Performance, Capital Structure, and Transfer Player Expenses variables has a positive relationship to Competitive Balance during the implementation of Financial Fair Play regulations in Europe.

‘You can look, but don’t touch’: competitive balance and dominance in the UEFA Champions League

ABSTRACT This paper examines the competitive balance of the Champions League between 1992/93–2019/20 focusing on both the group and knockout stages. The findings show that competitive balance has declined in the Champions League over time and that the competition has begun to be dominated by a select number of clubs. This situation has also worsened in the years following the inception of UEFA Financial Fair Play regulations in 2011. From a sporting economics perspective, the received theory suggests that such a decline in competitive balance could harm the product. If competitive balance continues to decline, the Champions League may face potential future challenges from the attractiveness of the product to broadcasters and commercial partners as well as the continuing emergence of financially dominant super clubs. This could also exacerbate the threat of breakaway European super leagues that would further damage the competition through the potential loss of elite teams within it.

A Review of Competitive Balance in European Football Leagues before and after Financial Fair Play Regulations

This paper analyses competitive balance in 24 top-division domestic football leagues in Europe before and after the implementation of UEFA’s Financial Fair Play (FFP) regulations. Our analysis covers 22 seasons between 2000/01 and 2021/22 and utilises indicators of overall league concentration and dominance. Seven of the 24 leagues examined have seen a statistically significant worsening of league concentration post-FFP, fourteen leagues experienced a decline in the number of top-four finishers and thirteen saw a reduction in the number of unique title winners. The weight of evidence indicates that FFP has adversely affected competitive balance in several European football leagues.

An overview fair play regulation in England premier league: Accounting information for leverage and financial distress to conservatism

The Union of European Football Associations (UEFA) has become an industry in recent decades that has attracted many investors. The UEFA issued a Financial Fair Play Regulation (FFPR) policy to control the financial condition of football clubs. This study aims to determine the effect of leverage and financial distress on applying the principle of conservatism to provide a sense of security to investors and creditors. It is quantitative research that uses purposive data from the football companies listed on the London Stock Exchange in 2011–2013. The results indicate that the level of leverage and financial distress positively affect the application of the conservatism principle. In conclusion, the higher level of debt and financial distress will increase the company’s applying the conservatism principle. A suggestion for further research is to test the theory against football leagues in other countries because football leagues in other countries may have different rules.

Integrity principle of sports competition: seeking certainty

The fall of 2021 in European football was marked by a pause in the Super League case: the Union of European Football Associations stopped disciplinary proceedings against the three clubs remaining in the status of organizers, and also canceled all mandatory payments to the confederation from the clubs that left the project. In a previous article, we looked at the UEFA Statutes and the UEFA Licensing and Financial Fair Play Regulations as possible sources of regulation that would have been violated by the emergence of new competition. However, the existence of UEFA regulation preventing the proliferation of organizers of football events on a European scale met with a possible obstacle from the economic-competitive guarantees provided in the provisions of the Treaty on the Functioning of the European Union. At the moment, UEFA is preparing to consider the dispute in the instances of European justice. One of the key arguments on the part of UEFA may be the violation by the Super League organizing clubs of the principle of the integrity of the competition (the integrity of sports). This will additionally update the meaning of the principle for sports justice. However, UEFAs chances of a successful application of the principle seem low: this principle is too elastic and subjective, although it has been featured in the normative regulation of sports for a long time. In the present study, the author has analyzed all the disputes before the Court of Arbitration for Sport (CAS) in which the principle of the integrity of sporting events was declared. The conclusions made confirm the complexity of a convincing appeal to the principle of any sports subject.

Caught in a trap? Financial Fair Play Regulations and the case of Scottish football

PurposeThe purpose of this study is to investigate the Union of European Football Associations’s Financial Fair Play (FFP) Regulations in the context of the European football industry. This study seeks to explore whether these regulations are perceived by member organisations as contributing to the creation of a “poverty trap”. To do so, this study turns towards what are traditionally perceived as smaller clubs operating in smaller member associations and, in doing so, explores whether the regulations limiting benefactor payments are suitable for smaller leagues.Design/methodology/approachIn-depth semi-structured interviews were conducted with key individuals involved in the management of Scottish football clubs. The Scottish context was chosen because of the disparity in revenues amongst competing teams and the limited broadcasting revenues achieved in comparison to some other European member associations.FindingsFFP Regulations are perceived to be an effective tool for monitoring clubs and ensuring financial stability. However, the findings suggest that participants believe that these regulations consolidate the financial position of larger teams who rely on broadcasting and extant brand power for revenue generation. Further, smaller leagues demonstrate a lesser reliance on benefactor payments, and therefore, the restriction on benefactor payments inherent within FFP Regulations is posited by participants as holding little consequence and/or relevance within the Scottish football context.Originality/valueMost prior studies on FFP Regulations have focused on generating quantitative insight into the application of FFP Regulations in large, resource-rich European football leagues. Through a qualitative approach, this study provides nascent exploratory insight into FFP Regulations from the perspective of smaller leagues.

Financial Fair Play and the Court of Arbitration for Sport

This article examines four major Financial Fair Play (FFP) cases that have come before the Court of Arbitration for Sport (CAS). Although significant previous work has addressed FFP in European football, there is a major gap where its treatment at the CAS is concerned. In addition to creating substantial holes in the effectiveness of FFP regulations, the progression of the four cases discussed have let some of FFP’s most egregious offenders avoid sanctions they would consider damaging. In considering two especially important cases, this article argues that Paris Saint-Germain and Manchester City have provided ample guidance for transforming mediocre clubs through disguised equity infusions to circumvent FFP until a sustainable revenue structure is created. For the CAS, the case line resulting in major FFP offending clubs escaping meaningful sanctions builds upon a body of anti-doping jurisprudence that has had the effect of shifting the cost-benefit analysis of rule breaking. This failure in both the FFP and CAS realms leads into a larger emergent policy reform conversation.

UEFA’S financial fair play regulations: a good example of best practice governance by a sporting body?

The Union of European Football Associations (UEFA) is the body that governs European football. In 2010 it introduced its Financial Fair Play (FFP) Regulations with the main aim of bringing financial stability to European football. This article examines UEFA’s FFP Regulations from good governance and ‘best practice’ perspectives. It finds that the setting-up, implementation and monitoring of the FFP Regulations by UEFA generally adhere to ‘best practice’ principles. However, recent cases in the Court of Arbitration for Sport have revealed several areas where changes to the regulations would be appropriate. In 2021 UEFA made some changes to its Procedural rules governing its Club Financial Control Body, which address some of the outstanding issues but there are still a number of areas where changes would be beneficial as these would provide greater clarity and transparency to its operation and enforcement and thereby promote more timely and cost-effective regulation.

Psychological Factors to Consider When Adopting an Ethics and Compliance Program

Ethics and compliance programs are imperative for all types of business organizations. That is because they ensure that businesses operate according to the demands of the law, and that they maintain their reputation among their customer bases. For instance, ethics and compliance programs may require organizations to conduct external audits on their financial information every once in a while, to ascertain that they are compliant with financial fair play regulations. As such, it is important for businesses to ensure their human power follows the ethical and compliance guidelines to avoid any legal or reputational issues. For businesses to ensure that their employees are compliant, it is important for them to consider the psychological factors that influence human behavior. That is because they will indicate whether the human factor will remain compliant with the set rules and regulations. In this study, the objective will be to prove that psychological factors are essential when adopting ethics and compliance programs, so as to show the psychological factors for organizations to consider. Ideally, human behavior is significantly influenced by motivation, attitudes, and perception, and these are the factors that the research will focus on analyzing.

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.

The game behind the game: UEFA's Financial Fair Play Regulations and the need to field a substitute

ABSTRACT European soccer clubs tend to spend beyond their revenues, causing disruptions in their finances. To minimize these disruptions, UEFA enacted the Financial Fair Play Regulations (FFP). FFP achieves its objectives through the “break-even” requirement, which prohibits clubs from spending beyond their revenues. This article argues that FFP violates Articles 101 and 102 TFEU. While there has been scholarly interest in FFP’s incompatibility with competition law, the focus has been on Article 101. In addition to contributing to the scholarship on FFP’s violation of Article 101, this article presents arguments on how FFP violates Article 102. This article then explores UEFA’s interactions with European regulators as a backdrop for explaining why regulators have failed to address FFP’s violation of Articles 101 and 102. This article concludes by arguing that a change to FFP is imminent and suggests a novel method through which UEFA can maintain FFP’s objectives while complying with competition law.

Jsou pravidla finanční fair play spravedlivá a udržitelná? Případ anglické Premier League

The paper investigates whether the Financial Fair Play Regulations have contributed to a sus- tainable economic framework of club football while retaining equal opportunities for sport success. Mutual relations among economic strength of football clubs, their financial aggres-siveness in investments into squads and league results after the implementation of the FFP rules are assessed. Using a dataset of the English Premier League clubs over 2011-2017, empirical data reveal that the league is economically sustainable in the long run. However, profitability improves by increasing broadcasting revenue, and clubs' profits are driven by their ownership structure rather than FFP. Furthermore, we identify a statistically signifi-cant financial aggressiveness in spending on squads. A regulation aiming at securing sustain-able economic development may, thus, curtail sport competitiveness of smaller clubs and boost dominance of teams that are economically strong around the time of regulation launch.

Does Compliance with Financial Fair Play Rules Improve the Football Clubs' Sport Performance and Their Chances to Reach UEFA Competitions?

This paper evaluates the European football clubs' compliance with UEFA Financial Fair Play (FFP) regulations and the effect of financial stability on sport achievements. The empirical analysis uses data of teams competing in the 1st division of four top domestic leagues (Premier League, La Liga, Serie A, and Ligue 1) over the seasons 2009/10 to 2015/16. We control for team quality through the annual wages (in quadratic form) and use the Wage-to-Revenue (WRR) ratio as a proxy variable to measure how close the clubs meet the break-even requirements. Our results reveal that greater financial responsibility implies better sport performance and higher chances to qualify for the Champions and Europa Leagues.

On the relationship between sport and financial performances: an empirical investigation

PurposeOur paper shows an empirical analysis of the European football companies to test the association between sport results, proxied by ranking position and financial performance in panel framework (starting from 59 firms over the 2013–2018 time span).Design/methodology/approachWe use panel data models for studying the relationship of our interest and we make no a priori assumption about the strict exogeneity of the covariates and estimate equation using both Random Effects GLS (RE-GLS) and Fixed Effects OLS (FE-OLS) estimations.FindingsOur results suggest there is stable and significant relationship between the two types of performance and that when detectable this is linked in a positive way to the profit maximization of the business model, suggesting that it is more useful for investor remuneration and to increase technical-tactical resources and therefore sports results. Not surprisingly, as for many clubs, concentration effect is relevant while the financial fair play regulation is not. In fact, the current regulation of UEFA authority does not seem to have an impact on sport and financial results.Originality/valueThis work complements literature in several ways. First, we offer new empirical evidence for the association between the sport and financial performance for a panel of the European football companies, listed and not. Second, we show that the persistence of the sport results is strongly correlated with financial performance.

Too big to fail? Accounting for predictions of financial distress in English professional football clubs

PurposeThis paper analyses English Premier League (EPL) and English Football League (EFL) championship clubs during the period 2002–2019 to anticipate financial distress with specific reference to footballs' Financial Fair Play (FFP) regulations.Design/methodology/approachData was collected for 43 professional football clubs competing in the EPL and Championship for the financial year ends 2002–2019. Analysis was conducted using the Z-score methodology and additional statistical tests were conducted to measure differences between groups. Data was split into two distinct periods to analyse club finances pre- and post-FFP.FindingsThe results show significant cases of financial distress amongst clubs in both divisions and that Championship clubs are in significantly poorer financial health than EPL clubs. In some cases, financially sustainability has worsened post-FFP. The “big 6” clubs – due to their size – seem to be more financially sound than the rest of the EPL, thus preventing a “too big to fail” effect. Overall, the financial situation in English football remains poor, a position that could be exacerbated by the economic crisis, caused by COVID-19.Research limitations/implicationsThe findings are not generalisable outside of the English football industry and the data is susceptible to usual accounting techniques and treatments.Practical implicationsThe paper recommends a re-distribution of broadcasting rights, on a more equal basis and incentivised with cost-reduction targets. The implementation of a hard salary cap at league level is also recommended to control costs. Furthermore, FFP regulations should be re-visited to deliver the original objectives of bringing about financial sustainability in European football.Originality/valueThe paper extends the evidence base of measuring financial distress in professional team sports and is also the first paper of its kind to examine this in relation to Championship clubs.