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Financial constraints on sport organizations’ cost efficiency: the impact of financial fair play on Italian soccer clubs

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  • Alessandro Ghio
  • Massimo Ruberti
  • Roberto Verona

Abstract

We analyze the effect of the introduction of stricter financial constraints on the trade-off between sporting and economic results. We apply a stochastic Cobb-Douglas production frontier model to a sample of Italian Serie A teams, i.e. first division, over the period 2005–2015 to evaluate the variation in soccer clubs’ cost efficiency following the application of the UEFA Financial Fair Play (FFP) principles in 2010. FFP imposes stricter financial regulation as a requirement for a club to be admitted to Union of European Football Associations (UEFA) tournaments. Firstly, we find that FFP does not improve the average efficiency of the Italian first division teams. Secondly, we show that FFP has contributed to leveling the playing field, reducing the gap in terms of efficiency between top teams and lower-tier teams.Abbreviations: FFP: Financial Fair Play; UEFA: Union of European Football Associations; DEA: Data Envelopment Analysis; SFA: Stochastic Frontier Analysis

Suggested Citation

  • Alessandro Ghio & Massimo Ruberti & Roberto Verona, 2019. "Financial constraints on sport organizations’ cost efficiency: the impact of financial fair play on Italian soccer clubs," Applied Economics, Taylor & Francis Journals, vol. 51(24), pages 2623-2638, May.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:24:p:2623-2638
    DOI: 10.1080/00036846.2018.1558348
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    Cited by:

    1. Alabi, Mobolaji & Urquhart, Andrew, 2024. "The financial impact of financial fair play regulation: Evidence from the English premier league," International Review of Financial Analysis, Elsevier, vol. 92(C).
    2. David Boto‐García & Carlos Varela‐Quintana & Alvaro Muñiz, 2023. "Foreign players, team production, and technical efficiency: Evidence from European soccer," Bulletin of Economic Research, Wiley Blackwell, vol. 75(4), pages 1209-1241, October.
    3. Luigi Buzzacchi & Federico Caviggioli & Francesco Luigi Milone & Davide Scotti, 2021. "Impact and Efficiency Ranking of Football Managers in the Italian Serie A: Sport and Financial Performance," Journal of Sports Economics, , vol. 22(7), pages 744-776, October.
    4. Giovanni Bernardo & Massimo Ruberti & Roberto Verona, 2022. "Image is everything! Professional football players' visibility and wages: evidence from the Italian Serie A," Applied Economics, Taylor & Francis Journals, vol. 54(5), pages 595-614, January.
    5. Pedro Garcia‐del‐Barrio & Pablo Agnese, 2023. "To comply or not to comply? How a UEFA wage‐to‐revenue requirement might affect the sport and managerial performance of soccer clubs," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 767-786, March.
    6. Ana Pérez-González & Pablo Carlos & Elisa Alén, 2022. "An analysis of the efficiency of football clubs in the Spanish First Division through a two-stage relational network DEA model: a simulation study," Operational Research, Springer, vol. 22(3), pages 3089-3112, July.
    7. Garcia-del-Barrio, Pedro & Agnese, Pablo, 2021. "Does Compliance with Financial Fair Play Rules Improve the Football Clubs' Sport Performance and Their Chances to Reach UEFA Competitions?," IZA Discussion Papers 14474, Institute of Labor Economics (IZA).
    8. Marco Di Domizio & Raul Caruso & Bernd Frick, 2020. "Intelligenza Collettiva E Valore Di Mercato Dei Calciatori: Il Caso Transfermarkt," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 16(2), pages 155-172, novembre.

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