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Financial Fair Play in European Football: Economics and Political Economy a Review Essay

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  • Angelo D’Andrea
  • Donato Masciandaro

Abstract

The 2010 UEFA Club Licensing and Financial Fair Play Regulations (FFPR) constitute an enhancement of the Club Licensing System, originally introduced in 2004-2005 with the aim to regulate the world of European football and create a more competitive and level playing field. The aim of this paper is to review the economic studies that have so far investigated the subject of Financial Fair Play Regulations, in order to provide a comprehensive overview of their pros and cons. Starting from a common assumption - that football clubs are special firms for reasons of economics and political economy - all but one of the reviewed articles criticize FFPR, by focusing on the Break-Even Requirement (BER), i.e. the principle according to which relevant expenses must be matched by relevant revenues. The critiques fall into three categories, highlighting that on the one side FFPR are likely to produce inefficiencies in labour markets, and, on the other side, they are likely to trigger unfair competition in football leagues, as well as freezing existing hierarchies in European soccer. The paper analyzes each individual critique, as well as the respective counterarguments.

Suggested Citation

  • Angelo D’Andrea & Donato Masciandaro, 2016. "Financial Fair Play in European Football: Economics and Political Economy a Review Essay," BAFFI CAREFIN Working Papers 1615, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    • Handle: RePEc:baf:cbafwp:cbafwp1615
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    References listed on IDEAS

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    1. Paul Madden & Terry Robinson, 2012. "Supporter Influence on Club Governance in a Sports League; a “Utility Maximization” Model," Scottish Journal of Political Economy, Scottish Economic Society, vol. 59(4), pages 339-360, September.
    2. J. Kornai & E. Maskin & G. Roland, 2004. "Understanding the Soft Budget Constraint," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 11.
    3. Egon Franck, 2014. "Financial Fair Play in European Club Football: What Is It All About?," International Journal of Sport Finance, Fitness Information Technology, vol. 9(3), pages 193-217, August.
    4. Markus Sass, 2012. "Long-term Competitive Balance under UEFA Financial Fair Play Regulations," FEMM Working Papers 120005, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    5. repec:oup:ecpoli:v:29:y:2014:i:78:p:343-390 is not listed on IDEAS
    6. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    7. Paul Madden, 2012. "Welfare Economics of "Financial Fair Play" in a Sports League With Benefactor Owners," Economics Discussion Paper Series 1221, Economics, The University of Manchester.
    8. Paul Madden, 2014. "Does Break-Even Regulation of Soccer Clubs Make Sense?," Economics Discussion Paper Series 1405, Economics, The University of Manchester.
    9. Thomas Peeters & Stefan Szymanski, 2014. "Financial fair play in European football [v. National Football League, 560 (The Supreme Court May 24, 2010)]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 29(78), pages 343-390.
    10. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
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    Citations

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    Cited by:

    1. Havran, Zsolt & András, Krisztina, 2022. "A puha költségvetési korlát szindrómája a hivatásos labdarúgásban. Kitekintés a nemzetközi és a magyarországi sajátosságokra [The soft-budget constraint in professional football syndrome. A view of," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 230-254.
    2. Denis Alajbeg & Zoran Bubas & Bojan Moric Milovanovic, 2022. "Financial Health and Self-Sustainability of a Small European Football League: The Realities of Top-Flight Croatian Football," Sustainability, MDPI, vol. 14(24), pages 1-26, December.
    3. Florbela Dantas & Ana Borges & Rui Silva, 2020. "Impact of UEFA Champions League and UEFA Europa League on Financial Sustainability—Case Study of Two Small Football Portuguese Teams," Sustainability, MDPI, vol. 12(21), pages 1-15, November.
    4. Stephan Birkhäuser & Christoph Kaserer & Daniel Urban, 2019. "Did UEFA’s financial fair play harm competition in European football leagues?," Review of Managerial Science, Springer, vol. 13(1), pages 113-145, February.

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