Did UEFA’s Financial Fair Play Harm Competition in European Football Leagues?

Review of Managerial Science, Forthcoming

40 Pages Posted: 7 Apr 2016 Last revised: 5 Jul 2017

See all articles by Stephan Birkhäuser

Stephan Birkhäuser

Independent

Christoph Kaserer

Technische Universität München (TUM)

Daniel Urban

Erasmus University Rotterdam (EUR) - Department of Business Economics

Date Written: July 04, 2017

Abstract

When introducing UEFA’s Financial Fair Play (FFP) it was argued that as a beneficial side effect competition in European football leagues should become more equilibrated and perceived as being fairer. Based on a hand-collected dataset on league results, player market values as well as investor payments of more than 300 European football clubs, we scrutinize the impact of FFP on the competitive landscape in major European football leagues. By applying a fixed-effect panel regression difference-in-differences approach, we find results that are consistent with the view that FFP might have further amplified the competitive imbalance. This might be caused by the fact that FFP raises some barriers against the entrance of new investors. Moreover, we present evidence that FFP supports the former season’s winner in terms of budget shares in the upcoming season. Overall, our results support the view that FFP turns European football leagues less equilibrated and even tends to freeze current hierarchies.

Keywords: Football, competition, investors, inequality, fair play

JEL Classification: L83

Suggested Citation

Birkhäuser, Stephan and Kaserer, Christoph and Urban, Daniel, Did UEFA’s Financial Fair Play Harm Competition in European Football Leagues? (July 04, 2017). Review of Managerial Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2759335 or http://dx.doi.org/10.2139/ssrn.2759335

Stephan Birkhäuser

Independent ( email )

No Address Available

Christoph Kaserer (Contact Author)

Technische Universität München (TUM) ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25489 (Phone)
+49 89 289 25488 (Fax)

HOME PAGE: http://www.cefs.de

Daniel Urban

Erasmus University Rotterdam (EUR) - Department of Business Economics ( email )

Netherlands

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