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Does Fair Play Matter? UEFA Regulation and Financial Sustainability in the European Football Industry

42 Pages Posted: 18 Oct 2016 Last revised: 15 Jul 2017

Ariela Caglio

Bocconi University - Department of Accounting; SDA Bocconi

Angelo D'Andrea

Bocconi University - BAFFI Center on International Markets, Money, and Regulation

Donato Masciandaro

Bocconi University - Department of Economics

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation

Date Written: October 1, 2016

Abstract

In 2009 the Union of European Football Associations (UEFA) launched its Financial Fair Play Regulations (FFPR) aimed at preventing professional football clubs from overspending in the quest of sporting success to the detriment of their long‐run financial sustainability. The rationale and the effectiveness of the FFPR have both been questioned, but only on theoretical grounds. We make a first attempt at bringing empirical evidence to this debate exploiting an original dataset covering 156 clubs playing in the top five European Leagues (those of England, France, Germany, Italy and Spain) in the period 2006‐2015. We address two main questions: whether before 2009 there was indeed a problem of growing financial leverage for European football clubs, and whether after 2009 the financial leverage of European clubs has started decreasing. We find that the introduction of the FFPR is associated with changes in the financial sustainability of European football clubs that are consistent with the regulations’ intended effects. These changes are, however, rather weak and vary substantially across national leagues.

Suggested Citation

Caglio, Ariela and D'Andrea, Angelo and Masciandaro, Donato and Ottaviano, Gianmarco I.P., Does Fair Play Matter? UEFA Regulation and Financial Sustainability in the European Football Industry (October 1, 2016). BAFFI CAREFIN Centre Research Paper No. 2016-38. Available at SSRN: https://ssrn.com/abstract=2853349 or http://dx.doi.org/10.2139/ssrn.2853349

Ariela Caglio

Bocconi University - Department of Accounting ( email )

Via Roentgen 1
Milan, 20136
Italy

SDA Bocconi ( email )

Via Bocconi 8
Milan, Milan 20136
Italy

Angelo D'Andrea

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Donato Masciandaro (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Gianmarco Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation ( email )

Via Gobbi 5
Milan, 20136
Italy

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