Does Financial Fair Play Matter? The Real Effects of UEFA Regulation for European Football Clubs

30 Pages Posted: 27 Sep 2019 Last revised: 3 Oct 2019

See all articles by Ariela Caglio

Ariela Caglio

Bocconi University - Department of Accounting; SDA Bocconi

Sébastien Laffitte

Ecole Normale Superieure de Cachan (ENS); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

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: September 1, 2019

Abstract

We provide the first detailed quantitative assessment of the effects of the Financial Fair Play Regulation (FFPR) introduced by the Union of European Football Associations (UEFA) on the income statements and balance sheets of European football clubs. While other studies exist documenting the financial challenges of the European football industry, to the best of our knowledge none has yet analyzed the implications of the FFPR. Our analysis relies on two two sources of information, one we assembled using information from Amadeus (Bureau van Dijk) and the other collected by the UEFA for the specific purpose of implementing the FFPR. Drawing on Amadeus data and regression outputs provided by the UEFA, we consistently find that the introduction of the FFPR has been followed by a significant improvement in the clubs’ income statements, which is consistent with the new accounting rules having ‘real effects’ on the clubs’ management. However, this positive development has yet to be paralleled also in the club’s balance sheets (notably in terms of debt) and cash flow statements, which may call for the FFPR to be further extended in that direction.

Keywords: Financial fair play, UEFA, European football clubs, Financial sustainability, Break even requirement (BER)

JEL Classification: L5, L8

Suggested Citation

Caglio, Ariela and Laffitte, Sébastien and Masciandaro, Donato and Ottaviano, Gianmarco I.P., Does Financial Fair Play Matter? The Real Effects of UEFA Regulation for European Football Clubs (September 1, 2019). BAFFI CAREFIN Centre Research Paper No. 2019-119. Available at SSRN: https://ssrn.com/abstract=3459935 or http://dx.doi.org/10.2139/ssrn.3459935

Ariela Caglio

Bocconi University - Department of Accounting ( email )

Via Roentgen 1
Milan, 20136
Italy

SDA Bocconi ( email )

Via Bocconi 8
Milan, Milan 20136
Italy

Sébastien Laffitte

Ecole Normale Superieure de Cachan (ENS) ( email )

61 avenue du président Wilson
Cachan, Paris 94235
France

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Donato Masciandaro (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

Gianmarco I.P. 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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