Analyzing the effectiveness of UEFA's financial fair play regulations: A comparative study of the French Ligue 1 and the English Premier League

L'analyse du fair-play financier au prisme de son efficacité: regards croisés entre la Ligue 1 et l'English Premier League

Aurélien François (), Nadine Dermit-Richard, Daniel Plumley and Robert Wilson
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Aurélien François: CETAPS - Centre d’études des transformations des activités physiques et sportives - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université
Nadine Dermit-Richard: CETAPS - Centre d’études des transformations des activités physiques et sportives - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université - IRIHS - Institut de Recherche Interdisciplinaire Homme et Société - UNIROUEN - Université de Rouen Normandie - NU - Normandie Université
Daniel Plumley: Sheffield Hallam University

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Abstract: This article assesses the effectiveness of the UEFA Financial Fair Play (FFP) regulations, one of the few financial regulatory tools for open leagues in Europe in two top divisions in Europe. The objective of FFP borrows from the theoretical concept of ‘soft budget constraint' in sport finance and regulation literature. Introduced by UEFA in 2011 and fully implemented from 2013, FFP requires clubs qualifying for European competitions to comply with the financial concept of "break-even", where football expenses should not exceed football revenues. This study uses the French Ligue 1 (L1) and the English Premier League (PL) as a case study for analysing the effectiveness of FFP and includes thirteen clubs (seven French and six English) in total. The selection of clubs was guided firstly by data access but was also restricted to clubs regularly participating in European competitions between 2011, when FFP came into effect, and 2018. The scope of the study enabled us to measure the effect of FFP with regard to the break-even rule and the payroll ratios before and after its full application by comparing the periods 2008-2013 and 2013-2018 using descriptive statistics and tests of comparisons. The results are contrasted according to the national context of the clubs studied and the indicators analysed. First, they show a general improvement in the profitability of the clubs in the sample, although the results are statistically significant only in the case of the PL. Concerning the payroll ratios, the first measure (payroll/operating expenses) decreased significantly for all clubs, with significant differences found comparatively in the case of the L1. The second measure (payroll/operating income) also decreased, but the decrease was only significant at the sample level when the trading activity was included in operating income. From a theoretical perspective, this contribution makes it possible to compare the conclusions obtained with existing works, be it predictive or empirical in nature. From a managerial point of view, it calls for UEFA to remain vigilant in respect of FFP. While the results appear to suggest that FFP has been effective in improving the financial equilibrium of clubs and their payroll ratios, the link between better financial health and good governance remains a key challenge for the industry moving forward.

Keywords: Financial Fair-Play; Financial Regulation; Effectiveness; Cross-national comparisons; European Football; Fair-play financier; Régulation financière; Efficacité; Comparaisons internationales; Football européen (search for similar items in EconPapers)
Date: 2021-12-14
New Economics Papers: this item is included in nep-cul and nep-spo
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Published in Management & Organisations du Sport, 2021, Issue 3 | 2021, ⟨10.46298/mos-2021-7270⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03167685

DOI: 10.46298/mos-2021-7270

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