Financial fair play and competitive balance in the Premier League

Abstract

Purpose: The introduction of financial fair play regulations in 2011 was accompanied by criticism that they would have an adverse effect on competitive balance in European football. Counterpoints were also expressed, suggesting that the opposite would occur; that they would actually increase competitive balance through reducing the importance of financial power. The lack of clarity and cohesion on this issue prompted this study, which examines the effect FFP has had on competitive balance in the English Premier League. Design: The analysis conducted uses the Herfindahl Index of Competitive Balance as the primary method, and is supported by standard deviation of points analysis and a Scully-Noll ratio analysis, which together provide an indication of the level of competitive balance for each of the past 21 seasons, from 1995/96 to 2015/16. This examination allows for the trends in competitive balance to be identified, with emphasis drawn on the seasons after the introduction of the regulations. Findings: The results provide no indication that FFP regulations have resulted in a decline in competitive balance in the EPL, instead hinting that a positive effect may have been caused. This positive effect exceeds the primary aim of the regulations and underlines their importance in the future stability of club football. Originality/value: While underlining the need for further research on the topic, this study provides the first insights to the effects of FFP regulations on competitive balance in the EPL. These insights would support the view that FFP initiatives have begun to shift the focus of sporting competition away from financial strength towards more natural means of competition such as efficiency, innovation and good management.

Has UEFA’s financial fair play regulation increased football clubs’ profitability?

“…Plumley et al (2019) examine competitive balance in the big five European leagues before and after FFP. They find a significant decline in competitive balance in Spain, Germany, and France but not in England (consistent with Freestone & Manoli, 2017) and Italy. Gallagher and Quinn (2020) investigate the effect of FFP on sporting and financial efficiency of English football clubs.…”

“…The study's results are consistent with the view that FFP might have further amplified the competitive imbalance by reducing the equilibrium in European football leagues and freezing current hierarchies. However, Freestone and Manoli (2017) provide evidence that FFP regulations have not resulted in a reduction in competitive balance in the English Premier League (EPL). Plumley et al (2019) examine competitive balance in the big five European leagues before and after FFP.…”

“…There are both theoretical (Franck, 2014;Peeters & Szymanski, 2014;Sass, 2016) and empirical analyses of UEFA's FFP, especially on its effects on competitive balance (Birkhäuser et al, 2019;Freestone & Manoli, 2017;Plumley, Ramchandani, & Wilson, 2019). Recent studies have found that the FFP has further amplified the competitive imbalance, but the effect is not uniform across leagues.…”

The implementation of integrated marketing communication (IMC): evidence from professional football clubs in England

“…First, selecting companies that operate in the same industry sector would allow for any differences among sectors to be avoided. Second, an independent (with minimum state involvement) and financially growing sector, such as the EPL, would prevent for any macro-economic factors of influence, such as unstable financial times, to affect the analysis (Freestone and Manoli, 2017). The EPL is currently considered one of the fastest growing industry sectors in the UK, achieving a revenue increase of one £ billion within the last three years, and attracting considerable investments, commercial partnerships and supporter audience globally (Deloitte, 2016).…”

An anatomy of Turkish football match-fixing

“…The matches selected fall under two categories; firstly, matches of Fenerbahçe with competitive balance between the team and its opponent; and secondly, matches with competitive balance between the runner-up teams for the Championship title and their opponents. Competitive balance, the premise that sporting contests must contain elements of unpredictability and thus an uncertain outcome, is a central element to any sporting contest (Freestone and Manoli 2017). In both categories of matches, the existence of a high unpredictability of the result and the subsequent effect its outcome would have on the final ranking of the league table were the main criteria for the selection of particular matches to manipulate.…”