Financial Fair Play in European Club Football - What is it All About?

Abstract

The new UEFA Club Licensing and Financial Fair Play Regulations have encountered stiff criticism. The concerns are that the new regulations may harm football in three different ways: By forgoing the potential benefits from substantial injections of "external" money into payrolls, by restricting competition in the player market without at the same time achieving benefits from more balanced competition, and by creating some sort of barrier to entry which could "freeze" the current hierarchy of clubs. It is the purpose of this paper to take these concerns as a starting point for discussing the likely effects of the new regulations.As a by-product it will become obvious why and in which points the concerns are unfounded.

A new research area: disequilibrium sports economics

“…in particular, the International Journal of Sport Finance has played a crucial role as a springboard to this new disequilibrium approach to sports economics. This has been done when the journal published in the same year a rather theoretical article about the building blocks of a disequilibrium model of team sport leagues (Andreff, 2014) as well as a practical assessment of the Union of European Football Associations' (UEFA) Financial Fair Play facing the fact that many European football clubs actually do not break even because they face a soft -instead of hard -budget constraint (Franck, 2014). in the market for fan attendance, ticket touting expresses a local excess demand for a local sport show, whereas skyrocketing superstar wages express an excess demand for their talent.…”

Untitled

“…Football clubs are encouraged to invest in the infrastructure and the youth sector on one hand, and to compete with their revenues without external funds coming in and to settle their liabilities in a timely manner on the other hand (UEFA, 2015). The Club Financial Control Body (CFCB) was created as a new unit consisting of independent legal and financial experts who will be monitoring the implementation of new rules (Franck, 2014). These regulations imply the existence of an implicit relationship between the financial health and sporting success at least for the whole European football industry in the long run.…”

Dynamic Contests with Bankruptcy: The Despair Effect

“…recent FIFA proposal to enforce a budget balance among all of the clubs that play European competitions. To play, clubs must prove that they have no outstanding payments to players, to each other or to the tax authorities (Franck 2014).…”