Potential agency problems in European club football? The case of UEFA Financial Fair Play

Schubert, Mathias

doi:10.1108/sbm-02-2014-0006

Cited by 26 publications

(29 citation statements)

References 47 publications

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“…Second and by contrast, we find that the relationship between these same set of variables and FP is, however, insignificant except for the board NED that remained significant and negatively related to FP‐ROA. Our findings appear to reflect existing view (Acero et al, 2017; Dimitropoulos et al, 2016; Schubert, 2014) that sports organisations, especially football ones tend to prioritise on‐the‐field performance (NFP‐Points) over off‐the‐field performance (FP). Our evidence is largely robust to using alternative measures and estimation models.…”

Section: Discussionsupporting

confidence: 87%

“…In fact, the extant research has already showed that board of directors' characteristics affect public companies' FP. However, and by contrast, given the evidence (Acero et al, 2017; Dimitropoulos, Leventis, & Dedoulis, 2016; Schubert, 2014) that sports organisations, especially football clubs tend to prioritise on‐the‐field performance (NFP‐Points) over off‐the‐field performance (FP), it is likely that the relationship between CG characteristics as measured in the current study and FP may differ from those that have been reported for non‐sports organisations, especially football ones. Therefore, as a further analysis, we investigate whether our findings reported under the main analysis can be extended to football clubs' FP.…”

Section: Empirical Results and Discussionmentioning

confidence: 94%

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Corporate governance and performance in sports organisations: The case of UK premier leagues

et al. 2020

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A considerable amount of accounting, economics and finance studies have investigated the link between corporate governance (CG) and performance in profit and non‐profit organisations. This paper departs from the existing literature by investigating the relationship between CG structures and both financial performance (FP, measured as return on assets (ROA) and equity (ROE)) and non‐financial performance, measured as league points won (NFP‐Points), of sports organisations with specific focus on UK premier leagues' football (soccer) teams. We collect data relating to CG structures, FP and NFP‐Points of football clubs playing in the four UK premier leagues in England, Northern Ireland, Scotland and Wales along with the English Championship teams over the 2011–2016 period. We analyse our data relating to 80 football clubs over a 6‐year period (generating 397 club‐year observations) by running a number of multivariate analyses to test our hypotheses. Our findings are as follows. First, we find that NFP‐Points is higher in clubs with larger boards, non‐executive directors (NED), CEO role duality, and higher percentage of foreign and/or younger directors, but lower in firms with higher percentage of female directors. Second and by contrast, we find that the relationship between these same set of variables and FP is, however, insignificant except for boards with NED that remained significant and negatively related to ROA. Our findings appear to reflect the prioritisation of on‐the‐field performance over off‐the‐field performance by sports organisations. Our evidence is largely robust to using alternative measures and estimation models.

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Section: Discussionsupporting

confidence: 87%

Section: Empirical Results and Discussionmentioning

confidence: 94%

Corporate governance and performance in sports organisations: The case of UK premier leagues

et al. 2020

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“…However, it is probable that football club managers resort to strategies which deteriorate accounting quality in order to accommodate the regulatory body's requirements -since UEFA's intention to discipline club finances by introducing economic rationality contradicts the underlying logic of the managerial priority to satisfy supporter demands for success on the field of play at all costs. Moreover, managers may be further incentivized to resort to EM activities 7 for two reasons: firstly, the industry is in dire financial need and, therefore, clubs cannot afford UEFA's severe penalties for non-compliance; and, secondly, UEFA intends to increase the amount of money available 8 for clubs participating in European championships (see, for instance, Franck, 2014;Peeters & Szymanski, 2014;Schubert, 2014).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Managing the European football industry: UEFA’s regulatory intervention and the impact on accounting quality

Dimitropoulos

Leventis

Dedoulis

2016

European Sport Management Quarterly

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Research question: European football clubs are known for an institutionalized management culture which prioritizes on-field success over financial performance. This creates an extremely competitive context within which most clubs operate, producing debts and deficits. However, in order to secure clubs' long-term financial viability, Union of European Football Association (UEFA) has introduced regulatory and monitoring processes tied to accounting data in order to assess clubs' financial performance. This study aims to determine whether UEFA's framework has an impact on clubs' management policies with regard to accounting quality. Research methods:The study employs a sample of 109 European football clubs for a seven-year period, 2008-2014 (three years before and four years after the regulatory intervention), to investigate the impact of the reform upon management practices related to accounting. Following prior literature, we employ the three most commonly used proxies of accounting quality: earnings management, conditional accounting conservatism and auditor switching. Results and findings: This study demonstrates that, at the expense of accounting quality, club management seeks to promote the image of a financially robust organization in order to secure licensing and, consequently, much needed funding from UEFA. In this manner, the dominance of a management culture which impairs financial performance is further cemented. Implications: UEFA should take into consideration that, in a financially distressed industry focused on achieving success on the field of play, the imposition of regulatory monitoring tied to accounting data inevitably leads to a loss of organizational credibility and transparency. Hence, UEFA's intervention should be accompanied by the imposition of a corporate governance framework which would aim to rearrange club management priorities by facilitating a change in institutionalized mentalities. ARTICLE HISTORY

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“…This, in turn, can endanger league competition and evoke negative externalities. Furthermore, the aim of sanctions is not to change intrinsic motivation for deviant behavior (Schubert, 2014). This can even lead to a deliberate change of the strategy at the expense of sporting success to comply with the regulatory requirements (Terrien et al, 2017).…”

Section: Results and Discussion For Category 4: 'Process'mentioning

confidence: 99%

“…Szymanski (2012) examines insolvencies of English football clubs from another perspective. His research is based on two alternative hypotheses: insolvency is either considered as a consequence of 'irrational exuberance' or 'negative productivity or Müller et al, 2012;Preuss, et al, 2014;Schubert, 2014;Schubert and Könecke, 2015;Szymanski, 2014b). Here it has to be pointed out that the UEFA's FFP regime has not been considered in literature in the context of national policies (except of the consideration for France by Dermit-Richard et al, 2017) although national league associations also target at preserving the long-term viability of their clubs.…”

Section: Literature Reviewmentioning

confidence: 99%

Regulatory intensity in English and German professional football

Bachmaier

Lammert

Plumley

et al. 2018

SBM

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Purpose-In order to secure a proper execution of sporting competitions, national governing bodies of professional football leagues apply specific regulatory procedures. In this context, special focus is placed on requirements that are supposed to ensure financial stability of clubs. They, in turn, help avoid negative economic externalities, i.e. the problem that financial difficulties from one club can affect other clubs and stakeholders due to the interdependent relationships of the competition. These regulations on a national level in European professional football leagues show several significant differences. Therefore, the aim of this paper is to comprehensively analyze financial regulatory procedures of professional football leagues to generate possible improvements of the regulations in detail. Design/methodology/approach-Using a document analysis of the regulation books of the English Premier League and German Bundesliga, this study compares the regulatory procedures of those important European professional football leagues. Further evaluation was performed through a qualitative content analysis to develop a category system including six categories with 72 criteria from deductive and inductive procedures. For more advanced coding an assessment scale was integrated. Findings-Compared to the Premier League, the regulation of the Bundesliga points to a more intensive regulation in all categories and across all analyzed indices. The results of both leagues partially reveal that assessment and monitoring requirements tend to be ineffective, which can substantially endanger the achievement of the whole monitoring process' aims. The intention to ensure the financial stability for securing the league competition can be missed in such a situation and negative economic externalities cannot be prevented effectively. Originality/value-For the first time, this study includes all relevant requirements of financial club assessment and monitoring. Thereby, an abstract comprehensive and systematic structure for professional team sports leagues is described and allows for a concrete international comparison of two European professional football leagues. At the end several approaches to improve the regulatory framework are provided.

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Potential agency problems in European club football? The case of UEFA Financial Fair Play

Cited by 26 publications

References 47 publications

Corporate governance and performance in sports organisations: The case of UK premier leagues

Corporate governance and performance in sports organisations: The case of UK premier leagues

Managing the European football industry: UEFA’s regulatory intervention and the impact on accounting quality

Regulatory intensity in English and German professional football

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