The Impact of Union of European Football Associations (UEFA) Financial Fair Play Regulation on Audit Fees: Evidence from Spanish Football

Abstract

This paper analyzes whether the Financial Fair Play (FFP) regulations set by Union of European Football Associations (UEFA) have influenced the auditing fees charged to football clubs. In addition, it explores the determinants of audit fees. We used a two-sample t-test with equal variances to determine whether differences are present. After this, we carried out a panel data regression with the clubs fix effect to estimate the determinants of audit fees in football clubs. Our findings revealed an increase of audit fees after the implementation of FFP regulations. On top of that, audit fees were explained by the presence of foreign investors if the audit firm was one of the Big 4 and if the auditor was a woman. The regulation change has had an impact on the audit fees charged by auditors for their services. However, this increase may be compensated over future years given the improving financial situation of clubs; therefore, the auditors’ risk diminishes and subsequent audit fees may be reduced. UEFA should monitor audit fees as well as the quality of the audit reports, which have become crucial to obtaining the license to participate in UEFA competitions.

Transparency and Accountability in Sports: Measuring the Social and Financial Performance of Spanish Professional Football

“…However, the financial reports of the Higher Sports Council of Spain (Consejo Superior de Deportes (CSD)) [52] present evidence of the improvements in the financial situation of Spanish football as a consequence of the new regulations. Mareque et al [25] observe improvements in the financial performance of the clubs, and Ahtiainen and Jarva [31] highlight the positive impact of the regulations on Spanish football compared to other European leagues. This behavior is related to that observed in other sectors of Spanish sport in response to new financial regulations [53].…”

“…However, some studies suggest that this regulatory effort may not be having the intended results, reducing, rather than increasing, the transparency and credibility of clubs' managers, since the imposition of regulatory control linked to reporting based on accounting data can lead to a deterioration in accounting quality [15], to a discretionary choice of the audit firm [51], and an increase in auditing fees [25].…”

“…Another difference is the listing on the stock market. While English clubs have been registered since 1983, in Spain, there are no Professional Football League (Liga de Fútbol Profesional (LFP)) clubs to date that have been listed on the Stock Exchange [25], which also allows for less transparency and accountability. In fact, the richest clubs are not Sports Corporations, but Sports Associations (for example: Real Madrid and Barcelona).…”

The economics of team sport in Europe: production, monetization, deficit and regulation

“…La littérature sur les objectifs et l'efficacité du fair-play financier est aujourd'hui abondante (Barajas et al, 2017;Birkhäuser et al, 2019;Franck, 2018;Mareque et al, 2018;Plumley et al, 2018). Il ne nous est donc pas possible d'exposer ici l'ensemble des débats suscités par ce dispositif.…”

Comparative analysis of income trends and perceived value of squad of the highest turnover European football clubs (2010-2019)

“…The expenses of the clubs have grown linearly and many of them have been in economic difficulties for various reasons such as mismanagement, the dizzying increase in the wage bill, the cost of staff renewal or the purchase of certain football clubs for tycoons or states. For all these reasons, some international organizations, such as FIFA, have proposed account control mechanisms, seeking sustainable income and that comes exclusively from the football business (Mareque, Barajas, and López-Corrales, 2018;Sánchez et al, 2019).…”