UEFA Financial Fair Play’s effect on the salary-to-revenue ratios of European professional football clubs – evidence from top five football leagues in Europe
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School of Business |
Master's thesis
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Author
Date
2017
Department
Major/Subject
Mcode
Degree programme
Accounting
Language
en
Pages
81
Series
Abstract
Objectives of the study This study examines whether the adoption of UEFA’s Financial Fair Play regulation has re-duced the salaries in relation to revenues in the top five football leagues in Europe. The study applies Soft Budget Constraint theory to explain the peculiar operating environment of Euro-pean professional football, and explores whether the Break-Even requirement of Financial Fair Play regulation has shifted the European footballing environment towards financially re-sponsible behaviour. Data and methodology The study is quantitative in nature and applies robust pooled OLS regression to detect chang-es in salary-to-revenue –ratios after the introduction of Financial Fair Play regulation. The sample consists of 79 football clubs from England, Spain, Germany, Italy and France between seasons 2008/09 –2014/15 and the data is mainly obtained from ORBIS –database. In case of missing data, the dataset has been complemented with data from the annual reports of the clubs. Results The findings of this study suggest that the Financial Fair Play regulation has reduced salaries in relation to revenues in the top five leagues in Europe. More specifically, the salary-to-revenue –ratios have been reduced the most in Spain and in England, whereas the regulation has not had any effect in Germany. Furthermore, teams that have not qualified for UEFA’s competitions, namely Champions League and Europa League, have reduced their salary-to-revenue –ratios remarkably. No such effect could be found on teams that have qualified for international football. The results of this study indicate that the Financial Fair Play regulation has shifted the Soft Budget Constraint environment of European professional football towards more financially responsible behaviour.Description
Thesis advisor
Huikku, JariKeywords
financial fair play, break-even requirement, UEFA, salary-to-revenue –ratio, soft budget constraint, football, soccer
