Financial Fair Play in European football

Abstract: This thesis deals with the matter of competitive balance in European club football. Its starting point is UEFA’s new set of regulations known as Financial Fair Play. These new rules officially started to be active for the season 2013-2014. The ground rule for FFP as I will call it further on, is the so-called “break-even” criterion, and cancels the possibility for clubs to make losses at the end of each season. This new regulation is important since it cancels the possibility for so called “sugar-daddy” club owners to make money injections into the club as a mean to buy players and pay high wages. This should impact well-known clubs such as Manchester City or Paris Saint-Germain for example, at least theoretically. The purpose of this study is to analyze whether or not these regulations will have a real impact on the competitive balance within and between leagues, in terms of fairness of the competition means. I first consider the consequences for the competitive balance in the short-term to then analyze consequences in the medium-term. Since these regulations have only been active for a few months my study is presented in the form of a prediction and reflects the expected outcome. This outcome shows that FFP will indeed improve the competitive balance between clubs. Especially because clubs will compete with similar and fairer means after FFP is introduced. However, big clubs will still have an advantage on smaller clubs mainly because of a bigger market size. But the fact that FFP will force clubs towards better management incentives should benefit the smaller ones that already focused on ”healthy” and “smart” management before FFP came into force. In the end those two effects might compensate each other.