Honors College Theses

Publication Date

4-18-2023

Major

Economics (BBA)

Document Type and Release Option

Thesis (open access)

Faculty Mentor

Dr. Jeffrey Schiman

Abstract

This study explores the effects that Financial Fair Play (FFP) regulations introduced by the Union of European Football Associations (UEFA) in the 2011-12 season have on the success of football teams within the league. The rationale of FFP was to make the league more competitive by restricting a team’s ability to spend on player salaries. Through the construction of a comprehensive longitudinal dataset, I analyzed team performance from the 2004-05 season through to the 2020-21 season, measuring club success in points-per-game, wins, losses, and draws and financial success using team profit margin and salary expenditures. Using difference-in-differences approaches, I find that the effectiveness of FFP regulations was limited for the largest salary teams prior to the regulation. Amongst the smallest salary teams, I find some evidence of improvements in terms of points-per-game and wins along with reductions in losses; these gains were concentrated in the years immediately following the regulation. Interestingly, I find that the largest salary teams prior to FFP spent even more in the period following FFP, opposite of the intention of the regulations. The effectiveness of FFP regulations seems highly debatable based on the findings of my study.

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