Financial Fair Play in European Football: Economics and Political Economy A Review Essay
The 2010 UEFA Club Licensing and Financial Fair Play Regulations (FFPR) constitute an enhancement of the Club Licensing System, originally introduced in 2004 2005 with the aim to regulate the world of European football and create a more competitive and level playing field. The aim of this paper is to review the economic studies that have so far investigated the subject of Financial Fair Play Regulations, in order to provide a comprehensive overview of their pros and cons. Starting from a common assumption that football clubs are special firms for reasons of economics and political economy all but one of the reviewed articles criticize FFPR, by focusing on the Break Even Requirement (BER) i.e. the principle according to which relevant expenses must be matched by relevant revenues. The critiques fall into three categories, highlighting that on the one side FFPR are likely to produce inefficiencies in labour markets, and, on the other side, they are likely to trigger unfair competition in football leagues, as well as freezing existing hierarchies in European soccer. The paper analyzes each individual critique, as well as the respective counterarguments.