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Study finds FFP reinforces financial inequality in football

SoccerNews in General Soccer News 8 Sep 2016

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Financial Fair Play (FFP) regulations have “reinforced” inequality in football rather than reducing the gap between the richest and poorest clubs, a new study has found.

Research conducted by economists from the Technical University of Munich (TUM), who assessed 10 years of data, revealed FFP rules could block investment in smaller clubs.

Dr Daniel Urban, co-author of the report, titled ‘Did UEFA’s Financial Fair Play Harm Competition in European Soccer Leagues?’, compared the impact of football investors to venture capital in economics.

“Investors can break up established structures and thus strengthen competition – similar to what we have seen with venture capital in economics,” Dr Urban said.

“The UEFA regulations, however, seem to have set too high barriers for investors looking to start sponsoring smaller clubs.

“Due to the financial caps, potential financiers don’t see a chance for financially weaker clubs to transform into internationally competitive teams by means of their investment. This is how FFP solidifies existing hierarchies.”

Premier League clubs Manchester City and Bournemouth have both been handed big fines as a result of breaking FFP rules, while Ligue 1 champions Paris Saint-Germain were also punished for overspending.

The TUM report recommends UEFA amends FFP so smaller clubs are more attractive to investors, hailing conditions introduced for the licensing period from 2015 to 2018 as a step in the right direction.

Study author Professor Christoph Kaserer said: “FFP didn’t reduce inequality between clubs, but rather increased it further.

“Clubs and soccer associations could take some cues from the business world on how to combine the free market, competition regulations, and good management practice.

“Following extensive debates, corporate governance in large enterprises has undergone substantial transformation over the past 15 years. Soccer could follow the lead in order to avoid losing the acceptance of fans.”

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