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Contemporary Research in Sports Economics

Proceedings of the 5 th ESEA Conference

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Edited By Oliver Budzinski and Arne Feddersen

This volume comprises scientific contributions in the context of the 5 th annual conference of the European Association of Sports Economics (ESEA), which took place in September 2013 in Esbjerg, Denmark. It contains five articles on UEFA’s financial fair play regulation in European football, written by internationally renowned sports economists like Stefan Szymanski, Joel Maxcy and Sean Hamil. Moreover, a further three chapters deal with football topics like the dismissal of coaches or competitive balance. Furthermore, the economics of sports events – the Olympics as well as local events – are analyzed by well-known scholars like Wladimir Andreff and Plácido Rodríguez. Next to team sports, new developments of the economics of individual sports like cycling, ski-jumping and motor-racing are explored.
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Financial Fair Play: Winners and Losers on and off the Pitch

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In this chapter we analyze the impact of the break-even rule embedded in Financial Fair Play on individual teams in England, Spain, Italy and France. In a counterfactual analysis we show which teams would be gaining and losing on the field and in financial terms. We also compare these results to the findings of the theoretical literature on Financial Fair Play.

Financial Fair Play, break-even rule, European football

In this chapter we look at the effects of the introduction of the break-even rule embedded in UEFA’s Financial Fair Play regulations (UEFA 2012). The break-even rule forbids clubs to spend more in “relevant” costs than they earn in “relevant” revenues with some leeway in the form of an “acceptable deviation”. In practice relevant costs include transfer costs (which is not the same as net transfer spending), player and manager salaries and other operating costs, but the term excludes investments in certain assets such as stadium facilities and youth academies. Relevant revenues are mainly comprised of match-day, media and sponsorship income. Crucially this excludes direct investments by team owners to fund operational losses. The rule is gradually going into effect in four phases, where UEFA is planning to decrease the acceptable deviation over time. Starting in 2014 teams are allowed to lose €45m over the past three seasons. This declines to €30m in 2016 and then further to an unspecified amount in 2019. In the long run UEFA wants to arrive at an acceptable deviation of €5m over...

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