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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 – Why Loss-Making Is a Problem: The Example of the English Football League

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Drawing on case material from the English Football League, this paper argues that (1) consistent loss-making is always a problem, even in the football industry, (2) European football is facing an unprecedented financial crisis, and (3) the implementation of the Financial Fair Play regime is an entirely reasonable and logical response to this crisis.

benefactor, loss-making, bankruptcy, tax, financial fair play.

It has long been the view of the author that it was simply impossible for the football industry to defy the laws of economic gravity and continue to make losses year after year without any long term consequences1. In England, there has never been a season since the foundation of the Premier League in 1992 when either the combined clubs in the Premier League (level 1) and the Football League (levels 2–4) made a pre-tax profit – substantial losses are the norm. For example, figures from the Deloitte Annual Review of Football Finance indicate that in the 2011/2012 season the 20 clubs in the Premier League lost £245m and the 72 clubs in the Football League lost £224m (Deloitte 2013: 29). The consequence of this wholesale loss-making has been a very high level of bankruptcy in English football, 57 separate bankruptcy events between 1992 and 2013 in the top four divisions, out of a total of 92 clubs. On every occasion an extended group of creditors, from Her Majesty’s Revenue & Customs (the UK tax authority) to small business suppliers have gone unpaid. This in...

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