Scroing in the European Footbal Market under Financial Fair Play Regulations

This paper provides guidelines to football clubs aiming for sporting success on a European level under Financial Fair Play Regulation (FFPR). FFPR forces clubs to consider financial health in addition to sporting success. The main criteria for clubs are to break-even and to put effort into the development of youth programs. Both factors and their effect on sporting success are analysed by means of a literature review and three empirical models. Model 1 tests the relationship between revenue and sporting success, defined by UEFA’s club coefficient ranking points. Model 2 and 3 are based on a sports applied version of Tullock’s (1980) contest success function (CSF), where the probability of success is dependent on a club’s investment in quality compared to the total investment in quality in the industry. The literature and both model 1 and 2 show that clubs should increase revenue to comply with FFPR as it positively affects sporting success. Clubs should also invest in youth programs, as MODEL 3 shows that more homegrown players on the pitch compared to your opponent does not negatively influence the probability of success. These investments facilitate meeting FFPR requirements. Foremost, clubs should embrace FFPR and push their leagues to implement similar regulation.