FFP and Salary Caps in the Eredivisie

The Financial Fair Play (FFP) regulations created by UEFA are comparable to salary caps in the United States. I investigate the effects of an imposition of the FFP rules in the 2012/2013 Eredivisie season compared to an application of typical American style salary caps in the same year. The Eredivisie is first discussed, followed by an explanation of the FFP and typical salary caps. An analysis on the effect of changed team payrolls due to the FFP or salary caps indicate that both regulations decrease overall wage spending and payrolls and thus increase team profits. Analysis also reveals that the FFP “sticks” the position of the large teams at the top of the table while salary caps increase competitive balance thereby indicating that the FFP is used as a tool for financial rather than sporting regulation.