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Abstract
In response to the severe financial plight of many clubs that regularly take part in European competitions, UEFA developed the concept of Financial Fair Play as an extension of its licensing regulations. The aim of the concept is to curtail financial foul play in European football (nonpayment of liabilities owing to rival clubs or employees) and financial doping (excessive funding provided to cover losses arising from expenses for playing talent not balanced by revenues). The paper addresses the question if the Financial Fair Play is an adequate concept to ensure the long-term viability and sustainability of European club football as intended by UEFA. To answer this question, we illustrate the empirical background and search for a theoretical justification within the field of sport economics. Based on structuring UEFA's objectives, we analyze and evaluate the major amendments of the Financial Fair Play Regulations.
Keywords: financial fair play, integrity, licensing, regulation, rat race, sports leagues, professional football
Introduction
Professional football clubs throughout Europe have been experiencing significant losses despite sustained revenue growth. Furthermore, quite a few clubs show considerable levels of indebtedness. Long-term financial stability as well as going concern of even prestigious clubs are at risk. At the same time, enormous funding by investors and benefactors of football clubs can be seen as a means of keeping clubs alive and of gaining influence on sporting performance through investments in valuable players. Together, these aspects have gained considerable attention in relation to what the primary focus should be: the actual performance on the pitch. Against this background, UEFA has decided to take action and, as a supplement to its existing licensing regulation, has issued the Financial Fair Play concept under the name of "UEFA Club Licensing and Financial Fair Play Regulations Edition 2010" (hereafter: UEFA, 2010a). Its main aims are to improve the financial performance of European club football and to protect its long-term viability and sustainability (see Art. 2(2) therein).
Among these issues, Financial Fair Play pursues many different detailed objectives, introducing several requirements, two of which are of major importance: 1) the enhanced rules concerning overdue payables (Art. 65-66) which came into force in June 2011; and 2) the break-even requirement specified in Art. 58-63. UEFA club monitoring of the break-even requirement will...