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ABSTRACT
We analyze the effect of the introduction of stricter financial constraints on the trade-off between sporting and economic results. We apply a stochastic Cobb-Douglas production frontier model to a sample of Italian Serie A teams, i.e. first division, over the period 2005–2015 to evaluate the variation in soccer clubs’ cost efficiency following the application of the UEFA Financial Fair Play (FFP) principles in 2010. FFP imposes stricter financial regulation as a requirement for a club to be admitted to Union of European Football Associations (UEFA) tournaments. Firstly, we find that FFP does not improve the average efficiency of the Italian first division teams. Secondly, we show that FFP has contributed to leveling the playing field, reducing the gap in terms of efficiency between top teams and lower-tier teams.
Abbreviations: FFP: Financial Fair Play; UEFA: Union of European Football Associations; DEA: Data Envelopment Analysis; SFA: Stochastic Frontier Analysis
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 We define the efficiency of an economic unit as the ability to minimize input costs in order to produce a certain quantity of output (see Coelli et al. Citation2005).
2 Its governing Body, FIGC, was established in 1898.
3 In 2017, Italy, as a national team, is second in the world for victories in the World Cup (4) and, as individual clubs, is second in Europe for the number of Champions League wins (12).
4 Mainly Champions League and Europa League.
5 F Further information at: https://www.uefa.com/insideuefa/protecting-the-game/club-licensing-and-financial-fair-play/ (Accessed: 1 May 2017).
7 Failed because of bankruptcy in 2008.
8 Milan 2006/07 and Inter 2009/10.