Regulatory intensity in English and German professional football

Abstract

Purpose-In order to secure a proper execution of sporting competitions, national governing bodies of professional football leagues apply specific regulatory procedures. In this context, special focus is placed on requirements that are supposed to ensure financial stability of clubs. They, in turn, help avoid negative economic externalities, i.e. the problem that financial difficulties from one club can affect other clubs and stakeholders due to the interdependent relationships of the competition. These regulations on a national level in European professional football leagues show several significant differences. Therefore, the aim of this paper is to comprehensively analyze financial regulatory procedures of professional football leagues to generate possible improvements of the regulations in detail. Design/methodology/approach-Using a document analysis of the regulation books of the English Premier League and German Bundesliga, this study compares the regulatory procedures of those important European professional football leagues. Further evaluation was performed through a qualitative content analysis to develop a category system including six categories with 72 criteria from deductive and inductive procedures. For more advanced coding an assessment scale was integrated. Findings-Compared to the Premier League, the regulation of the Bundesliga points to a more intensive regulation in all categories and across all analyzed indices. The results of both leagues partially reveal that assessment and monitoring requirements tend to be ineffective, which can substantially endanger the achievement of the whole monitoring process' aims. The intention to ensure the financial stability for securing the league competition can be missed in such a situation and negative economic externalities cannot be prevented effectively. Originality/value-For the first time, this study includes all relevant requirements of financial club assessment and monitoring. Thereby, an abstract comprehensive and systematic structure for professional team sports leagues is described and allows for a concrete international comparison of two European professional football leagues. At the end several approaches to improve the regulatory framework are provided.

Why do football clubs fail financially? A financial distress prediction model for European professional football industry

“…[9] argued that with greater regulation, such as the FFP, it can increase the imbalance in the leagues because it can protect well-established clubs against emerging clubs. [52] supported these conclusions after analyzing and comparing the regulation of English and German football. [53] has shown that the FFP has been able to improve financial recovery but has been able to increase polarization.…”

PROFUT: an analysis of the capital structure of Brazilian soccer teams

“…These economic consequences can become a threat to the integrity of sports competition, according to Buraimo (2006), in addition to damaging the league's image and reducing the club's revenues. Bachmaier (2018) also adds that due to this financial responsibility of clubs, certain regulations aim to avoid negative economic externalities for all interested parties.…”

“…For the consideration of regulatory requirements related to the assessment and monitoring of financial stability, the negative effects of economic activity on the well-being of third parties are relevant and may allow a drop in revenues, given the inefficient allocation of resources. According to the concept of market failure, such theorizing could justify government intervention, contributing to improvements in capital allocation (Bachmaier, 2018).…”

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“…Essas consequências econômicas podem se transformar em uma ameaça à integridade da competição esportiva, conforme Buraimo (2006), além de prejudicar a imagem da liga e reduzir as receitas do clube. Bachmaier (2018) também complementa que devido a essa responsabilidade financeira dos clubes, certos regulamentos visam evitar externalidades econômicas negativas para todas as partes interessadas.…”