To comply or not to comply? How a UEFA wage‐to‐revenue requirement might affect the sport and managerial performance of soccer clubs

Abstract

This paper evaluates the soccer clubs' compliance with a potential wage‐to‐revenue requirement by the Union of European Football Associations (UEFA) and studies the effect on sport achievements resulting from sports and managerial skills. The empirical analysis uses data on first division teams of the Premier League, La Liga, Serie A, and Ligue 1, from seasons 2009/2010 to 2018/2019. We measure the teams' quality through the annual wages and use the wage‐to‐revenue ratio as a proxy measure for financial responsibility. Our results reveal that a more prudent financial performance, which is generally linked to good management practices, implies better sport performance and higher chances of qualifying for UEFA competitions.

Financial Regulation in Sport Championships as an Anticompetitive Institution

“…After all, without the financial injections, it does not seem to be possible to enter the top segment of the market, even in a longer period of time.Very recently, the first empirical analyses of the effects of UEFA's FFP have been published, confirming several of the theoretically derived predictions. FFP comparatively increased the profitability of clubs falling under the regulation(Ahtiainen & Jarva, 2022;Alabi & Urquhart, 2023;Caglio et al 2023;Garcia-del-Barrio & Agnese, 2023) but decreased competitive balance at the European level…”