Mobolaji Alabi (ICMA) – “The financial impact of Financial Fair Play regulation: Evidence from the English Premier League” – PhD Seminar

Abstract

In response to the ailing financial situation of European Football clubs, UEFA introduced Financial Fair Play (FFP) regulation in 2011 to guide clubs towards profitability and sustainability. The existing literature is inundated with the impacts of FFP on footballing competitiveness. However, this study focuses on FFP’s impact on financial performance. The English Premier League (EPL) – with the highest losses and debt level in Europe pre-FFP – is an excellent scene to assess the effectiveness of FFP. Drawing on financial data of 37 football clubs in the EPL and applying difference-in-differences quasi-experiment, we measure the effectiveness of the regulation. We find statistical significance for improved profitability; however, solvency is yet to experience similar improvements. We believe our findings and subsequent regulatory recommendations can further improve the financial performance of football clubs.