Fair is foul: a critical analysis of UEFA financial fair play.

Szymanski, Stefan

Introduction

Names matter. Once upon a time every nation had a "Ministry of War," and now it is called the "Ministry of Defence." Businesses like to apply words such as "natural" and "organic" to their products; political parties adopt the word "democratic," whatever their intentions; and of course football clubs are variously "United," "Athletic," and "Sporting." The decision by UEFA to call its financial regulations "Financial Fair Play" (FFP) was a masterstroke. Who could argue that fair play should apply in financial matters, as in all aspects of the game? Unfortunately, names can be misleading. The United Nations seem anything but United; Northern Rock (1) proved to be anything but solid; while the content of TV shows such as "America's Got Talent" seems to flatly contradict their title.

So it is not unreasonable to ask whether FFP is really fair, and indeed whether it is really about fairness at all. (2) Closer inspection of the stated objectives suggests that it is more about efficiency than fairness. Given the extent of financial insolvency in European football, it can be argued that some regulatory constraints are necessary for the purposes of survival rather than fairness. However, the regulations go far beyond promoting solvency by seeking to constrain the ways in which owners can invest in their football clubs. The rules of FFP seem likely to limit the opportunities for small clubs to challenge the established large clubs, and thus to reinforce a hierarchy that has long been established in European football. This hierarchy, while seemingly quite stable, is difficult to characterize as fair. More interestingly, it is questionable whether the preservation of this hierarchy is efficient.

The paper proceeds as follows. In the next section the rules of FFP are described together with their objectives. The following section assesses the efficiency of the rules, and the section after that considers the issue of fairness. Then there is a section assessing whether the rules are likely to pass antitrust scrutiny under European law, and the final section concludes.

The Rules of Financial Fair Play

UEFA is the governing body of European football. Strictly speaking, it is an association of European national associations. National associations exercise regulatory functions such as rule-setting and discipline as well as competition-organizing functions (such as the FA Cup in England or the Copa del Rey in Spain). FIFA, founded in 1904, is the global association of national associations, and is both the ultimate source of rulemaking and the organizer of the largest competition, the FIFA World Cup. UEFA is a relatively recent creation, created in 1954 to organize a club competition--the UEFA Cup which has evolved into the Champions League, the most prestigious club competition in the world.

In 1999 UEFA decided to embark on a system of club licensing for clubs entering UEFA competitions (see UEFA (2008)). According to UEFA, the initial purpose was to explore the possibility of creating a salary cap, but it was soon decided that this could not be done without first creating a legal framework. The rules of the licensing system are laid down by UEFA, and the award of the licenses is overseen by the national associations so as to bring "member associations closer to their clubs" Initially the licensing system laid down rules relating to sporting development (youth training), infrastructure (stadiums), personnel and administration (key posts to be filled), legal (documentation) and financial issues. The financial requirements were for the provision of periodic audited financial statements, and that clubs should have no "overdue payables" to other clubs or players. These requirements were applied from the 2004/05 season, and extended in 2008/09 season to include no overdue payment to tax authorities and provision of budget forecasts. In 2009 UEFA also announced the introduction of Financial Fair Play.

According to FFP, any club that wishes to take part in UEFA's two main competitions, the Champions League and Europa League, must obtain a license from their national association certifying that they meet certain criteria. The key criteria are:

* No overdue payables. This means that a club must be fully up to date with payments to creditors.

* Break-even. This means that a club must be able to demonstrate that "relevant" income balances with "relevant" expenditure. For these purposes the balance of income and expenditure are calculated over a three year period, and the balance is subject to an acceptable deviation of 5 million [euro]. Moreover, there is a transitional period to 2018 during which larger deviations are permitted.

The break-even constraint is complex, since allowable income and expenditures are defined in great detail. They do not coincide with simple accounting definitions and a club could in theory declare an accounting profit while failing to meet break-even or declare an accounting loss but meet break-even. Football income is broadly defined as income from ticket sales, merchandising, broadcasting rights and sponsorship. Football expenditure is broadly defined as wage and transfer spending on players.

The stated objectives of FFP Regulations (UEFA, 2012b, p2) are "to achieve financial fair play in UEFA club competitions and in particular:

a. to improve the economic and financial capability of the clubs, increasing their transparency and credibility;

b. to place the necessary importance on the protection of creditors and to ensure that clubs settle their liabilities with players, social/tax authorities and other clubs punctually;

c. to introduce more discipline and rationality in club football finances;

d. to encourage clubs to operate on the basis of their own revenues;

e. to encourage responsible spending for the long-term benefit of football; and

f. to protect the long-term viability and sustainability of European club football." These objectives seem primarily to focus on efficiency concepts rather than fairness.

For example, there need be nothing fair about improving the economic and financial capability of clubs (part (a)); a 20% levy on ticket prices would achieve this end without being necessarily fair. Likewise, "discipline and rationality" (part (c)) can be achieved without any appeal to fairness. Part (b) seems closest to the sense of fairness in that it requires clubs to fulfil obligations into which they enter, however even in this case the rule is not self-evidently fair. For example, creditors may have been guilty of imposing unreasonable conditions in the first place (a problem not unknown in the world of football) and hence requiring teams to meet these obligations may simply enforce an unfair deal. Given the focus of these rules on efficiency concepts it is worthwhile to consider whether the rules will enhance efficiency.

Efficiency and FFP

It is clear that many, if not most European football clubs have financial problems. According to the most recent survey of European football club finances by UEFA (FY 2011, see UEFA (2012a)), 63% of top division clubs in Europe reported an operating loss, 55% reported a net loss, 38% reported negative net equity and auditors raised "going concern" doubts in 16% of cases. UEFA views these figures with concern, their powers are limited. While there are around 700 top division clubs in Europe, and many thousands that operate below this level, only 235 play in UEFA competitions and are therefore affected by FFP rules. Moreover, the FFP rules exempt clubs with revenues or expenses below 5 million [euro], which constitutes roughly half of all top division clubs and 41% of all clubs qualifying for UEFA competition (only 77 European clubs have revenues in excess of 50 million [euro]).

How is efficiency affected by the targets of FFP, namely economic losses and weak balance sheets? In a market economy, prices are usually considered to act as signals which suggest courses of action to economic actors. When firms make losses, the value of what they produce is lower than the value of the inputs required, suggesting that there is overproduction and that resources might be more profitably applied to some other economic activity. This can be achieved voluntarily by the choices of the managers of the firm, or can be achieved through bankruptcy, which forces the firm to cease production altogether. From the perspective of economic efficiency, the losses of European football clubs appear to signal that there is "too much football."

This argument, though not expressed in quite these terms, has been commonly expressed in the literature. Sports leagues are often characterised as a type of rat race, drawing on the contest literature e.g., Tullock (1980), in which firms dissipate rents through competition to win a prize. Logically, if there exists a fixed prize (e.g., a championship title) which can only be won by expending more effort than your rivals, then only effort relative to your rivals matters, not the total amount of effort supplied. From the point of view of the competitors, an agreement by all to halve effort leaves relative positions unchanged, while economising on resources for all. A general theoretical argument for overinvestment in sports leagues is advanced by Dietl et al. (2008) and adopted in Muller at al. (2012).

Suppose then that football clubs scale back their expenditures, either because of the no overdue payables rule or the break-even rule. Expenditures by football clubs are primarily on football players and a general decrease in player spending will tend to put downward pressure on player wages (Peeters and Szymanski (2014) estimate in detail the precise size of the effect that would arise from FFP and estimate a reduction of around 15-20% in the biggest European leagues). Since players at the highest level are already paid well in excess of their probable opportunity cost (almost every plausible alternative would entail a considerably lower wage), it will not cause a reduction in the supply of players. Likewise, since owners are currently willing to absorb losses, increasing profitability thanks to wage reductions, this will not decrease the supply of clubs. Thus if there is oversupply of football at the moment, FFP will not change this.

However, not all clubs are currently lossmakers. FFP might cause some clubs to scale back their operations while causing others to expand. The expansion effect will arise if player salaries fall on average and therefore clubs that currently enjoy a surplus will be willing to improve team quality to the extent that it will raise revenues. This rebalancing will tend to favour clubs that are able to generate higher revenues from a given number of wins. These are likely to be clubs with more populous markets (big cities) and richer fans. The latter effect is particularly notable given the gap in incomes comparing northwest Europe (Germany, UK, Scandinavia, Benelux) to southern and eastern Europe (Spain, Italy Greece, Poland, Hungary, Romania, etc.). Historically, the teams of Italy and Spain have tended to dominate European competition; in recent years, the English Premier League has become more competitive thanks to the high value of its broadcast rights and high ticket prices; in the future, one might expect German clubs, relative underperformers compared to clubs from these other countries, to improve if this kind of rebalancing occurs.

On the surface there is nothing efficient about this kind of rebalancing. Losses incurred currently are voluntary in the sense that the owners appear willing to pay for them by injecting new capital into the business. And when existing owners are no longer able to do so, new owners always seem to appear to replace them. It hard to find any professional football clubs that have been disbanded in recent years, despite the persistence of loss making. This partly reflects the observation made long ago by Sloane (1971) that football club owners are better characterised as utility maximisers rather than profit maximisers. Given that the success of a club generates consumption benefits for the owner, it is not surprising that the owners pump money in (i.e., accepts losses on ordinary business activities) rather than takes money out (i.e., dividends on profits). (3)

At this point the distinction between the overdue payables rule and the break-even rule is important. The overdue payables rule is intended to prevent creditors from becoming involuntary investors in a club by ensuring they are repaid in time. This is in line with standard business practice, and indeed for most countries this is a requirement to continue trading--creditors can have the business wound up if their repayments are overdue. The social significance of football clubs to local communities often means that creditors are unwilling to enforce their rights, and so FFP can be seen as redressing the balance in what is currently an unfair bargain. (4)

The break-even rule, however, limits the ways in which owners can invest in their teams, even when they have the resources to do so. To be clear, some forms of investment are not restricted under FFP--e.g., development of training facilities and stadium enhancements--but the most secure route to improved success, buying top players in the transfer market, (5) is severely restricted. There is no doubt that most people view FFP in these terms--it is a mechanism to prevent extremely wealthy individuals (the so-called "sugar daddies") from using their financial muscle to win championships by hiring the best players.

If we still focus on the issue of efficiency, it is not obvious why sugar daddies are inefficient. Clearly they bring more money into the game, allowing it to expand. When they hire talent they typically pay large transfer fees to rival teams, and therefore the benefits of their investment are shared, at least to some extent. Their interest in football reflects the growing social significance of the game which has grown at a remarkable rate in recent decades. Indeed, this is where the rat race arguments referred to above tend to fail. It is assumed that excessive competition is of no value, whereas in reality fans are attracted by the quality of a competition as well as by its pure rivalry. In the hypothetical example above, if all teams reduce effort by half then the spectacle is diminished in the eyes of the fans, even if the relative ranking of teams is unchanged. In practice, high levels of investment in players has raised interest in the game; it has provoked a global search for talent which in turn generally requires increased participation in the sport, and increased supply of facilities such as training grounds or stadiums. People who dislike football bemoan the way the game has become pervasive in modern society; it seems hard to argue that the rat race has done anything but enhance the game's popularity.

A related argument concerns the "soft budget constraint." It is argued that the deficits of European football clubs are comparable to the financing arrangements that existed for enterprises in the Soviet planning system. In that case, the state was unwilling to close enterprises that made losses, and as a result managers lacked incentives to improve efficiency, resulting in the undersupply and poor quality that was characteristic of the Soviet system. For the application of this argument to European football see Andreff (2011), Storm and Nielsen (2012), and especially Franck (2013). To the extent that those who run football clubs do not believe that they need to repay creditors, this argument may have some validity. However, a crucial difference between the Soviet case and the present issue is that European football is a highly competitive business, while the Soviet system encouraged state monopolies. Competition drives clubs to seek efficiencies in ways which Soviet state enterprises would never have considered, and indeed the desire to attract a sugar daddy is in itself a motivation to improve efficiency. Sugar daddies are assumed to be motivated by success, and after all, even billionaires have choices.

Some argue that their investments are not "sustainable." It is neither clear that this is the case (the supply of sugar daddies appears to be growing, not declining) nor that it would be a problem if it were not--football can grow and it can contract; neither trend is in itself efficient or inefficient. However, it might be argued that the long-term strength of European club football will be adversely affected by limiting the capacity of wealthy individuals to invest in European clubs. To the extent that these individuals are unable to fulfil their ambitions by investing in Europe, they may look elsewhere. Hitherto European leagues have dominated the globe, but that need not necessarily continue forever; football is followed fanatically in many developing regions of the world: Latin America, the Gulf, China, and the Far East. Frustrated billionaires in these regions might one day just decide to bring all the talent into their countries, just as European clubs currently attract most of the top talent from the rest of the world.

One problem for those who wish to argue that financial regulation of European football is necessary is the requirement to demonstrate that there is some kind of market failure at operation under the current arrangements. Of course, in any market it is possible to postulate that there could exist some market failure, just as one can always argue that if we do nothing today then tomorrow the sky may fall. However, all the evidence at the moment points to the robust good health of football in general and European football in particular. The present arrangements have generated growing audiences both at the stadium and on screens (TV, computer, mobile phone, etc.), exploding revenues and the continued survival of pretty much every club of any size that has ever existed. Without intervention the game might deteriorate badly, but there is no evidence to suggest that this is the case.

Football developed first in Europe, and most of the history of football is a European history. This gives European football a first mover advantage, which has been a significant source of its strength as markets have globalized in recent years. However, misdirected regulations that undermine efficiency also have the potential to drive resources away from Europe. There is no such thing as an impregnable dominant position.

Fairness and FFP

From the start the public statements of UEFA officials, notably President Platini, made it clear that sugar daddies were the target of FFP regulations. (6) It would be disingenuous to suggest that this was motivated primarily by efficiency concerns--it is obvious that many fans think it unfair that a team should able to win simply because its owner is wealthy (although see also footnote 4). The impact of sugar daddies has been called "financial doping" (see e.g., Muller et al., 2012), by analogy to the use of performance enhancing drugs (PEDs) in sports. PEDs may give an unfair advantage to those that take them over those who do not, and by analogy those who have access to funding from wealthy investors also have an advantage over those who do not.

This argument is somewhat meretricious. Clearly, prior to FFP there was no deceit involved as there is with PEDs--clubs such as Chelsea or Manchester City did not try to pretend that they had not received income from their wealthy owners. Of course, now that FFP restricts their freedom to invest as they please, they do have incentives to conceal income sources, but that is a creation of regulation. PEDs are banned, of course, because of the perceived dangers to athletes, whereas financial injections cannot be shown to damage the long-term health of the recipient football clubs. Where this argument has some force is in the pursuit of some form of competitive purity, whether embodied in the idealized athlete or in the idealized local football club. In both cases this idealism also seems rooted in the tradition of amateurism. No doubt these ideals have a certain attraction, but in a world of highly commercialised sport they are becoming less tenable. Athletes use every means they can to obtain an edge, and since the introduction of doping rules they have become significantly more complex and are now seen by some athletes as the problem rather than the solution. This is not to argue against the removal of all doping restraints, but it would be well to recognise that anti-doping rules are controversial. Likewise, financial regulation should not be dismissed, but it is certainly problematic that an investment by a Russian (e.g. in Chelsea or in AS Monaco) might face sanctions while at the same time as large sponsorship from the Russian energy company Gazprom (Schalke 04) goes unquestioned.

The case for break-even is usually presented in terms of the need to rely on "own revenues" (see objective d) above). Own revenues are usually defined as gate money, sponsorship, merchandising, and TV revenue, but their definition is clearly problematic. This is of course a problem with any regulatory regime and not in itself an argument against regulation. For example, it is sensible for governments to regulate levels of reserve capital to be held by banks to insure against systemic risk, but defining exactly what is allowable for measurement purposes will always be problematic. However, the meaning of "own" seems especially difficult. In reality football clubs do not start out with any resources of their own--they raise resources from investors initially and then seek to sustain themselves with any income sources they can generate. In the past, football clubs have run lotteries, organised social clubs, gone into manufacturing businesses, and much else besides. Indeed, many of Europe's biggest clubs today are multi-sport enterprises with opportunities for cross subsidy. There is an ancient saying "pecunia non olet"--money doesn't smell. Once one starts to define "good money" and "bad money" it is possible to introduce sources of unfairness unimagined and regulations multiply. Typically those who are able to navigate the system are the wealthy, which most would consider a form of unfairness.

But the real problem with deploying fairness argument in the context of the distribution of resources among teams in a league is that it is far from obvious that a regime in which every team relies only gate money, sponsorship, merchandising, and TV revenue is fair. A league competition is produced jointly by the competing clubs, an argument often used to support a system of pooling incomes and then distributing them equally among competitors. Measures to equalize incomes are widely adopted in American major leagues, not on fairness grounds but because they promote a more even contest that will be more attractive to fans. (7) European football has grown despite the absence of such measures, casting doubt on the efficiency argument in favour of competitive balance. But it could certainly be argued that equal sharing of revenues in European football would be fair, but such reform is not on the agenda. Indeed, the distribution of income from the UEFA Champions League seems to have significantly enhanced inequality over the last decade. Currently the competition pays out around 1 billion [euro] a season to the competing teams, and over the last decade a mere 10 teams have accounted for 50% of the money distributed.

The FFP regulations argue for one kind of inequality over another. This does not seem like a sound basis from which to argue the case for fairness.

Competition Law

I have argued in this paper that FFP is problematic both in terms of its stated objectives which seem mostly to revolve around enhancing efficiency, and in terms of any reasonable standard of fairness. With Thomas Peeters I have simulated the impact of FFP on four of the five largest football nations in Europe (England, France, Italy, and Spain) (8) and shown that the major effect, if fully implemented, will be to reduce player salaries significantly.

In May 2013 the lawyer Jean-Louis Dupont (9) filed a complaint with the European Commission on behalf of Daniel Striani (a player agent) challenging the legality of the break-even rule under EU law. Mr. Dupont argues in his complaint that

The "break-even" rule (which according to article 101 of the Treaty on the functioning of the EU, is an "agreement between undertakings") generates the following restrictions of competition:

Restriction of investments;

Fossilization of the existing market structure (i.e. the current top clubs are likely to maintain their leadership and even increase it); Reduction of the number of transfers, of the transfer amounts and of the number of players under contracts per club; Deflatory effect on the level of player's salaries; and Consequently, a deflatory effect on the revenues of players' agents. (Dupont, 2013, p.1)

In Mr. Dupont's view, the break-even rule constitutes a restraint on competition, which infringes on the free movement of capital, workers, and services. He further argues that the rule is not only unjustifiable, but also "in practice illegal, because the rule is not proportionate (since it can be replaced by another measure, equally efficient but less damaging as far as EU freedoms are concerned)" (Dupont, 2013, p.2).

It is not easy to predict whether this challenge will be successful. Article 101 is essentially a law that prohibits cartels (agreements among firms, in this case football clubs). The first section states that any agreements among firms that have as "their object or effect the prevention, restriction or distortion of competition" are prohibited. UEFA will presumably stand by its stated objectives and claim that none of these are intended to reduce competition.

Against this Dupont would probably argue that the effect of the agreement is the reduction of competition among teams competing in football championships (domestic and UEFA) and the reduction of competition in the market for players. In the "championship" market UEFA may try to argue that the rules are intended to enhance competition by enabling teams without sugar daddies to be more competitive, while on the player market UEFA may claim that even if this is a side effect, it is not the main aim of the regulation. However, it will be hard for UEFA to maintain that competition has not been restrained in the sense that some competitors are no longer free to make choices that they would otherwise make.

Article 101

1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

--any agreement or category of agreements between undertakings,

--any decision or category of decisions by associations of undertakings,

--any concerted practice or category of concerted practices,

which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

The decision in the case, therefore, is likely to rest on the interpretation of the third section. This involves balancing several potential effects. The prohibition in Article 101 does not apply if the restriction contributes to improving the product or promoting economic progress so long as consumers share the benefits. In the early stages of FFP, UEFA seemed inclined to argue that the regulations would enhance competitive balance and hence the quality of European football. However, more recently they seem to have shied away from this argument which does indeed sound rather implausible. The argument that the rules will "ossify" the system, by limiting opportunities for smaller clubs to rise up and compete with the established big clubs, seems more plausible. One might certainly argue that the rules on payment of creditors represents "economic progress," but it is the break-even rule that is being challenged, not the creditor rule. Thus it would appear that UEFA will have to rely on a rather general argument to the effect that FFP is eliminating the rat race or the soft budget constraint, while as we have seen, it is not clear that these issues have posed a serious problem for the development of European football.

UEFA may also face difficulties persuading a court that the break-even rule is really indispensable to its objectives. Alternative forms of regulation to ensure financial stability might easily be feasible--for example, requiring club owners to provide formal guarantees or post bonds to cover any losses incurred by the clubs they own. Moreover the concept of "own revenues" for clubs that are owned by wealthy individuals may prove hard to sustain in law--even if fans see themselves as holding a stake in their club, legally it may be property of the owner and his to do with as he pleases.

Finally, it is hard to see how UEFA can contradict the argument that the break-even requirement will eliminate competition in the player market, to the benefit of the clubs, at the expense of players and with no obvious benefit to the fans. For a more detailed discussion of FFP and competition law see Budzinski and Szymanski (2014).

Conclusion

"A man may take to drink because he feels himself to be a failure, and then fail all the more completely because he drinks. It is rather the same thing that is happening to the English language. It becomes ugly and inaccurate because our thoughts are foolish, but the slovenliness of our language makes it easier for us to have foolish thoughts."

George Orwell, Politics and the English Language

The real problem with Financial Fair Play is that it does not offer Fair Play at all. It is an abuse of language. Rather, it imposes some very specific restrictions on competition. On the one hand UEFA claims, through its official documentation, that these rules will enhance efficiency in ways which are far from clear. At the same time the leaders of UEFA allow it to be understood that the so-called sugar daddies are indeed their target, in a bid to satisfy disgruntled fans. Not surprisingly these rules have provoked a competition law challenge in the European Union. Success or failure in court is always hard to predict, but there should be no doubt that the breakeven rule of FFP deserves to be struck down.

References

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Stefan Szymanski

University of Michigan

Endnotes

(1) Northern Rock was a UK bank that collapsed in 2007, causing the first British bank run in 150 years. It was subsequently saved by means of a government takeover.

(2) Fair Play is a concept given to the world by the English language, like the word football. The English words "Fair Play" have been adopted in almost every other language (judging by my search on Google translate) and the German anglophile Rudolf Kircher, who wrote a book on the subject in 1928, roundly declared "the words are untranslatable." He argued that the concept is something that you learn as a child, "that it is wrong to take advantage of the weak, and unmanly to ill-treat a beaten adversary." The use of the term does not originate in sport, but is first found in Shakespeare, when a character in King John says "According to the fair play of the world, let me have audience." When the witches in Macbeth say "fair is foul and foul is fair," words that might be spoken by a football coach determined to win at any cost, the word you should understand is "play." The earliest use of the word in a sporting context that I have been able to find relates to cricket, in a memoir of the Hambledon cricket club written by John Nyren in 1832, including the rules of the game, of which one is "the umpires are the sole judges of fair and unfair play." Not that this prevented one hard-done-by cricketer complaining that his defeat was attributable to the latter.

(3) This seems to create cognitive dissonance for many football fans who appear to think that "losses are bad" and "profits are good" but prefer an owner such as Chelsea's Roman Abramovitch who puts money into his club (Chelsea) rather than owners such as the Glazer family, which takes money out (Manchester United). Moreover, this view seems to characterize not just fans at the respective clubs, but fans at rival clubs too.

(4) Some might argue that the "caveat emptor" principle should apply, but it seems clear that the support of the competition commissioner for the EU, Joaquin Almunia, stemmed from the belief that FFP would reduce demands from football clubs for state aid in the form of soft loans, etc. (21 March 2012, Joint statement by Joaquin Almunia and Michel Platini).

(5) On this relationship see e.g. Szymanski and Smith (1997), Hall et al (2002), and Peeters and Szymanski (2014).

(6) See e.g., The Daily Telegraph August 28th 2009: "Platini dismissed the idea that billionaire benefactors like Sheikh Mansour were good for football because they challenge the elite. He gestured to Infantino. "We think that the opposite will happen," said Infantino, "because if you have a rich sugar daddy coming in and throwing money around, this is unhealthy in the mediumterm and unsustainable in the long-term. For the club to be healthy it has to live on its own means and generate income and this is not impossible. Otherwise it is an artificial bubble." See also the Guardian August 28th 2009: "If you have a sugar daddy it is unhealthy," Uefa's deputy general secretary, Gianni Infantino, said. "The club has to stay on its own legs and generate its own revenue."

(7) This is now a huge literature, going back to Rottenberg (1956). See Szymanski (2003) for a comparison of the US and European systems.

(8) Given that FFP was modeled on the German club licensing system, and given the aspiration of transparency, it is ironic that financial results for all clubs were missing only in the case of Germany.

(9) Dupont is the lawyer who successfully led to legal challenge to the European player transfer rules resulting in the Bosman judgment of 1995.

Stefan Szymanski is the Stephen J. Galetti Professor of Sport Management in the Department of Kinesiology. His main research interests are the economics of sporting contests, English football club accounts, and the economics of major sporting events.