Effectiveness of financial regulation in football

What is the aim of the study? (There should only be one Aim)

To analyse the impact of UEFA Financial Fair Play rules on the English premier league clubs.

What are the objectives of your study?

(There should be 3 or 4 objectives )

1. To examine the literature regarding financial regulation in football to establish the successes and failures of the available financial rules in football. (To be completed by June)

2. To collect managers’, players’, club owners’, and fans’ perspectives on the successes and failures of UEFA Financial Fair Play rules on English premier league clubs by completing focus groups and questionnaire. (To be completed by July)

3. To critically analyse the data collected from primary research against the literature and record the impacts on football stakeholders due to the findings. (To be completed by August)

4. To evaluate the overall project and appropriately conclude whether financial regulation in football is effective and outline necessary recommendations for relevant stakeholders to improve UEFA Financial Fair Play rules. (To be completed by September)

7. Rationale

What is the rationale for your study? (Approximately 300 words)

The purpose of this study is to evaluate the effectiveness of financial regulations in football and uncover the implications and impacts that are caused as a result. Financial distress is a major concern for stakeholders in European football. The Union of European Football Association (UEFA) introduced Financial Fair Play as an attempt to solve or reduce the state of financial distress facing European football (Scelles et al., 2020). According to Florbela et al. (2020), the primary aim of Financial Fair Play rules is to forcefully direct football clubs against spending more than their earnings between an agreeable deviations to ultimately eliminate financial distress in the clubs. The rules under Financial Fair Play emphasize reducing player expenditure (Ghio et al., 2019). The above assertions indicate that financial regulation is a critical aspect of modern football, hence the need for football stakeholders to continuously assess its effectiveness in realizing its main agenda, reducing financial distress.

However, it is integral to note that Financial Fair Play is a relatively under-explored concept in the academic literature because UEFA introduced it in 2010. Most of the existing literature during the early years of the concept was mainly theoretical and predictive (Walters and Hamil, 2013; Barajas and Rodríguez, 2014; Muller et al., 2012). However, there has been a rapid rise in empirical studies and evidence on Financial Fair Play in the past three years (Alaminos and Fernández, 2019; Florbela et al., 2020; Andreff, 2018). This implies that the inadequate literature on the successes and failures of Financial Fair Play 12 years after its implementation creates a dire need for the current study. The study will compare the findings to the aims of Financial Fair Play to determine its effectiveness, which will help UEFA amend its financial regulation, which shows this study’s practical relevance.

Word count: 298

8. Literature Review

Brief review of relevant literature (Approximately 600 words) with a minimum of 6 key publications cited. (Critically evaluate recent and relevant research that has addressed similar issues to those covered in your objectives)

In recent years, revenues in European football have significantly increased. For example, Ahtiainen and Jarva (2020) highlight that 2010 marked an increase in total revenues for European football clubs up to €13.2 billion. Most recently, Gallagher and Quinn (2020) reported that European football; clubs in 2018 recorded total revenue of €28.4 billion. Additionally, Ghio et al. (2019) study reported that the total revenue earned by English football increased by 900% from 1992 to 2007. However, European football still faces massive financial distress. Scelles et al. (2020) reported that since its inception, English football had never recorded a pre-tax profit until 2010. It is, therefore, prudent to evaluate studies on the impact of financial regulation in the modern European football

Overinvestment in football players remains an issue in European football and more so for English football. A study by Florbela et al. (2020) revealed that European football clubs are under pressure to maximize their wins hence spending beyond their budget limits to buy players with huge transfer fees and tie them to lucrative salaries to get better performances. However, Plumley et al. (2017) argue that no football club can win without inflicting failure on its opponent, which pressures clubs to inject heavy investments to boost their performance. Similarly, Dimitropoulos (2016) asserts that the problem with European football clubs is that they are all involved in a gamble for better performance to attract higher revenues. The consequence of the above situation is an increased demand for high-profile football players. The findings from the three studies above create the need for more research on the impact of financial regulation on overinvestment in football.

UEFA introduced financial regulations under the Financial Fair play (FFP) on 1 June 2010 to enhance UEFA’s club licencing system. Initially, the UEFA had an intention to introduce a salary cap for football players in European competitions as an additional financial regulation, but it failed (Gallagher and Quinn, 2020). According to Fitzpatrick (2015), the UEFA implemented FFP because the financial condition of European football clubs was deteriorating on an annual basis. Similarly, Alaminos and Fernández (2019) argue that the purpose of FFP regulations was to transform European football clubs into self-sustainable clubs and create equity for all clubs in terms of financial opportunities. Also, Scelles (2020) asserts that the main goals for the implementation of FFP were to enhance clubs’ economic capabilities, credibility and transparency, financial discipline, and long term sustainability and viability. However, there is inadequate research on FFP’s successes and failures in European football.

FFP has a layout of punitive measures to ensure that European football clubs align their operations to the financial regulations. According to Gallagher and Quinn (2020), Club Financial Control Body (CFCB) judge individual football clubs on violations of the FFP laws using the information provided. The CFCB’s investigatory chamber determines the relevant facts and gathers evidence to help decide on one of the four options: impose minor disciplinary measures, dismiss the case, propose a settlement agreement, or refer it to the adjudicatory chamber (Franck, 2018). The lack of empirical data on the impact of FFP’s punitive measures from the above two studies creates a gap for more research on punitive measures’ impact on financial regulation. As the studies in this section indicates, there are several gaps in the area of study that creates the need for further research to determine the relationship between player expenditure and financial distress to help assess the impact of FFP.

Word count: 571

9. Research Methodology

Provide a concise outline of research methodology, including justification for choices.

Please ensure each sub section is completed. (Approximately 600 words)

Use the Saunders Research Onion to guide you

9.1 Research Strategy

The study intends to use the pragmatism philosophy of research. The research philosophy would be most appropriate for the current research because it would enable the researcher to concentrate on FFP in the real-world context (English premier league football clubs) to have a clear understanding of the effect of financial regulation in football (Saunders et al., 2019). Using the pragmatism philosophy, the researcher would begin by identifying the problem (impact of financial regulation in football) in the specific context. The second and third steps will involve formulating the solutions and drawing recommendations for effective changes in football regulation in Europe for UEFA. The philosophy is also most applicable for the current study because it enables the researcher to understand the problem of financial regulation in football in the English football context and make recommendations for real-life application in a larger context by UEFA.

The research will use both deductive and inductive research approaches. The researcher will use an inductive approach because the qualitative aspect of the research methodology would require the study to move from data to empirical generalizations (Saunders et al., 2019). On the other hand, the research will use deductive reasoning because it would enable the researcher during the quantitative component of the study to use the theory developed from the qualitative data to create and test a hypothesis on the issue of the effectiveness of financial regulations in football. In essence, using both deductive and inductive reasoning is most appropriate for the current study as it would enable the researcher to capitalize on the merits of data collection using both qualitative and quantitative methods.

Informed by the research philosophy and approaches selected in the previous sections alongside the research objectives and questions, the study will use a mixed-methodology strategy. The mixed methodology approach would be most appropriate for the study because it would enable the researcher to use both qualitative and quantitative data to develop a theory using the qualitative data to form and test a hypothesis using quantitative data.

9.2 Research Design

The research will use the convergent research design to implement the mixed-method research strategy. As recommended by Saunders et al. (2019), the convergent design would be integral in helping the researcher collect both qualitative and quantitative data concurrently. Also, the design would be most applicable for the current study since it would help the researcher analyse the two data sets separately then merge the findings during the interpretation stage. The research will use a focus group to gather qualitative data and a questionnaire (with close-ended questions) to collect quantitative data.

For the focus group, the research will select 18 participants from Chelsea, Manchester City, Liverpool, Brentford, Leeds, and Swansea football clubs using the convenience sampling method. The convenience sampling method is most appropriate for the current study because it would ensure that the researcher gets the most appropriate sample size to effectively participate. The researcher will send emails to the six football clubs requesting their in-depth online interviews with the clubs’ managers. Each club will offer three participants from its executive leadership positions. Due to the limited time and financial resources, the researcher will call the respondents via their mobile phone numbers and schedule interviews through the zoom application. The researcher will download the completed questionnaires and save them on a secure drive.

For the questionnaire, the research will target general employees and players from the above football clubs (Chelsea, Manchester City, Liverpool, Brentford, Leeds, and Swansea). Using snowball sampling, the study will get 60 respondents (10 from each club) by contacting the clubs (Chelsea, Manchester City, Liverpool, Brentford, Leeds, and Swansea) with an email containing a link for the survey. Using the link in the email, the researcher will direct the participants to duly fill out the forms and send them back to the researcher via email. The researcher will save the completed interview forms in the secure drive.

Word count: 643

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A full list of all the sources used in the proposal, presented using the Harvard system of referencing.