This dissertation aims to assess the effect of UEFA's Financial Fair Play regulations on club management. It analyzes the commercial positions and financial situations of clubs in Italy, Germany, and England to understand the differing impacts across leagues. The literature review covers the outcomes of the first FFP monitoring period, general effects on European football, and predictions for the sport's future. The discussion analyzes club ownership, management quality, infrastructure investment, youth development, and homegrown players. It finds that FFP has improved financial stability but reduced smaller clubs' competitiveness and increased the dominance of top clubs. The conclusion is that management must find new ways to close revenue gaps and stay competitive within the restrictions of FFP.

1. Southampton Solent University
Faculty of Business, Sport and Enterprise
BA (Hons) Football Studies with Business
Eriks Melbardis
The effect of UEFA Financial Fair Play
Regulations on club management
March 2016

2. i
Acknowledgements
I would like to express my gratitude to my supervisor Charles Caplen for the
useful comments, and his excitement in regard of teaching. His passion, and
his absolutely fantastic classes, definitely, made a huge impact on my
decision to conduct a research under his strict supervision. Without his
guidance and persistent help this dissertation would not have been possible.
Also, I want to thank my Unit leader, Dr. Richard Elliott, who showed to me
the importance of football in our modern society, what helped me to boost
my interest towards football.
In addition, I am very grateful to Dmitrijs Hohlovs, who always was there to
help me since 2008, while I was playing football in FK Ventspils, and, of
course, now, by providing his views on this topic.
I take this opportunity to thank my loved ones, especially, my mother, who
was always supporting me throughout the three year journey. Lastly, I would
to thank my closest friends, who were keeping me fresh-minded and who gave
me energy to remain confident in myself.

3. ii
Abstract
Over the last thirty years football has transformed from game to business. The
global expansion of the game generates the interest from wealthy private
benefactors, who actively started to invest in football clubs. This has led to
the significant increase in total club turnover in Europe. As a consequence of
this, the broadcast and prize money went up in all European leagues and
tournaments respectively. The football finance has not been controlled by
authorities and clubs started to gamble on success, the so-called “rat race”.
In other words, clubs started to play catch up by spending more money in
order to succeed. However, the nature of football predicts the uncertainty of
outcome and many clubs failed and became insolvent. UEFA had nothing to do
but to design the Financial Fair Play Regulations to bring the sustainability in
European football.
Throughout the extensive research it was found out, that UEFA has admitted,
that it was ignoring the noteworthy cultural and economical differences,
which were discovered in the background check. The country analysis
discovered several problems with football development in Italy, which
requires huge investment to deal with them. However, it also was found that
despite the improved financial outlook in Europe, the FFP had a negative
impact on club competitiveness and reduced smaller club chances to develop.
The FFP Regulations encouraged teams to redesign existing business models
and improve the quality of club management. This dissertation found a strong
correlation between off-pitch performance and on-pitch success. The main
objective for management is to establish development strategy in order to
increase football relevant income and then reinvest in future to stay
competitive. However, it is seems to be close to impossible to achieve
considering the massive top-club dominance and unequal redistribution of
prize money in the main continental tournament.

4. iii
Contents
ACKNOWLEDGEMENTS..............................................................................................................................................I
ABSTRACT .....................................................................................................................................................................II
CONTENTS ...................................................................................................................................................................III
LIST OF FIGURES......................................................................................................................................................IV
INTRODUCTION ..........................................................................................................................................................1
THE FINANCIAL FAIR PLAY REGULATIONS .................................................................................................................3
THE CHOSEN COUNTRIES TO ASSESS THE EFFECT OF FFP REGULATIONS..................................................................6
AIM - TO ASSESS THE EFFECT OF FFP REGULATIONS ON CLUB MANAGEMENT..........................................................8
OBJECTIVES.................................................................................................................................................................9
LITERATURE REVIEW.............................................................................................................................................10
I. THE COMMERCIAL POSITION OF CHOSEN COUNTRIES.....................................................................................10
A. ITALY..............................................................................................................................................................10
B. GERMANY .......................................................................................................................................................13
C. ENGLAND........................................................................................................................................................15
II. THE EFFECTS OF FFP REGULATIONS ON EUROPEAN FOOTBALL...................................................................17
A. THE OUTCOMES OF FIRST FFP MONITORING PERIOD.....................................................................................17
B. THE GENERAL EFFECTS OF FFP REGULATIONS.............................................................................................18
III. THE FUTURE OF EUROPEAN FOOTBALL IN THE NEXT FIVE YEARS..................................................................21
METHODOLOGY .......................................................................................................................................................23
I. RESEARCH APPROACHES.................................................................................................................................24
II. DATA AND INFORMATION COLLECTION...........................................................................................................25
III. QUANTITATIVE AND QUALITATIVE DATA........................................................................................................27
IV. CONSIDERATION OF ETHICAL ISSUES..............................................................................................................28
DISCUSSION ...............................................................................................................................................................29
I. THE ANALYSIS OF CLUB OWNERSHIP IN CHOSEN COUNTRIES.........................................................................29
II. THE “GOOD MANAGEMENT”..........................................................................................................................32
III. NEW FACILITIES AS AN OPTION TO INCREASE REVENUE.................................................................................36
IV. THE YOUTH DEVELOPMENT............................................................................................................................38
V. THE IMPORTANCE OF HOME-GROWN PLAYERS...............................................................................................40
VI. THE FUTURE OF EUROPEAN FOOTBALL.........................................................................................................42
CONCLUSION.............................................................................................................................................................44
RECOMMENDATIONS ..............................................................................................................................................46
REFERENCE LIST .....................................................................................................................................................47
LIST OF APPENDICES .............................................................................................................................................56

5. iv
List of Figures
FIGURE 1. THE AGGREGATE LOSSES WITHIN EUROPEAN FOOTBALL (UEFA, 2015)....................................................2
FIGURE 2. THE AGGREGATE OPERATING PROFIT WITHIN EUROPEAN FOOTBALL (UEFA,2015). ................................4
FIGURE 3. THE REVENUE BREAKDOWNS FOR THE TOP-3 LEAGUES (DELOITTE, 2015).............................................11
FIGURE 4. THE AVERAGE ATTENDANCE IN TOP-5 EUROPEAN LEAGUES (DELOITTE, 2015)......................................12
FIGURE 5. THE AGGREGATE REVENUE IN BUNDESLIGA (BUNDESLIGA, 2016)............................................................13
FIGURE 6. THE PREMIER LEAGUE'S DOMESTIC TV DEALS (BBC, 2015). ...................................................................16
FIGURE 7. THE PERCENTAGE OF FOREIGN PLAYERS (AUTHOR’S CALCULATION)........................................................18
FIGURE 8. THE CHAMPIONS LEAGUE MARKET POOL SHARE BY COUNTRY (MIERITZ & HELDE, 2014)......................20
FIGURE 9. THE WAGE GROWTH RATE (UEFA, 2015). ...............................................................................................21
FIGURE 10. THE AVERAGE TRANSFER EXPENDITURE FORSQUAD MEMBERS OF THE THREE TOP RANKED CLUBS, PER
LEAGUE (2009/10-2014/15, MILLION €)(CIES,2015)................................................................................22
FIGURE 11. THE PROPORTION OF FOREIGN AND DOMESTIC OWNERS IN THREE LEAGUES (CAMPBELL, 2014;
GUARDIAN, 2015; DELOITTE, 2015)................................................................................................................29
FIGURE 12. THE PREMIER LEAGUE CLUBS COMPARISON OF TOTAL WAGES WITH LEAGUE PERFORMANCE 2013/14
(DELOITTE, 2015)..............................................................................................................................................34
FIGURE 13. THE PLANNED OR RECENTLY FINISHED STADIUMS IN ITALY......................................................................37
FIGURE 14. THE PERCENTAGE OF FOREIGN PLAYERS IN BUNDESLIGA(BOURG& GOUGUET, 2010; AUTHOR’S
CALCULATION).....................................................................................................................................................40

6. 1
Introduction
Contemporary football is not just a sport; it is a highly-competitive business,
which has significantly developed over the past decades. Maguire (1999)
states that the substantial impact of this development came from the
mediation process of game, especially, in United Kingdom, where English
Premier League signed a new TV-deal worth £5billion per three years until
2019 (BBC, 2015). Consequently, this attention from mass media means
massive cash in-flow from advertisers (McLeod, 2013, p. 38). Moreover, top
flight clubs became able to reach new markets such as Asia or North America.
Almost all top-clubs tried to penetrate emerging markets, which have led to
increased competition among clubs and increasing costs (e.g. travelling
expenses, accommodation expenses) in order to gain dominance in new
regions. Commercialisation of industry transformed the game and football
clubs are nowadays more than just sporting organisations, as they have many
different interdependent departments, which support the clubs’ overall aim
to be successful (Franck, 2014).
In financial terms, European football industry grows on average by 9.5% per
annum. UEFA Benchmarking Report (2015) states that European club revenues
have grown from €2.8billion in 1996 to €15.9billion in 2014. This increasing
amount of income within football industry has attracted more investors from
all around the world, known as sugar daddies (Franck, 2014). Commonly, their
intention was to force a club’s development and spend millions trying to build
a squad, which should be able to compete for the trophies (Szymanski, 2014).
Furthermore, various other club-owners were forced to follow this uncertain
action in order to be able to face the intense competition. This short-term
investment strategy tends to be risky and often destabilises a club’s financial
position (Muller et al., 2012). Constant clubs’ inability to manage finances
correctly led to discussion about the risk of numerous club bankruptcies
within the European football industry. As a result of this discussion, in
September 2009, UEFA announced implementation of its Financial Fair
Regulation (FFP), which came into effect from the football season 2011/12.
According to the UEFA Benchmarking Report (2012), the aggregate losses

7. 2
within European football were increasing every year and reached €1.7billion
in 2011, which was the last non-FFP year (Figure 1). Moreover, report showed
that 38% of the clubs had a negative equity (more liabilities than total
equity).
Figure 1. The aggregate losses within European football (UEFA, 2015).

8. 3
The Financial Fair Play Regulations
In 2009, UEFA further developed its existing UEFA Licensing System in order to
stabilise and control European clubs’ spending using the new regulation,
called Financial Fair Play (FFP) (UEFA, 2015). In order to obtain a licence they
must meet the following key criteria:
1. No overdue payments to players and to creditors. Payments are
considered as overdue if they are not paid according to the agreed
terms.
2. A club cannot have a bigger expenditure than income over the
monitored period, which is three consecutive years. This means that
club must show a positive balance of income and expenditure, in order
to get licence. Although, there is an acceptable deviation of €5million
(UEFA, 2015).
It should be mentioned that FFP Regulations is looking at football relevant
income, which is a combination of commercial income, profit from the
transfers and ticket sales, whilst the relevant expenditure is a combination of
wages and incoming transfer fees. Investments in clubs’ facilities, youth
academies are not considered as football relevant expenditure. If club fails to
gain the licence, UEFA remain rights to sanction clubs by fines and warnings,
restrictions to register new players or even restrictions to participate in
European competitions (UEFA, 2012). Therefore, the actual Financial Fair
Play’s sanctions can only apply to football teams, which have secured spots in
European competitions through their domestic leagues and have annual
budget, which exceeds €5million. Nevertheless, all other clubs fell under the
UEFA Club Licensing Regulations, which share almost identical set of rules
with FFP Regulations, but firstly club must obtain the National licence, which
is issued by the local FA. Any National FA in Europe possesses the rights to
sanction domestic clubs within the league, if there is a reason to do so (FAI,
2014). Moreover, in case of failure to get domestic licence it means that club
will fail to get a European licence and will be excluded from UEFA
competitions. For instance, the European record holder for most consecutive

9. 4
wins in National championship (14 seasons in a row), Latvian FC Skonto Riga
has failed to complete the licensing process for the upcoming 2016 season,
meaning club has practically lost its rights to participate in Europa League
(Latvian Football Federation, 2016).
Despite FFP only being recently introduced and first monitored period just
finished at the end of 2013/14 season with one year gap to review club’s
financial statements and sanction those clubs, which failed to stay within the
limits. Latest UEFA Benchmarking Report (2015) shows that the overall
situation in European football has been visibly improved: aggregate losses
among the 654 top division clubs dropped by more than three times to
€500million from €1.7billion in 2011 , overdue payables reduced by 80%.
Furthermore, Figure 2 shows the aggregate operating profit has grew by more
than €1billion since 2009.
Figure 2. The aggregate operating profit within European football (UEFA,2015).
Evidently, FFP Regulations showed positive results in financial terms in the
past few years, but it is still unclear how FFP will deal with the massive
difference between top-clubs and smaller clubs in all possible areas and now,
UEFA has, arguably, decreased the smaller clubs’ chances of success by
implementing the FFP Regulations. Although, UEFA recognise that FFP
Regulations limit the chances of success for smaller clubs, but the main
European football organisation states that FFP was designed to promote the
idea of investing in facilities to be more stable in future. Clearly, that it is

10. 5
unfair on smaller clubs, and many official bodies of smaller clubs mention the
possible gap in commercial income between them and rich clubs
(Indenpendent, 2013; Howe, 2015). As a result, now club management needs
to find a way to decrease this gap by implementing wise financial decisions.

11. 6
The chosen countries to assess the effect of FFP Regulations
To assess the impact of FFP Regulations on European football it is important
to overview this issue from different perspectives, in this case from different
European leagues’ perspective. As FFP Regulations only affects clubs, which
have budgets more than €5 million, it limits the options to choose from,
because only few leagues in Europe, in which clubs open their financial
statements, or all clubs in league have the needed budget to fall under the
FFP Regulations.
Therefore, the most suitable leagues will be Italian Serie A, German
Bundesliga and English Barclays Premier League. All three chosen leagues
have interesting backgrounds, where Italy was the first league, where owners
have started to invest large sums in new players, German Bundesliga, where
for many years clubs are showing that it is possible to stay efficient and earn
money without high ticket prices and investing enormous amount of money
into club’s development, whereas Barclays Premier League clubs are
completely opposite to Bundesliga.
Looking from financial perspective on the current state of chosen leagues, the
average situation in them is very different. The one of the issues, which will
be discussed later in this project is that major part of Italian highest division
clubs has a quite old infrastructure, which requires a massive investment in it
in the nearest future, whereas English and German football infrastructure is
developing from year to year (Deloitte, 2015). Clearly, quality of stadiums
attracts fans and generates revenue. Moreover, better infrastructure gives a
chance to clubs to produce higher quality players, and then sell them for
profit. Nevertheless, FFP Regulations do not consider investments in facilities
as football relevant; all clubs still need to find a suitable way to finance this
kind of projects without effecting club’s sustainability. Therefore, Italian
football is in a huge trouble, where only few top-clubs have a solid stadium
and training ground (Doidge, 2015), all others have limited resources,
especially, with a low turnout on match days (See Figure 4).

12. 7
Italian football has a huge gap between Bundesliga and Barclays Premier
League in all areas. Moreover, the gap is noticeable among the clubs within
the internal competition, where top-clubs can avoid major investments, but
for smaller clubs it is impossible to finance construction of the new training
fields in order produce, what UEFA wants to get through the FFP Regulations –
increase in new talents (UEFA, 2015). Thus, investment in facilities is not the
most important issue regarding the possible outcomes of FFP, but it is
impossible to generate football relevant income without the appropriate
facilities in long-term.

13. 8
Aim - to assess the effect of FFP Regulations on club
management
The project will investigate the FFP’s effects in three European top-leagues,
which have different backgrounds - England, Germany and Italy. Differences
between these three countries and their domestic leagues will show how FFP
is effective and is it ‘fair’. Clearly, not all European leagues share the same
level of readiness (UEFA, 2015); therefore, without an experienced
management, not only smaller clubs can be out powered, but also the leagues
outside of continental elite leagues (Vopel, 2011).
Moreover, FFP Regulations are the first radical changes in European club
football since the Bosman Case and nobody can predict outcome of them.
Bosman Case reformed the world’s football environment by changing the
transfer policies, which allowed players to freely join new clubs and easily
migrate around the world (Giulianotti, 1999). It is expected to see from FFP
Regulations a massive transformation of European football in financial terms.
Some researchers (e.g. Szymanski, Franck) argue that financial restrictions
may create a huge gap between top-clubs and small-clubs. Moreover,
Szymanski (2014) stated that all this will lead to decrease in level of
excitement for fans, which are one of the main stakeholders in football and
bring significant part of clubs’ income.
It is believed that only a “good management” and club well-organised
structure may keep safe from now uncertain outcomes of FFP Regulations.

14. 9
Objectives
1. To outline the three major European leagues’ football and
commercial situations.
Commercial situations in Italy, Germany and England are different, so these
differences must be assessed in order to understand how FFP may affect their
football industries. Moreover, it is important to identify each country’s
football specifics in legal and socio-cultural terms. All gathered information
about these particular countries will be used to critically analyse current and
potential outcomes of applying FFP Regulations specifically in these countries.
2. To show how UEFA’s Financial Fair Play regulations affect the
interests of the big three European Leagues.
UEFA stated that clubs must compete within generated revenue, but in each
league there are small and rich clubs, and difference between their budgets is
significant, and small clubs and top clubs have a different targets and goals. It
is vital to see how their goals may change in future, what will show how ‘fair’
these Regulations are.
This part will include different types of data and figures in order to assess the
changing European football’s financial model.
3. To assess how the European football industry may change in the
next five years.
This is the most important objective of this project to assess how UEFA goal –
“to change financial situation among European clubs” – works and what
changes in European football it may bring. As FFP being a relatively new legal
framework it is incomplete and the regulations are transforming and changing
every year to close holes in set of rules, which can be found by clubs and,
most likely, exploited in own interests, what, clearly, might be considered as
not fully legal actions.
This part of project will be fulfilled by interviewing an expert in football
industry to understand the possible outcomes of FFP Regulations.

15. 10
Literature Review
In general, this particular area is a relatively new in football industry, with
only one finished monitoring period. Therefore, there is a limited amount of
literature, which is describing the effects of FFP Regulations. However,
information from the founded journals or books might be supported by real
activities and changes within football.
i. The commercial position of chosen countries
To understand the differences between three selected European leagues their
football background and history should be revised. Moreover, each country
may have specific rules, which may, potentially, put some countries in
different position in financial terms. It is important in order to understand
possible effects of FFP Regulations, which applies to major leagues in the
same way.
a. Italy
Italian football historically is considered as a one of the best in the World.
Along with all achievements Italian Serie A has experienced various football
scandals more than any other football league in Europe – Calciopoli in 2006
and the most recent match-fixing scandal in 2011. Arguably, Italy was the first
country in European football, where owners have started to invest enormous
amount of money in squad development, what has led to various bankruptcies
among the Italian clubs in late 90’s-early 00’s, such as Lazio and Fiorentina.
The great legacy from hosting the World Cup 1990 will not last forever and
Italian football infrastructure requires new investments. King (1998) states
that the Italian football structure and new stadiums were on the highest level,
what boosted football all around the world. For instance, popularity of
Italia’90 in England played a significant role in formation of English Premier
League (Doidge, 2015). Twenty six years later Serie A clubs still rent out those
stadiums avoiding investments in new projects, overall level of national
championship massively dropped down, consequently, even Italian top-flight

16. 11
clubs cannot attract the big names as it was in 1990’s and early 2000’s (Boeri
& Severgnini, 2012). Despite the fact Serie A generates the lowest commercial
and matchday income among other Top-5 leagues (approximately €700 million
per season), the league still manages to sell its TV rights for €1 billion per
year, what places it on the second place, just behind the commercialised
Barclays Premier League (See Figure 3).
Figure 3. The revenue breakdowns for the Top-3 leagues (Deloitte, 2015).
On the other hand, according to a reputable Italian newspaper La Gazzetta
Dello Sport (2015) the average club’s total annual wage bill within the Serie
A is €44.1 million, with the lowest wage bill of €8 million for Frosinone and
the highest bill of €124 million for Juventus. The colossal difference in wages
highlights the inequalities in Italian football, but Serie A shows that it is
possible to be in Top-5 leagues without paying ridiciously large salaries to
footballers as it happens in English Premier League, where only Manchester
United star-player Wayne Rooney earns three times more than Frosinone
annualy pays to all players (BBC, 2014).
Nowadays, most of Serie A clubs are owned by private benefactors, who are
massively investing in their owned clubs. Moreover, Italian clubs are not as
successful in European competitions as it was in mid 90’s and average
attendance of Serie A is one of the lowest among Top-5 European leagues (See

17. 12
Figure 4). All these problems have led to obvious low commercial income and
losses, which lately are covered from owners’ pockets. Iaria (2012) ideally
summarises Italian football:
“The exact total is € 2.483 billion. That figure includes every single financial
contribution, be it a cash investment or revision of financial situation that has been
necessary to keep the clubs afloat. In layman’s terms: without that money, football
in the ‘Belpaese’ would no longer exist.”
Figure 4. The average attendance in Top-5 European leagues (Deloitte, 2015).
Regarding the financial specifics, until 2014, Italian football system involved
in itself the co-ownership of players, where one club can sell half share of
player to other club and send player on loan. This scheme proved its
effectiveness in many cases, for example, Adriano, who was owned by Inter
Milano and was sent on loan in Parma. Co-ownership was a good opportunity
for smaller clubs to get good-quality players in its squad and then earn extra
profit from selling half share. Unfortunately for lower table clubs, this scheme
was cancelled because scheme was atypical compared to Europe (Abete,
2014). Clearly, this do not affect Italian top-clubs, but it affects finances of
other Italian clubs, who were using co-ownership to reduce costs and risks
from making transfers.

18. 13
b. Germany
Same as Italian football, Germany is a successful football country with a great
history. After the fail on Euro 2000, German football governing bodies made
improvements in coaching and talent identification systems (James, 2013). In
2014 Germany won its first World Cup since 1990.
Nowadays, Bundesliga has 42% of foreign players (62% in English Premier
League) and has a highest average attendance among all Top-5 European
Leagues (Bundesliga, 2014). Moreover, 17 out of 18 Bundesliga clubs show
positive balance of income and expenditure (Bundesliga, 2016). To highlight
German commercial success it should be mentioned that the ticket price level
in Bundesliga is one of the lowest in Europe, which makes football affordable
to any fan (DFL, 2014). Although, the low ticket prices lead to relatively small
matchday income, which was almost by 30% less than in Premier League
(Deloitte, 2015).
The last couple of years were successful for both German National side and
German clubs on international level. In combination with strong economy, this
success led to spectacular increase by 16% in commercial and sponsorship
revenue (Deloitte, 2015), and Bundesliga is still growing its revenue.
Figure 5. The aggregate revenue in Bundesliga (Bundesliga, 2016).

19. 14
Furthermore, large German corporations Allianz and Evonik Industries
massively improved their financial situation, and increased their share
percentage in Bayern Munich and Borussia Dortmund respectively (Allianz,
2015; Evonik Industries, 2015; Deloitte, 2015), what shows trust in German’s
football future from major sponsors. However, these corporate giants cannot
have a major part of club’s shares due to the “50+1” rule, where majority is
owned by fans, apart from two clubs – Wolfsburg and Bayer Leverkusen –
considering history of these clubs (Elliott, 2014). This brings stability into a
club and keeps them safe from economic exploitation (Müller, 2011).
Bundesliga is now in process of negotiating a new domestic TV deal starting
from 2017. The existing contract brings only €628 million per year and all
German football community wants to change the situation, where even the
bottom team in Premier League earns more than Bayern Munich from
broadcasting rights (Associated Press, 2015).
German had a long way to go since 2000, but German football association has
managed to turnaround the whole system, through the investing in youth
football and upgrading training grounds, and other football related facilities
(Guardian, 2013).

20. 15
c. England
England is a home-nation of football; nevertheless, England won only one
World Cup back in 1966. In club football English clubs were dominating side in
late 70’s-early 80’s, but in the same time it was the most shameful period of
English football, because of football “hooligans” and English clubs were
disqualified from European Competitions due to accidents, which were started
by English fans (Wang, 2004).
In late 60’s British television has started its relationship with English football
and by 80’s television became a central figure in football, where TV
companies have started to bid for TV rights and in turn football began to see
TV contracts as an important source of income (Russell, 1997). In 1985,
English football reached its peak of crisis, when club chairmen have rejected
the offered TV deal and league has been left without TV coverage for one
season. It happened for the first time over the thirty years. In the same year
it was followed by Bradford disaster and peaked by mentioned above
exclusion of English clubs from European competitions, when 39 Juventus fans
were killed by Liverpool “hooligans” on Haysel stadium. However, all
interested sides (e.g. clubs, league, government) made some changes in
football, society could not see football as a “people’s game” anymore (King,
2002). Moreover, after the tragically known Hillsborough tragedy in 1989,
people lost patience and trust in game, meaning that English football could
just disappear, but, luckily for football, major transformation of game was
announced.
In early 90’s Premier Leagues was established by top-clubs’ chairmen, so-
called “gang of five”, in order to change English football and public’s view on
game (Kelso, 2009; Elliott, 2014). Nowadays, it is the richest and the most
mediated league in the world; it attracts top-flight football players and rich
owners, as well (Deloitte, 2015).

21. 16
However, in the beginning of Premier League situation was radically different,
where only 11 foreign players had started games in the very first match day of
Premier League (Elliott, 2014), while nowadays there are 70 different
nationalities. Figure 6 shows that first TV deal was worth £214million over five
years, whereas now it reached £5.14billion over three years (BBC, 2015).
Figure 6. The Premier League's domestic TV deals (BBC, 2015).
In addition, Premier League gets £2billion over three years from selling
overseas TV rights and might be seen live in 212 countries. Furthermore, now
league is in the middle of renegotiating process, and it is believed that deal
will significantly increase to £1billion per season (Deloitte, 2015), considering
the growing leagues popularity in North America and Asia (Guardian, 2015). In
the beginning of 2015, Barclays Premier League has announced that league is
moving away from title sponsor, what shows how league grew up since 1992
and became a financially independent organisation (Premier League, 2016).
Regarding the investments in football facilities, since the formation of
Premier League, clubs have invested more than £3billion in stadiums and
training grounds, meaning that English clubs have the state-of-art
infrastructure (Elliott, 2014). Although, even with having these resources
English football fails to produce new talents for the National Team,

22. 17
consequently, this leads to a high proportion of foreign athletic labour in
Premier League.
ii. The effects of FFP Regulations on European football
a. The outcomes of first FFP monitoring period
The Club Financial Control Body (CFCB) Investigatory Chamber, which
monitors the clubs’ financial performance and issues sanctions clubs which
break the FFP Regulations, found fourteen clubs, who breached the FFP in the
first monitoring period. All clubs individually agreed to settlement agreements
with aim to breakeven (ECA, 2015).
European Club Association (ECA) highlights changes in FFP Regulations
regarding the economical differences and changes within Europe. UEFA
announced that starting from season 2015/16 FFP will take them into
consideration in order to strengthen spirit of Regulations (ECA, 2015). That
means this set of rules ignored economical differences among countries for
the whole monitoring period. In other words, UEFA has generalised the state
of all countries’ economies, but in reality they are unlike, what makes
football different as well. Relating to rules are still modifying and are not
complete, Hohlovs (2016) argues that it “can be used by clubs in their own
good”. However, UEFA consider FFP Regulations as a document, which will be
revised and updated from year to year to adapt this document to any changes
might be in European football (ECA, 2015). Therefore, club management
should think wisely and do not rely on possibilities to avoid FFP Regulations,
because sooner or later they will be modified, meaning that club will be one
step behind.
Nevertheless, from financial perspective, FFP has positively changed the
outlook of European football: reduced overdue payables by 80% and increased
the aggregate underlying operating profit (See Figure 2), meaning European
football society has started to live within their means, what brings a financial
stability in it.

23. 18
b. The general effects of FFP Regulations
As it was mentioned earlier, UEFA FFP Regulations do not consider
investments in youth academies as a football relevant expenditure (UEFA,
2012); meaning that clubs should concentrate on producing their own football
talents, rather than to buy players from other clubs. In this issue Germany is
far ahead from other Top-5 European Leagues; total investment of all
Bundesliga clubs in youth development is now reached €94million per year and
still is growing (DFL, 2016). Moreover, the German National team brings new
young players in its squad every year, what shows quality of produced players
in football academies. Obviously, Italy and England produces young players as
well, but outcome of it hardly can be compared to German example.
Furthermore, the percentage of foreign players in Premier League is the
highest in Europe top-flight league society – 62% (See Figure 7).
Figure 7. The percentage of foreign players (Author’s calculation).
Smaller clubs cannot afford to pay wages to high-quality players due to the
significant difference between rich clubs’ and smaller clubs’ income,
especially, so-called football relevant income, so they were forced to only
produce their own players through academies (Szymanski, 2014). Although,
not every club can produce good-quality player, who can be involved in higher
league games. It makes talented players highly inelastic product (Franck,
2014). For example, FC Southampton historically prioritises its academy and
they have used club-grown players in Premier League for many years.
Southampton sold their home-grown players, such as Lallana and Shaw to
English rich clubs – Liverpool and Manchester United, mostly because these
players want to succeed in football, but Southampton is a small club

24. 19
(Southampton Football Club, 2015). Then Southampton needs to produce new
players to strengthen its squad, what takes time and the success is not
guaranteed. On the other hand, smaller clubs gain profit from selling players,
which is a football relevant income from FFP Regulations’ point of view
(Szymanski, 2014).
The same situation is in any European league, but why rich clubs can afford to
pay wages to talented players, but smaller cannot? Firstly, rich clubs are well-
known brands and sponsors are more interested in sponsoring them and they
can attract more fans to their stadiums rather than smaller clubs do.
Moreover, rich clubs have an opportunity and financial resources to build or
rebuild their existing stadiums to increase capacity, because their fan base is
growing faster than smallers’ clubs, what will boost commercial and match
day income (Sass, 2016). Juventus Stadium is a recent example, whilst most of
the Serie A clubs play on relatively old stadiums (Doidge, 2015). Secondly, rich
clubs have a better squad, so they can participate in European competitions
and depending on their performance receive higher revenue from UEFA, which
can be reinvested to qualify to next European competition (Vopel, 2013). On
top of that, Mieritz and Helde (2014) highlight the cartel-like situation in
Champions League, where revenue is distirbuted according to club’s success,
how many games were shown on television and, most importantly, from
market pool. Market pool is formed out of television interest in country and
the amount of profit, which comes to UEFA from local broadcaster. Therefore,
clubs from Top-5 European leagues earns more not only from being more
successful than other clubs, but from greater interest in their country as well
(See Figure 8).

25. 20
Figure 8. The Champions League market pool share by country (Mieritz & Helde, 2014).

26. 21
iii. The future of European football in the next five years
The first noticeable outcome is that top-clubs will have better opportunities
to strengthen its squads due to the higher commercial income (Vopel, 2013).
In some cases, sponsor money of rich club is greater than a small clubs’ season
budget. For example, Manchester United earns £53million per season from
Chevrolet (Telegraph Sport, 2014), whilst Southampton FC paid £55million on
wages in season 2013/2014 (Southampton Football Club, 2015). Clearly,
smaller clubs must improve their off the pitch performance in order to
increase awareness of their brand to attract interest from sponsors and
increase fan base to generate stable income, rather than gamble on ongoing
transfers (Franck, 2014).
The FFP Regulations eliminate the “rat race” within European football
(Franck, 2010) by forcing clubs to create a good management, which should
involve experts in football, who are able to redesign club’s business model
and then boost club’s commercial revenue. Evidently, good management
team, most likely, will pursue different goals rather than to play catch-up
with top-clubs by investing large sums and gamble on success (Franck, 2010).
Figure 9. The wage growth rate (UEFA, 2015).
On the other hand, wage growth rate in European football is decreasing,
because FFP is limiting the number of clubs, who can afford to pay high wages
(See Figure 9). The UEFA Benchmarking report (2015) states that the wage
growth rate became less than the growth rate of European football. FFP
requirements insist that from clubs should remain its wage to revenue ratio

27. 22
close to or below 60%, whereas at the beginning of these rules the
recommended ratio was up to 70% (Deloitte. 2015). However, a “good
management” might lead to club’s better financial performance, what will
give to club an extra profit, and then invest in new players by significant raise
in wages, due to the club’s increased financial sustainability.
Moreover, Franck (2014) and Madden (2012) argues that FFP Regulations will
change transfer market significantly and prices will go down, due to
combination of break-even rule and less competitiveness from smaller club
side, but the CIES study (2015) shows that aggregate money spend on transfers
in Top-5 League only grows up (See Figure 10).
With regards to Champions League’s specifics, this competition means to have
at least eight home-grown players in every club, who, regardless of their
nationality, have been trained by their club or by another club in the same
national association for at least three years between the age of 15 and 21
(UEFA, 2014). Whilst it is not a problem for any club from less developed
league, it is becoming a problem for core European clubs, especially, English
such as Chelsea or any other English club, which prefers to buy foreign players
instead of producing own talents through academy.
Madden (2012) and Sass (2016) have designed the special models in order to
analyse different scenarios how FFP might affect the European football in
long-term. Both researchers came up with negative conclusions. In Madden’s
(2012) case, model predicts a decrease in all team quality, whereas Sass’s
(2016) model shows that top-clubs only will enlarge the gap between them
and smaller clubs.
Figure 10. The average transfer expenditure for squad members of the three top ranked clubs,
per league (2009/10-2014/15, million €)(CIES,2015).

28. 23
Methodology
This part analyses the two different research approaches, which are deductive
and inductive. First part will describe the differences between two
approaches and then it will discuss the chosen approach for this particular
project.
Second part will describe the various methods of data collection in order to
understand, what methods should be applied to existing project, with its
limited available literature.
Next part explains differences between analysis of qualitative data and
quantative data, and which type of data should be used in this project.
Any project is obligated to follow strict guidelines and cannot offend other
people feelings. Therefore, the last part of methodology will describe the
social norms and what should be done in regards to this dissertation.

29. 24
i. Research approaches
Deductive approach is when firstly the researcher develops his idea and
theory, and backups them with facts and evidences, which were founded
during the extensive research. Inductive approach is when firstly the
researcher collects data and builds theory using the founded information
(Saunders et al., 2012).
Using deductive approach researcher develops theory, based on collected
data; this process is very close to scientific research. According to Blaikie
(2010), there are six steps, which should be done to test the theory:
1. Theory
2. Hypothesis
3. Data collection
4. Analysis of collected data
5. If the theory fails the test, then it must be modified and restart
the process
6. If theory succeeds, then it is confirmed.
The theory of this project is that rich clubs are in a better commercial
position rather than smaller clubs, which puts club management under the
pressure and requires wise decisions in order to stay competitive. To collect
all available information on this topic, the deep literature review was done.
Moreover, data was collected by methods, which will be described in the next
part, to gain a broader knowledge about this topic.
Revising the information that had been discussed, it could be stated that the
effectiveness of club management could be evidenced in club results and in
clubs’ annual reports. However, there is limited information about how FFP
directly affects the club results. In conclusion, this project is based on
deductive approach as it is the most appropriate in this case.

30. 25
ii. Data and information collection
There are two main different types of data, which are more appropriate to
use – primary data and secondary data.
The primary data focus on gathering information specifically for one certain
case. Usually, it involves methods such as interviews, observations and
questionnaires.
According to Atkinson (2012), there are two interviewing approaches, which
are used more often than others on undergraduate level:
 Structured – A structured interview is one in which the researcher asks
respondents to answer a series of standartised questions. In this type of
interview answers are expected, because the interviewer is not
providing his own opinions on the topic.
 Semi-structured – Usually, the researcher has a list of prepared
questions to be covered. During this interview the researcher can pick
up new and important information about his topic. If necessary, it is
acceptable to ask extra questions to get more information.
Secondary data might be divided into two groups, which are Documentary
Data and Survey Based Data. Documentary data include published journals,
newspapers and articles, whereas Survey Data includes, obviously, surveys.
These types of data might be used in combination with each other (Saunders
et al., 2012).
Clearly, analysis of primary data takes time, but collected information is more
precise than the secondary data (Saunders et al., 2012). Moreover, access to
secondary data is easier rather than to primary, but it makes it more
vulnerable with regards to quality, as well. However, due to the fact that
primary data is collected specifically to certain topic, it makes it more
valuable and precise (Atkinson, 2012).

31. 26
FFP is a new field in football industry; therefore, there is a limited secondary
data available, but a few recognised experts in this industry are regularly
publishing valuable materials on this topic. Moreover, football is a relatively
closed industry, so only a few people know the specifics of it. With regards to
this project and problem it is investigating, it was appropriate to
communicate with people within the football industry, such as FIFA Agents
and football governing bodies, in order to get more accurate information. This
project was initially planned to be majorly based on interviews with reputable
people, what could provide with a significant amount of primary data to this
project. Unfortunately to this project, only one member from football
industry accepted the offer to share his view on FFP Regulations and current
state of football; all others rejected or ignored the invitation. This happened
mostly because football is a closed industry and people, who work within
football, experience the lack of time to participate in interviews.
Therefore, this project will be mostly based on secondary data from various
reputable sources and supplemented by one interview with FIFA Agent in
order to get a critical view on future of European football in regards with FFP
Regulations.

32. 27
iii.Quantitative and Qualitative data
According to Atkinson (2012), qualitative data is a data which is expressed
through words and then analysed through discussion. On the other hand,
quantitative data explains information using numbers, which then transforms
into graphs and statistics (Saunders et al., 2012).
FFP Regulations are about clubs’ commercial income and spending. Obviously,
quantitative data was be used in order to assess the commercial situation of
European clubs. However, as all clubs tend to hide some of their expenses,
some of quantitative data was used from reputable news sources, what makes
it unofficial and, in some cases, approximate.
In order to set up a background of chosen countries it is important to revise
their history, specifics and current state. Furthermore, collected data from
interview will help make this project’s discussion part more critical by
providing useful and sometimes radical views on FFP. Therefore, this project
will include in itself both types of data to back up all findings and make it
unbiased.

33. 28
iv.Consideration of ethical issues
As this project involves human participation, the ethical clearance for this
project must to be approved by Solent Research Ethical Committee prior the
actual interview (See Appendix 1). Ethics refer to the standards of behaviour
and any research must stick to social norms to avoid any possible conflicts of
interest or affects person’s rights, who was involved in this project (Saunders,
2012).
However, this project is about well-known set of financial rules and all
information about it is freely available for public. Clearly, outcomes of this
research must not affect or violate someone’s rights, but only discuss possible
effects on European club football, which are based mainly on UEFA’s and
clubs’ official reports. Moreover, almost all football experts refused to share
their views on effects of FFP Regulations, meaning that inside or secret
information will not be used in this research.
This project will be made within the guidelines and will strictly follow social
norms.

34. 29
Discussion
i. The analysis of club ownership in chosen countries
Football industry starts with clubs, and clubs, in its turn, start with owners. It
is hard to believe that any key financial decisions in club’s operation might be
done without owner’s approval. Considering the fact that all people are
different to each other, it means that all clubs are different as well.
However, any league has specifics, which create patterns in club ownership.
These patterns might be observed below on Figure 11.
Figure 11. The proportion of foreign and domestic owners in three leagues (Campbell, 2014;
Guardian, 2015; Deloitte, 2015).
In German case it is prohibited by law to sell majority of club shares to
private investors and control of club must remain in club members’ hands
(Elliott, 2014). As it seen, leader in this context is a highly-mediated Barclays
Premier League, where greater part of clubs is fully or partially owned by
overseas investors. The most recent change in club’s board happened in
February 2016, when Iranian businessman, Farhad Moshiri, bought a 49.9%
shares of Everton FC. A new Board member promised to invest a significant
amount of his wealth in club’s future (Everton Football Club, 2016). However,
these investments might be only seen in infrastructure development, because

35. 30
FFP do not allow injecting in football related areas. Deloitte (2015) explains
this activity by Premier League’s global expansion.
On the other side, Italian football remains to be Italian, with the minimal
foreign influence on it. As Figure 3 showed, Serie A has a lowest commercial
income between mentioned leagues, meaning the least public attention.
Hence, foreign investors are not interested in Italian clubs, as it is with
English top division. As a result, clubs are owned by Italian businessmen, film
producers and fashion designers. Franck (2014) argues that private
benefactors own clubs for very different reasons from improving public
opinion about them and raising prestige to money laundering (Doidge, 2015;
Iaria, 2012). For the past ten years, Italian football has experienced various
scandals, which were organised by Italian top-club official governing bodies or
they were somehow involved in them. However, these owners are passioned
about their football clubs, what, sometimes, leads to irrational moves from
their side. The brightest example is Maurizio Zamperini, Palermo president,
who already sacked five managers (one was re-hired during the season) by
March in season 2015/16 due to poor results (U.S. Citta di Palermo, 2016).
Zamperini cares about his club, but all this leads to enormous compensations,
which were paid to fired managers. Potentially, these irrational costs may
breach FFP Regulations’ breakeven policy, what will lead to exclusion from
European trophy, in case if club secures a place in one of them. Although,
Italy has other examples of presidency in face of Silvio Berlusconi at AC Milan
and Massimo Moratti at Inter Milan by investing in total €1.5billion in their
top-clubs’ development, but, obviously, these investments will never be
returned (ESPN, 2015). Consequently, it looks like these presidents see their
clubs as a fun or pleasure, rather than as a business. This behaviour hardly
can be imagined in German football, where all key decisions are made with
fans’ approval. However, strictness, which comes from Italian owners, leads
to low wages in Serie A (La Gazzetta Dello Sport, 2015). As FFP Regulations
requires from clubs to follow certain financial framework, it is crucial to any
club to avoid unnecessary or inefficient costs.

36. 31
Nevertheless, there is no right way how to operate a club, even sometimes
irrational Italy was considered as one of the best on European club arena in
early 2000’s. Analogy can be seen in differences between the Anglo-Saxon
capitalism and corporatist theory, where first model is market-oriented and
companies care more about the shareholders, whereas corporatist model is
bank-oriented and is about satisfying stakeholders (Nobes & Parker, 2012). Put
in other words, the first model is focused on increase of investors’ wealth,
and the second one is concentrating on who are involved in process. In
football context we see Premier League, where some clubs’ set the global
expansion as a mission (Manchester United, 2016a), attract wealthy investors
and are constantly increasing ticket prices, whereas German clubs are owned
by its members and try to remain ticket prices as low as possible to satisfy
fans.
Hence, in order to meet FFP Regulations it is important for owners to create a
good management team before this FFP monitoring period ends, whilst the
injections from owners’ side to cover up to €5million losses within the
maximum permitted deficit (€30million in 2015/16-2017/18 monitoring
period) are still possible (UEFA, 2015). UEFA still has not announced the
maximum permitted deficit for the further period, but, assuming the nature
of FFP, it is fair to suggest that it will massively decrease until it reaches
level, when clubs must be profitable without any financial injections from
outside. The management team should be formed in order to maximise club’s
football related revenue, which then can be then efficiently reinvested in
development.

37. 32
ii. The “Good management”
Proportion of matchday income to total revenue in Italy and Germany stays
around 20% since 2001/02, whilst in England this figure visibly decreased from
28% in 2001/02 to 19% in 2013/14 (Deloitte, 2003; Deloitte, 2015). This means
that contemporary football more concentrates on its commercial side, rather
than on matchday experience. However, costs are growing as well, meaning
that clubs should be controlled by experienced directors in order to take club
finances under strict control to meet European financial requirements.
As football globally expands and becomes more commercialised, it involves
more staff from business segment. Nowadays, education institutions
understand the social and economical importance of football by introducing
football related courses in different universities, such as Southampton Solent
University and University of Bedfordshire. Fernano Soriano, the Manchester
City CEO, stated in his book (2012) that during his tenure between 2003 and
2008 in FC Barcelona, he and his team increased club’s revenue almost by
three times – from €123million to €308million. Moreover, his decisions turned
Barcelona’s significant losses in to profit of almost €90million, what led to
club’s “golden years” peaked by winning all six trophies in which they
participated. Arguably, this happened mostly because of board’s good
financial decisions and well-balanced club structure, meaning that playing
squad was improved not only by quality signings from outside, but introducing
new players from its own academy as well (Soriano, 2012). Similar examples
of well-organised clubs might be observed in German football, which produces
new highly-talented players every year and shows great rate of return on
capital, with seventeen out of eighteen clubs being profitable (Bundesliga,
2016).
In all English clubs’s management might be seen people from other industries,
such as accountant Ed Woodward as a Manchester United CEO, whose
experience helped Manchester United to have twenty-two Official partners all
around the world (Manchester United, 2016b). This clearly helped club to see
themselves being Top-2 richest club in the World with €518million total
revenue, just behind Real Madrid (Deloitte, 2015b). Interestingly, it happened

38. 33
despite the poor on-pitch performance and various failures on both domestic
and European level since Sir Alex Ferguson retirement.
Top-clubs are commercially developed and it is hardly believed, that any of
them will have problems in regards to FFP Regulations. Wise management in
English football is Leicester City in season 2015/16, where this small club is
the main title contender so far. However, this case is different to Manchester
United commercialisation example, whereas Leicester City success is
concentrated on the on-pitch performance with excellent contribution from
club’s Perfomance Analysis department and wise decisions on transfer market
(SkySports, 2016). Moreover, club has formed a new partnership with Access
Group, which provides technology to monitors and analyses spending (Access
Group, 2015). To highlight Leicester managers’ success, Deloitte (2015) in
their latest report brings up the Premier League’s Spearman’s rank correlation
coefficient (See Figure 12), which is designed to measure the relationship
between total wage cost and league position.

39. 34
Figure 12. The Premier League clubs comparison of total wages with league performance 2013/14
(Deloitte, 2015).
Figure 12 shows that the size of season budget matters and has a clear
correlation with final position in the league. As it is seen, all English rich
clubs, apart from Everton and Manchester United, finished according to size of
their wage budgets in season 2013/14, what highlights a sufficient lack of
chances for smaller clubs’ success, who cannot afford to attract highly-
talented players and then set a target to compete for place in any of
European competitions. Considering the fact that Leicester City recently had
negotiation with UEFA concerning the FFP requirements (Guardian, 2015),
doubtfully that this small club radically increased its season budget to
previous one, when club finished just one place above the relegation zone.
Therefore, it was expected that club will be placed in Spearman’s left bottom
corner at the end of the season 2015/16 (See Figure 12), meaning Leicester
City has a low wage costs and low sporting performance. However, club’s

40. 35
performance is a remarkable example for smaller clubs, that even small clubs
can see themselves in Champions League.
Examples of good management can be found in Italy, where Juventus is a
main example of how to operate a football club on the highest-level. In the
latest annual report (2015) Juventus shows €2.3million profit at the end of
2014/15 season. comparing to €95.4million loss in 2011. Moreover, club’s
management managed to increase revenue by two times since 2011 - from
€172.1million to nearly €350million. Coincidentally, these significant changes
in club finances can be linked back to 2010, when Andrea Agnelli became a
club’s CEO. Moreover, club moved to a brand-new stadium in 2011, in which
Juventus invested around €150million and another €90million came from
partners, who developed the area around the stadium (Juventus, 2015). This
new facility helped to increase club’s active members by six times to up to
170’000 registered members, and it also increased matchday income by
almost 5 times – up to €51.4million. In annual report ( 2015) Agnelli highlights
that Juventus Stadium is club-owned, what brings to fact that only a few
Italian clubs own stadiums, which massively limits opportunities to generate
football relevant income. Soriano (2012) in his book argues that well-
organised structure will lead to on-pitch achievement, what was proved by
Barcelona and more recently Juventus.
Although, this project only saw one example of smaller club being able to
compete with rich clubs, considering the commercial potential of small clubs,
it shows a minimal possibility for them to be successful and breakeven. It only
can be achieved in long-term with competent directors, who will be able to
use their experience and knowledge to increase club’s commercial income,
which later can be wisely invested in further facility development, as not
being part of football related costs. However, at this point of time FFP
Regulations make it impossible to increase competitiveness without significant
injections (See Figure 12).

41. 36
iii.New facilities as an option to increase revenue
As it was mentioned earlier, FFP divides clubs’ income and expenditure into
two groups: football relevant and football irrelevant (UEFA, 2015). In top-
clubs’ case it is obvious, that they are in better commercial position and are
capable to attract new sources of income due to the brand awareness.
In combination with FFP Regulations this puts smaller clubs into position,
when they need to finance themselves only using existing resources or by
improving club’s on-pitch performance, which will guarantee higher payouts
and more interest from fans and sponsors side (Vopel, 2013; Sass, 2016).
However, according to Spearman’s rank (See Figure 12) any club, which wants
to improve its on-pitch performance, needs to attract better players, meaning
that team must to increase its wage budget, what, consequently, will lead to
so-called “rat-race” (Franck, 2014). This puts in conflict situation in regards
with FFP Regulations, which were specifically designed to protect football
from overspending. Therefore, this leaves smaller clubs only with two possible
strategies of increasing their football relevant income – invest in football
facilities and producing young talents.
Clearly, construction of new facilities or stadiums requires a significant
amount of investments, but these costs are not considered as a football
relevant, meaning its exclusion from breakeven calculation (UEFA, 2015). The
new Juventus Stadium example showed how new facilities may boost the
football relevant income (Juventus, 2015). However, smaller clubs still needs
to find a way to finance these improving and considering the size of
commercial income they generate - it is hard to see how it might be
achievable (Doidge, 2015). This puts smaller clubs in position, when they need
to attract investments from outside. If small club is not owned by wealthy
private, who is able to cover expenses, then only left opportunity is a long-
term bank-loan, but this action will be risky considering the low commercial
income. However, Italian football infrastructure needs a significant
improvement, whereas German and English were constantly developing
existing infrastructure (Elliott, 2014; Bundesliga, 2016).

42. 37
The German football association proved that this strategy works by winning
World Cup in 2014. However, those changes were designed based on outcomes
of official discussions, which involved clubs, Bundesliga official bodies and
DFB, which led to rational decision about the importance of investments in
academies (James, 2013). Considering Italian club owners’ pattern of
behaviour, this sort of discussion becomes less visible. However, a few Serie A
clubs see importance of owning a stadium and are planning to build their own
or in, some cases, already did (See Figure 13).
Planned or recently Finished Stadium Expansions
Juventus New 41’000 Stadium was opened in 2011
AC Milan New 48’000-seat Stadium is planned
AS Roma New 52’000-seat Stadium is planned
Udinese 25’000-seat stadium; Renovated in 2015
Torino New stadium is planned to open in 2016
Figure 13. The planned or recently finished stadiums in Italy.
In regards of producing new talents, all three nations have appropriate
training grounds. Moreover, Italian National training centre in Coverciano is
considered as state-of-art, which not only provides high quality pitches for
many teams, but also an innovative coaching learning centre, where all Italian
coaches and managers may improve their knowledge (BBC, 2010). This is the
option for Italian clubs to use in order to produce new talents. English FA,
prior the construction of its new St. George’s training centre, made a visit to
Coverciano to gain valuable information of how St. George’s Park might be
improved (BBC, 2010). Thus, it highlights the highest level of this National
training centre.

43. 38
iv. The youth development
By implementing FFP Regulations UEFA wants to build a solid structure of
youth players’ production across the Europe (UEFA, 2015). This incentive will
provide infinite athletic labour for European football in long-term, what will
increase club sustainability (Stratton, et al., 2004).
From club management perspective, youth academies are seen as an option to
heavily reduce transfer spending by producing new players for the first team
or as an opportunity to generate additional football relevant income by selling
new talents, who are not able to improve team quality, but are wanted by
smaller clubs (Stratton, et al., 2004).
In some cases, transfer income from selling one home-grown player may
significantly exceed the entire Academy budget (Fulham Football Club in
Stratton, et al., 2004), showing the financial reason why management should
invest in youth system. However, these football irrelevant costs are still
considerable, as a good academy requires an appropriate environment for
young players; moreover, it requires keeping youth coaches up to date. All
this leads to producing not just player, but intelligent person, who is capable
to appropriately behave in public, what might be considered as an “added
value” and sold for higher price (Richardson in Stratton, et al., 2004).
The successful strategy of focusing on youth player development might be
seen in a Southampton Football Club example. The club can be proud of its
academy, which gave to football numerous highly talented players such as
Shearer, Walcott, Lallana and, the world’s most expensive player, Gareth
Bale. The recent improvement of training facilities has cost £28million, and
was mostly covered by the club’s wealthy owner – Katarina Liebherr
(Southampton Football Club, 2014). Les Reed (2014), the Southampton CEO,
believes that the further investments in club facilities will create a stronger
link between the academy and first team.

44. 39
The Saint’s academy is not a FFP Regulations’ product, but it shows the
reason for smaller clubs to develop the existing youth system. As it seen, this
strategy pays off in long-term. If not by improving the first team, then
academy graduates may improve club’s financial situation. Although, to
create a successful system it is essential to have a well-established link among
all club departments (Szymanski, 2014).
However, Dmitrijs Hohlovs (2016), the FIFA Agent and ex-director of FK
Ventspils, says following:
“I do not think that clubs should set youth development as their primary
objective. While I was in charge of FK Ventspils, we were investing a lot of
money in Boarding school and Academy for several years, but the output was
minimal and it remains to be the same. As a consequence, the board heavily
reduced the budget. However, I do believe in long-term sustainability of this
strategy [investing in youth academies] and, of course, clubs should support
and invest in academies, as it is a football future.”
Hohlovs’s experience clearly shows the possible risk of this strategy, but still
recognises it importance. The failure in FK Ventspils might be explained by
the poor state of football in Latvia, which is placed as a forty-second nation in
UEFA rankings (UEFA, 2016). However, it is harsh to say that the output was
minimal, as at least five players in the FK Ventspils this season’s first team
graduated from academy and many others playing in other Latvian clubs (FK
Ventspils, 2016). Coincidentally, during the period, when club was investing in
youth development, the club reached Europa League Group Stage in 2009/10
season, becoming the first Baltic club to participate in European Competition.
This achievement can be linked back to Soriano’s (2012) statement that the
well-organised club structure leads to success. However, this relationship
cannot be proved for sure.

45. 40
v. The importance of home-grown players
The players who have graduated from club academy are considered as home-
grown players, what is necessary in case if club aims to play in Champions
League, which requires having at least eight home-grown players in the squad
(UEFA, 2014). However, it is still possible to participate with fewer locally
trained players, but then player registration list is reduced accordingly (UEFA,
2015). Clearly, shorter registration list leaves manager with fewer options to
prepare for the game.
The board of any club must see the importance of investing in youth;
otherwise, there is a possibility that the whole squad will be fully formed by
foreign athletic labour at some point of time. The other reason to finance a
youth academy is that it should be seen as a business, which provides a profit
to club (Saints Academy, 2016).
Ignoring of academy importance leads to a high proportion of foreign players
in league. DFB introduced its youth talent development programme in 2003,
and one reason among others was dealing with an increasing foreign
involvement in Bundesliga (James, 2013). Since then that figure massively
dropped down by almost 25%, what might be observed on Figure 14 below.
Figure 14. The percentage of foreign players in Bundesliga (Bourg & Gouguet, 2010; Author’s
calculation).

46. 41
Clearly, the DFB’s talent development programme has helped in this issue by
increasing number of talented players in Bundesliga clubs such as Ozil, Kroos
and, more recently, Sane. All these mentioned players are now playing for
German National team and some of them already are winners of 2014 World
Cup in Brazil, where Germany managed to beat hosts with astonishing result –
7:0. This leads to Stratton’s (2004) statement that it is not only club, who
benefits from investment in academy, but nation, as well. Moreover, FIFA and
UEFA payout bonuses to clubs per each player, who is involved in his national
team (ECA, 2015).

47. 42
vi. The Future of European Football
To summarise the discussed information, it is necessary to bring up the Sass’s
(2016) and Madden’s (Madden, 2012) models, these involve youth, fan and
commercial factors and how they affect club football development in
different ways. As it was mentioned earlier, both researchers predict
different negative impact of FFP on football clubs and their competititevness.
Sass (2016) uses a glory hunter phenomenon in his analysis. This phenomenon
states that if club becomes successful it is able to attract more spectators,
which leads to increase in commercial and matchday revenue (Sass, 2016). As
FFP Regulations prohibits financial injection, this puts top-clubs in the
superior position comparing to small clubs by having a better squad. The
Spearman’s rank (See Figure 12) shows the total league dominance of rich
clubs from year to year, especially, with FFP Regulations, meaning higher
payouts and secured place in continental tournaments, which works as a
cartel and pays more to clubs from top-leagues (Mieritz & Helde, 2014). As
top-clubs, most likely, will reinvest the generated income in further
development, it only will secure dominance over the small clubs in long-term
(Vopel, 2013). Moreover, the decline in small team quality will lead to less
football related income (Madden, 2012).
However, the significant increase in fan base cannot be seen without
appropriate facilities (Siegfried & Zimbalist, 2000). This leaves Italian football
far behind the Germany and England, where any club success will be heavily
boosted by modern stadiums, whereas in Italy it only can be seen in Juventus
example.
In regards with talent supply and, more importantly, homegrown player
supply, players produced by smaller clubs only will make impact on team
performance in short term and then sold to better club, as it was seen in
Southampton example. However, it also was showed that the football relevant
income from selling club-grown players to rich clubs can finance academy for
several years (Stratton, et al., 2004). In regards with small club management,
this risky opportunity should be seen as an income source in long-term,

48. 43
because it is predicted, that bigger clubs will become bigger and more rich,
while smaller will become smaller in all regards (Madden, 2012; Sass, 2016).
This draws parallels with Marxist theory, which assumes that the lower-class
has been exploited by the upper-class (Delaney & Madigan, 2009).
Anyhow, Hohlovs (2016) assumes that the FFP Regulations is a tool to limit
rich-clubs, because they “have something to lose”, but his statement conflicts
with the founded information, which shows the radically different situation in
European football industry. This questions the “fairness” of UEFA
implemented FFP Regulations, because it leaves small club management with
two visible options to develop. However, even those two options are full of
risk.

49. 44
Conclusion
The main purpose of this dissertation was to assess the effect of FFP
Regulations on club management by outlining the background differences
among three chosen countries, looking at the current state of football in
Europe and the future of FFP Regulations.
The background analysis showed that all three were on the different level of
preparedness for FFP Regulations implementation. It was found out that the
gap between the top and smaller clubs was existed even before the
introducing FFP and it only will increase after, as a consequence of top-clubs
being in the better commercial position. However, the results of the first
monitoring period showed the significant improvement in European club
finance, by reducing club total debt and overdue payables. This showed that
clubs follow the strict financial set of rules and understand its importance.
The combination of findings from background analysis and results has helped
to form the view at the current state of football in Europe. This has led to
identification of key areas for improvement, such as football facilities and
youth development. Moreover, it was identified that it only can be done by
designing a well-organised club structure, which should involve experienced
managers as the link between club success and good management has been
found. Although, it has been established that the FFP Regulations limits
smaller club development, what puts them into a position, where the
management should seek for the possible investment to finance these full of
risk strategies from outside, considering their low commercial income.
Alongside with the introduced FFP Regulations, the unequal payout system in
Champions League has been founded. The findings shows the uneven
distribution of prize money among all clubs, where Top-5 European leagues
receives by five times more, than other European leagues all together.
Clearly, as top-clubs have more chances to succeed in Champions League,
they receive even higher payouts than smaller clubs. As a consequence, top-
clubs are increasing the gap and will, arguably, continue to do so.

50. 45
To summarise, along with bringing financial stability in European football by
introducing the FFP Regulations, UEFA brings in the increasing top-club
dominance over the small clubs. Firstly, UEFA generalises the European
industry and ignores country differences. As a consequence, some leagues stay
behind the Top-5. Lastly, the FFP Regulations puts club management,
especially, smaller club management, under the pressure by forcing to change
business model of the club and, at the same time, do not leave any visible
options to expand, apart from risky incentives.
However, the idea of financial sustainability should be prioritized, as football
has transformed into a business, where the breakeven might be considered as
the most important performance measure.

51. 46
Recommendations
As Champions League’s payout system is uneven, it is important for UEFA to
find a suitable way how to increase small club revenue, what will lead to the
greater competition in Europe and to the higher fan interest due to the
uncertainty of outcome.
Secondly, research papers from Szymanski, Franck, Vopel and others,
discovered various unforeseen consequences of FFP Regulations. Therefore,
UEFA should promote the academic research in order to generate interest
around the FFP Regulations and to create an open dialogue, what should
improve the rules, and club management and development, as it happened in
Germany prior the revolution in its football.
In finale, considering the constantly increasing gap between top-clubs and
small clubs, UEFA must prevent the further development of this problem by
helping small club management to find a new options how to progress. It can
be done by the setting up effective club football development scheme, which
should be mainly financed by UEFA. It is believed, that this incentive could
significantly improve the football infrastructure, increase quality of youth
academies and create good management in European club football industry.

52. 47
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61. 56
List of Appendices
Appendix A. The ethical clearance for research and innovation projects.

62. 57

63. 58
Appendix B. The interview with the FIFA Agent, Dmitrijs Hohlovs, on original
language.
- В то время, когда вводили ФФП, ты был директором маленького
европейского клуба, какова была твоя реакция/мнение на ввод
правил?
Кому было интересно моё мнение? [Смеётся] Если УЕФА сказали, то
ничего уже нельзя было поменять. Меня больше волновал объём
документов, который требовался для комиссии по лицензиям.
- В другой нашей беседе ты упоминал, что правила ФФП несовершенны
и требуют доработок, и что этим могут пользоваться клубы, обходя их
в своихинтересах. Каково твоё мнение сейчас?
Конечно, так как я окончил юридический университет, то имею
представление, что любой закон можно обойти. Сейчас клубы могут себе
позволить нанять хороших юристов, чтобы найти дыры и обойти правила в
своих целях.
- Рационально ли клубам делать ставкуна воспитание новых игроков?
Почему?
Я не думаю, что это нужно ставить как главную цель клуба. Когда я был во
главе Вентспилса, мы много лет вкладывали большие деньги в интернат и
саму академию, но это нам мало что дало, поэтому президент сократил
бюджет. Хотя, конечно, клубы должны вкладывать средства в детский
спорт, это же наше будущее и я верю, что это работает, но в долгосрочной
перспективе.
- Ты также говорил, что ФФП скорее лимитирует большие клубы,
нежели маленькие. С чём связанно такое мнение?
Я вижу, что топ клубам есть что терять, а маленькие как были
маленькими, так и будут жить по средствам. У них просто нет достаточных
ресурсов, чтобы это делать, а ФФП может сказаться на трансферах,
контрактах и других аспектах больших клубов.

64. 59
Appendix C. The translated version of interview with the FIFA Agent, Dmitrijs
Hohlovs.
- At the time, when UEFA introduced the FFP Regulations, you have been
in charge of small European club. What was your reaction/opinion on this?
Who cared about my opinion? [Laughs] If UEFA said to do so, then nothing
could be changed. I was more concerned about the amount of paperwork,
which was required by Licensing committee.
- In our previous talk you have mentioned, that rules are incomplete, what
can be used by clubs. What do you think now?
Of course, I have a law degree, so I have some understanding that any law can
be avoided. Now clubs can afford to hire good lawyers, who can find the holes
in Regulations, which can be used by clubs in their own good.
- Is it reasonably to prioritise the youth development? Why?
I do not think that clubs should set youth development as their primary
objective. While I was in charge of FK Ventspils, we were investing a lot of
money in Boarding school and Academy for several years, but the output was
minimal and it remains to be the same. As a consequence, the president
heavily reduced the budget. However, I do believe in long-term sustainability
of this strategy and, of course, clubs should support and invest in academies,
as it is a football future.
- You also said that FFP more limits big clubs, rather than smaller clubs.
Why you think that way?
I see that top clubs have something to lose, whereas small clubs were small
and will continue to live by their means. Small clubs simply do not have many
resources to develop, but FFP might affect top club transfers, contracts and
other aspects.