Glory Hunters,Sugar Daddies,and Long-Term Competitive Balance Under UEFA Financial Fair Play

Abstract

This article analyzes the long-term effects of Union of European Football Associations (UEFA) Financial Fair Play on competitive balance using a multiperiod adaption of a professional team sports model. This study accounts for the empirical fact that a club’s market size is positively affected by historic success. An increasingly successful club can attract more and more supporters and thus yield higher revenues that lead to even more success and an ever-growing market size. It is argued that this development will result in an utmost uneven contest if so-called sugar daddies are prevented from overspending by Financial Fair Play and thus cannot longer outweigh a club’s smaller market size.