Ownership structure and financial performance in European football

What is it about?

This paper analyses the relationship between ownership structure and financial performance in the five major European football leagues from 2007/08 to 2012/13 and examines the impact of the Financial Fair Play (FFP) regulation. The sample used is comprised of 94 teams that participated in the major European competitions: German Bundesliga, Ligue 1 of France, Spanish Liga, English Premier League and the Italian Serie A. The estimation technique used is panel-corrected standard errors (PCSEs). The results confirm an inverted U-shaped curve relationship between ownership structure and financial performance as a consequence of both monitoring and expropriation effects. Moreover, the results show that after FFP regulation, the monitoring effect disappears and only the expropriation effect remains.

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Why is it important?

This study tries to provide direct evidence of the impact of large majority investors in the clubs and FFP regulation on the financial performance of football clubs. The paper has practical and social implications: Practical implications: One of the main issues that the various regulating bodies of the industry should address is the introduction of a code of good practice, not only for aspects related to the transparency of financial information, but also to require greater transparency in the information concerning corporate governance. Social implications: Regulating bodies could also consider other additional control instruments based on corporate governance, such as for example, corporate governance practices, corporate governance codes, greater transparency and control of the boards of directors, etc.