Event Details

Internal seminar talk - Jerome Santoul

Introduced in the 2011 season by the UEFA, the financial regulations known as financial fair play (FFP) were devised as a tool to prevent rich clubs from dominating the competitions with financial resources by allowing poorer clubs to borrow and invest in sporting talent and then reap the benefits in later years. The model presented in this paper shows that allowing clubs with a smaller home market to borrow to hire top-level athletes and compete with teams with a higher home market will not make the competition fairer. It predicts that teams currently dominated in a league will see a larger share of their investment in sporting talent siphoned by superstar players. Moreover, we highlight conditions under which a league can become cornered by one team hoarding all the superstar players and yet remain profitable for both dominant and dominated teams. Finally, we present an empirical test to assess whether a league is cornered or not.