Increase competitive balance in European football: a strategic approach

Over the last two decades, European football has gone through massive structural changes. The end of foreign player quotas (Bosman ruling) and substantial increases in revenue have paved the way toward today’s two-speed Football hierarchy. Top teams’ revenues have increased exponentially while there has been little change in revenues for lower budget clubs. As a result, a trend of competitive imbalance has emerged. UEFA has tried to address these problems with Financial Fair Play (FFP), a regulation system which obliges teams to respect the principle of “break even”, meaning that clubs must not finance themselves with loans and “favors” from wealthy owners. While FFP has been successful in limiting clubs’ indebtedness and ensuring long term viability, it does not have the capacity to deal with competitive imbalance. As long as unequal distributions of revenue persist among teams and leagues, the issue of competitive imbalance will not be solved. This paper focuses on identifying recommendations that could lead to improved competitive balance in football. What would better competitive balance achieve for fans? With player talent more equally distributed, outcomes of matches and league competitions would be more difficult to predict and thus more enjoyable for spectators to follow. In arriving at the recommendations that are presented in this work, measures that have been successfully adopted in other professional sports are examined and tested. Firstly, the distribution of TV revenue in the UEFA Champions League is tackled. By emphasising the importance of one home TV market (market pool), UEFA does not treat all teams equally. Therefore, a system of distribution without market pooling has been developed and proposed. Secondly, the salary cap system was found to be a very effective tool in promoting increased financial equality among clubs and within leagues. Thirdly, the possibility of introducing a playoff system in football was addressed. Playoffs would increase the uncertainty of outcomes until post-season, however, implementation would be complex and would require changes in the number of teams per league. The results of this research reveal that tools to promote competitive balance do indeed exist, however, implementation barriers are quite high. Also, to avoid the threat of top teams deciding to break away and creating their own leagues if the regulating measures are too severe, compromises will be necessary in terms of the strictness of measures that will be adopted and applied