Salary cap vs. break-even rule: assessing UEFA financial sustainability regulation through the analysis of English and Spanish economic control policies

Abstract

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ABSTRACT Research Question Due to the limited and mixed effects depending on leagues and club size of the Financial Fair Play Regulation (FFP), based mainly on a break-even rule, the UEFA introduced a stricter Financial Sustainability Regulation (FSR) in 2024, including salary cap rule. This study aimed to assess the effectiveness of the new FSR compared with the previous FFP by examining Spanish and English league regulations on clubs’ financial performance. Spanish regulation is stricter and aligns with FSR, whereas English regulation resembles the previous FFP.

Research methods We performed a panel analysis using data from 2014 to 2022 for 63 Spanish and English football clubs. Panel regression models were constructed to analyse the impact of Spanish and English regulations on clubs’ financial performance and whether the effect differs by club size.

Results and Findings Compared with English regulations, Spanish regulations significantly improved the financial performance of Spanish clubs, especially among medium and small-sized clubs. These findings suggest that the new FSR has the potential to significantly enhance the long-term financial sustainability of European football clubs compared with the previous FFP.

Implications The findings underscore the critical role of stricter economic controls in improving clubs’ financial performance. The study provides compelling evidence for the UEFA, national leagues, governments, and club stakeholders to continue to assess and improve economic control regulations to promote the financial responsibility of all-size European football clubs.