An Empirical Analysis of Financial Fair-Play: the Case of Russian Premier League

Abstract

The real impact of financial fair play (FFP) came along with the break-even rule which prevents clubs from over-spending through a variety of sanctions. As UEFA limited clubs’ expenses with their incomes, the transfer market took a hit. This paper demonstrates the impact of FFP on Russian Premier League teams’ transfer activity, examines how transfers’ demography and career profiles changed and investigates the changes in competitive balance after break-even. A regression discontinuity design is conducted in order to estimate the policy impact. The empirical results suggest that Russian clubs have been severely affected by break-even in terms of transfer expenditure and balance and started to transfer more U21 players and players from lesser leagues of the world. Furthermore, competitive balance in the Russian Premier League deteriorated in favor of the giants in the league as a result of break-even.