The Effect of Financial Fair Play on Free-Riding in Team Contests: The Case of Professional Soccer

Financial Fair Play policy was implemented in European football in season 2011/2012. This caused lots of discussion regarding its effect on the competitive balance and football clubs’ financial sustainability. However, there was no investigation of the policy impact on players performance within team. This paper is aimed to investigate whether the presence of superstar under the Financial Fair Play causes free-riding in the team. Empirical part considered the matches played in top six European football associations and top two non-European leagues for the period starting from season 2009/2010 until 2018/2019 season. In each of the match superstar might be present in the team roster if his market value is 10 times higher than the median value in the league. In order to analyze this data, difference-in-difference method was applied. The work discovered an evidence of free-riding in the top teams when at least one superstar is present in home club. However, bottom teams were not found to face it. Also, presence of extraordinary players in both home and away team does not result in free-riding when one of the teams is top. Robustness check includes the information on super player non-randomly missing the match and also contains another sample which takes into account games played in a draw. Generally, the same is obtained for both cases.