Fair Play or Financial Power? Examining the Competitive Impact of Foreign Investment in European Football

Football is not only the most popular sport in Europe but also fundamental to driving local and international economies due to the heavy influence fans have on driving ticket sales, team merchandise purchases and media rights. In the last twenty years, it has become increasingly popular for wealthy capital groups or businessmen from outside Europe to buy clubs and give teams a large influx of capital. Fans and players alike have grown worried that this type of new ownership will change the football world for the worse because teams with foreign investment can outspend their opponents for the best players. Others argue that buying out smaller clubs creates a fairer playing field and will raise the competitiveness of football, benefiting everyone involved. Using panel data from 20 seasons of European football play from the top five most profitable leagues in Europe, this thesis aims to understand which argument is correct: does foreign investment create an unfair advantage or make competition more equitable? An event difference-in-difference regression model with local team fixed effects is used to see if foreign investors have an impact on a team’s on-field and off-field. Both the summary statistics and the regression results conclude that there is not an unfair advantage created for teams with foreign ownership but rather teams with this type of ownership allows clubs to equal, or even surpass, clubs with domestic ownership. Through elevating the level of poorer clubs, this thesis concludes that foreign investment is advantageous for football as the overall competition is raised rather creating a wealth gap between clubs.