To comply or not to comply? How a UEFA wage-to-revenue requirement might affect the sport and managerial performance of soccer clubs

Abstract

This paper evaluates the soccer clubs' compliance with a potential wage-to-revenue requirement by the Union of European Football Associations (UEFA) and studies the effect on sport achievements resulting from sports and managerial skills. The empirical analysis uses data on first division teams of the Premier League, La Liga, Serie A, and Ligue 1, from seasons 2009/2010 to 2018/2019. We measure the teams' quality through the annual wages and use the wage-to-revenue ratio as a proxy measure for financial responsibility. Our results reveal that a more prudent financial performance, which is generally linked to good management practices, implies better sport performance and higher chances of qualifying for UEFA competitions.