Insolvency regulations of football association in Germany: Economic peculiarities, disincentives, and reform approaches

Abstract

Due to numerous economic peculiarities of the football (soccer) market, dealing with insolvent football clubs is complex. To ensure the call for fair competition, German football associations implemented special insolvency policies. However, past research has discussed partial contradiction of these association regulations to the official insolvency law. The criticism of competitor clubs against the sanctioning practice is also increasing. Due to the lack of economic and legal scientific discussion, this article discusses economic peculiarities, disincentives and potential reform approaches of association norms associated with insolvency proceedings of football clubs in Germany. The disadvantages of a fixed point penalty are highlighted and alternatives are discussed. Furthermore, the following are also discussed: the transfer of league rights to successor clubs should be prevented and the preinsolvency proceedings should be taken into account. Since there have been no insolvency proceedings in the first Bundesliga and only two in the second Bundesliga since 1995, the results are particularly relevant for the professional and semiprofessional leagues (third to fifth Liga).