Football Governance

by

TABLE OF CONTENTS

INTRODUCTION1

Background of the Study1

Problem Statement4

Research Aims5

Objectives5

Research Question5

Hypothesis6

REFERENCES7

INTRODUCTION

Every professional sports league in the world, regardless of the sport or the location of the league has a specific governance structure that each team or club must function under. A Governance structure can have either one, a few, or many governance options under which teams or clubs must operate. Therefore, professional sports leagues can either employ a standardized approach, which consists of teams with one homogonous governance structure, or a mixed approach where teams or clubs can choose from various governance structures (Dietl and Egon 2011 662).

There are three traditional governance structures in which a team can operate under: privately owned firm (true capitalist), public football corporation, and a non-profit firm (member association). The pros and cons of each form of club ownership will be discussed and analyzed later in this paper. The form of governance a team or club employs is very significant insofar as it determines who has the residual control and residual claim of the club (Hanford and Greenberg 2003 10).

The German Bundesliga, the major football (soccer) league in Germany, employs a mixed club ownership approach where clubs can choose their governance structure. Currently each of the three governance structures is utilized by clubs in the league.

Background of the Study

The landscape of professional football is always evolving. In the last 20 years, commercialization and globalization of the game have led to some significant developments. Such developments are both general and specific in manner; the former pertaining to football globally and the latter relevant only in the context of German football.

The transformation of football into a lucrative industry has occurred rapidly in the modern era as a result of technological advancement, most notably the internet and T.V. broadcasting. Such advancements have created a worldwide audience for the top European football leagues. Thus T.V. and internet broadcasting contracts generate a very significant portion of a club's revenue (Gijbels et al., 2006 213). Deloitte, a global accounting firm, reports an annual publication profiling football's highest earning clubs called the “Deloitte Football Money League 2011”. According to the 2011 edition, Barcelona, Manchester United and Bayern Munich examples of some of the most well known on the list had broadcasting revenue of €178.1 million, €128.0 million, and €83.4 million respectively (Loyens and Gijbels 2008 351).

For the three clubs such broadcasting revenues made up 44%, 37%, and 26% of total revenues respectively. Such broadcasting revenues are a direct result of new technology and are a relatively new source of revenue for clubs; however, such revenues make up a substantial portion of a club's total revenues. Furthermore, within the last 20 years football broadcasting contracts have grown greatly in value due to increased worldwide demand. With that said, clubs now have a much larger budget, which gives them more funds to spend on player talent (Loyens et al., 2007 179).

The classification of European football clubs euroTOPfoot is established the following results of the various clubs in European cups and updated over the ...