Governance and football: an examination of the relevance of corporate governance regulations for the sports sector

Abstract

Concerns have been raised about the finance of football clubs in England and elsewhere. With the increasing realisation that football is a business, and therefore should be treated as one, the question of whether issues of corporate governance are applicable and relevant to the sports/football context needs closer scrutiny. This research firstly details current theories of corporate governance and proceeds with an examination of their limitations as approaches in the sports and specifically the football context. This paper delineates the characteristics and specific peculiarities of the sports sector, specifically football, and argues the challenges of corporate governance in sports are substantially different from conventional business as to require different approaches and mechanisms for corporate governance.

Mutuality Ownership Form and Professional Sports

“…This research has identified the need for stability, community interest, common purpose, and affinity of owners with the organization as paramount concerns. This resonates with the contemporary extant corporate governance research focusing on stakeholder interest and sustainability (Farquhar et al, 2005; McCambridge, 2004). In practice, however, there remains a duality of interest between the club and the trust board and that is still one source of possible conflict and tension that is not widely discussed in the extant literature.…”

“…Consequently, academic interest in the business of football is growing producing a body of theoretical (Baldwin, 1997; Malcolm, 2000), empirical (Hamil, Michie, & Oughton, 1999, 2000, 2001), and review literature (Banks, 2002; Morrow, 1999) addressing the subject. At the same time there have been serious financial problems at many football clubs in England (Emery & Weed, 2006; Lago, Simmons, & Szymanski, 2006) leading to increased concerns surrounding the corporate governance and financial management of football clubs (Farquhar, Machold, & Ahmed, 2005). In 2009-2010, clubs in the Premier League made total revenues of £2.1 billion, yet 16 of the 20 clubs made losses, totaling a record £484 million, and the same number relied on funding from their wealthy benefactors (Deloitte, 2011).…”

The emerging labour market and transformation from state amateurs to professional athletes

“…Football clubs are organized in a league structure with promotion and relegation throughout the hierarchy. The whole system could be viewed as a network arrangement, and so requiring a model of network governance and a stakeholder approach to analyse it (Sloane, 1971;Farquhar et al, 2005;Szymanski, 1997).…”

Understanding Change in Professional Road Cycling

“…A number of authors have used stakeholder theory and stakeholder management to analyse behaviour and objectives in sport-based organisations including major events (Parent, 2008;Parent & Séguin, 2007), inter-collegiate athletics (Wolfe & Putler, 2002), public funding for professional sports facilities and franchise relocation (Mason & Slack, 1997). Several studies of professional football clubs have also explored the relevance of stakeholder theory as a way of explaining behaviour in an industry undergoing dramatic change, most notably change arising from the substantial increases in income and financial rewards available in that sport since the early 1990s (Farquhar et al, 2005;Hamil et al, 1999;Holt, 2007;Morrow, 1999Morrow, , 2003Senaux, 2008). While stakeholders in football clubs have probably never had a unitary objective -despite simplistic rhetoric about success (Stewart, 1986) -the business transformation has resulted in the objectives of stakeholders in contemporary clubs becoming more diverse than ever (Morrow, 2003).…”