Q: Set out the main stakeholders of football clubs. Describe their ‘stake’ in the organization and assess the legitimacy of their interests.

The main stakeholders are as follows:

1. Fans2. Shareholders3. Employees/Members4. Players and coaches5. Sponsors6. Government7. Bank8. Media

1. Fans:

If we have an approach of utilitarianism, fans are what make the football organization. The emotional investment is their stake in the organization. They bring trust to the table. Their stake is important because they are the reason the club is there for. They buy the merchandising products and support their favorite players in the game. Entertainment of the fans should be the main reason for the game in this context and making money. Moneymaking should be there but it should not be the primary reason. Therefore their interest is legitimate.

2. Shareholders:

Shareholders are the ones who invest their money in the organization and expect return on investment. But again their involvement has to be a little more considerate and not just see the game as just another way of making money. They must have a utilitarian approach in this context. If they actually believe in the organization and its vision and mission the returns will come along. Just self-interest may not be a correct approach for this organization. Their stake is investment and ownership. So their interests are legitimate because after all they own the organization.

3. Employees/Members

Employees are the first customers of any organization. Their stake here in this organization is their work and commitment towards organization. Again even they have to believe in the organization and its vision and mission. Their interest is legitimate because a satisfied employee is an asset of the organization. Human capital is equally important as the monitory capital.

4. Players and coaches:

Players and coaches are the products of this organization. Their stake is the most important because these players and coaches define the organization. They are the ones who deliver the end product, which is entertainment. For merchandising products to sell players and coaches have to perform well. Therefore their interest is legitimate.

5. Sponsors:

The stake of sponsors is their investment and brand association they bring to the table. In return they expect brand reach in terms of visibility of their products among the fans. Their interest is legitimate because they are responsible for smooth running of the business because of investment and fans do associate with these sponsors. They are directly responsible for revenue generation.

6. Government:

Government is also an important stakeholder. Wherever huge number of people are involved in any activity government is representing their interest as a stake in the organization. Another form of government stake is the income tax. Therefore their interests are legitimate.

7. Bank:

Banks provide loans to the clubs and expect interest. Their stake is a in terms of investment and not in terms of emotional involvement like fans. Therefore their interest is not that legitimate as compared to the other stakeholders.

8. Media:

Media is responsible to connect the fans to the game so their stake is the actual delivery of the product. The broadcasting of the football game is another way of connecting fans to the game. Their interest is legitimate because they are the reason to increase and expand fan base for the organization.

Q: What are the key governance issues each of these stakeholders might have?

The key governance issues of each of the stakeholder groups might have been the following:

1) Fans – The football fans expect a good quality from the match they buy a ticket for. They want to appreciate the stadium atmosphere and their experience that is offered by the clubs. The fans have an emotional connection with their teams, they identify themselves with the clubs and don’t really care much about the profits that their clubs make. The fans want their clubs to play with full commitment and dedication. The fans pay for the tickets to attend games, merchandise that they buy as well as visit to club’s museum or stadium’s tour. The corporatization and commercialization of football over the past decade has led to stagnation of average attendances at English Premier League matches and particularly the younger people have been priced out of the game. High cost of tickets and increased players’ wages have alienated the fans.

Another issue is the changes in kick-off times due to TV stations’ programming demands. Fans feel that football is no longer the fan’s game, it is a business focused at generating revenues for their owners.

2) Shareholders – Shareholders, when invest their money, seek a return on investment. It goes the same way for football but no completely. The shareholders of football clubs invest in various clubs in order to attain benefits from the media exposition of the game or other advantages such as meeting with players, access to games etc. But the business

angle of the sport also caused concerns and issues in a way that it struggled to enter the world of professional business. The dwindling fan base threatened the basis of business success. Since, supporters were shifting from the attendance in the stadium to spectators at TV, the issue arose due to the fact that limited number of people would like to view the match with empty seats in the stadium. It was evident from the fact that the English Clubs made huge loss between 1996 and 2006.

3) Employees/Members – The key governance issue for the members is to ensure on-field success. The members of a club play a vital role in the running and functioning of a club. They expect to get paid at the end of the month, to get recognition and work satisfaction as well as training and healthy working conditions. There is also a sportive aspect of their employer as they expect their team to win and make them feel as a part of the success. They are responsible for running the day-to-day business of the clubs and if their expectations are not met, it will lead to decrease in their productivity which will in turn lead to lack in motivation and less efficient working on their part which will affect the players as well as the merchandise sales.

4) Players and Coaches – They have various stakes in the organization that is the football club. Their stake is Team/Personal success which has linked with it the governance issue of ensuring on-field success. Another stake is the financial dependence which has linked to it the issue of managing the escalating costs. The third one is increasing the quality of their life which has in turn link to the governance issue of maximizing the revenue. They are also like the club’s employees and hence have certain similar expectations i.e. getting paid and having good working conditions and training, sportive success being the most important one. The players expect to play for the best club under best coaches. The same rule applies to the coaches as they wish to coach the best clubs with best players in them. This leads to rise in the prices and incomes of certain players as there are a few players that stand above the rest and the need to have them in their clubs makes them pay more and more for those players.

5) Sponsors – The key governing issue for the sponsors is National exposure that links with ensuring on-field success as well as their reputation which is linked with maximizing revenues. The sponsors have an important commitment in the game of football as they associate their names with the football clubs to seek benefits from their popularity while expecting brand recognition which increases with the team’s performance with which they are associated. The success of a team attracts more fans to the stadium and spectators on television which leads to obvious benefits for the sponsors of a successful team. The image of the sponsors is also associated with the image of the football club they are sponsoring. Hence they expect the clubs to maintain a respectful and clean image. They invest in these clubs also to seek new business opportunities and expect those clubs to play a role in letting them develop special commercial programs.

6) Government – Issues like Bankruptcy and several corruption scandals pose a huge issue and challenge in the developments toward commercialization of football industry and high level capital investment. The expectations of government from the football clubs are like from any other institution, such as getting involved in charity programs as well as various community programs in order to develop their region economically as it works in improving the image of football since those clubs represent the country at international competitions. The government also encourages the clubs financially in order to develop and foster education centers, community projects as well as employment programs.

7) Banks – The banks are more concerned with the solvency of the clubs. They expect the football clubs to make their payments timely of the loans and encourage the players associated with that club to open their accounts in those banks. A huge amount of money is managed by the football clubs which increases their attractiveness to the banks.

8) Media – The major governance issue on the part of the media are the circulation while minimizing negative press as well as to get re-elected. The media which we talk about is also divided into two parts: the press and newspapers, magazines etc. which are responsible for circulation and the media industry which invest money in showing the football games. Their major expectation from this industry is to generate important audiences when the games are being shown, that would lead to making financial profits. The clubs are expected to make efforts to produce pleasant games to watch as well as at a certain level of competitiveness with competitive teams so that the show becomes attractive enough for the people to pay and watch those games (pay-per-view system). The clubs are expected to develop and foster an easy-to-sell and positive image. The number of papers that will sell out will be directly linked to the popularity of the club. The information has to be original, not the club’s official information but the one that would lead to increase in the sales.

Q: This case describes a number of approaches that offer potential solutions to the governance issues raised. Set out these approaches and evaluate their likely effectiveness in dealing with governance challenges in football clubs.

• A Fit and proper persons test for the management and ownerships of clubs

-conducted in the hope that it prevents corrupt or untrustworthy businessmen from buying them.

-It reflects the concerns around owners.

-Currently the test is retrospective only but it should be made prospective too, so that anyone with the criminal hanging over them should not be allowed to take over a football club until their name has been cleared.

-In general, a businessmen will fail the test if:-

1. They have power or influence over another football league club.

2. They are filing for bankruptcy.

3. They become prohibited by law from being a director.

4. They have been a director of two or more clubs of which, while they have been director, has suffered an event of insolvency.

• Supporter-led governance

-More representatives from the supporter on the board of football clubs

As they don’t have any financial interest in the club .They should be appointed for a limited period in order to prevent them from getting too close to the company. They should be appointed independently and must be competent to judge the business of the football club.

For example, members of Barcelona can vote on the election of the club’s president and the governing board, and have a right to participate in key decisions.

-Affordable ticket prices

As supporters feel alienated by player wages and by the high cost of the tickets for games. For example, club German Bundesliga which is primarily owned by fans made an operating profit in 2006/07 mainly through higher attendance of supporters at lower ticket prices.

-More facilities and access for disabled supporters

These supporters still face problems in both accessing the stadiums themselves and then viewing and enjoying the game once inside. Audio described commentary should be available to all blind and visually impaired supporters. Many disabled people are denied an opportunity to purchase or join a waiting list for season ticket. Many clubs are not taking action because of the fear of expense involved, with unrealistic and inflated estimates.

• Nurturing the domestic talent

-It reflects a belief that football clubs should represent the local communities in which they operate and therefore should support young players from the local community.

At international level, supporters are becoming increasingly disillusioned with the national team’s continuing lack of success in the final stages of competitive tournaments. One reason in this case is that, increasingly, experienced players from abroad are being favored by the young domestic talent. Reality is that workers migrate to places where they are paid better. If we are going to pay for them at the cost of producing home-grown players, we will have a problem. We

have to examine ways of improving domestic talent and ensuring that players are given opportunities to participate at the top level.

Q: Ultimately who should own the football clubs and what should their priorities be in managing the enterprise?

According to the case, football has moved from a community sport to a multi-million pound international industry. One of the factor responsible for this is the involvement and growth of commercial television in the game. Due to this, most football clubs had attracted wealthy individuals and were sold to them. They treated it more as an investment and made it a business rather than a game. With these high level capital investments and development towards commercialization, there were significant challenges arise in football industry.

Over the past decade the number of audiences in English Premier League Matches had been stagnated and it was affected mostly due to young people in particular under 24 years of age has been reduced to 7% in 2009 for 25% in 1980. Clubs depend upon their fans for their livelihood, as either spectators, TV audiences, or consumers of merchandise. With the expensive tickets of watching the match and frequent changes in traditional kick off times due to programming demands from TV stations has fueled the feeling that football is no longer fans’ game rather a business oriented to generate revenues for their owners. Because of this some of the clubs had experienced huge loses.

There is a government-funded initiative which created the supporters trust. The aim of these trust is to bring about responsibilities and promote high standards of governance and accountability. In fact there are clubs such as Real Madrid and FC Barcelona which are member owned, democratic, non-profit organizations. The primary rationale is to play football and the club leadership is accountable to the people who watch and play. The best part is, members can vote on the election of the clubs president and the governing board, and have a right to participate in the key decisions. These saw a steady surge in the membership of these clubs.

As football is a community sport, and the clubs depend upon their fans for livelihood as described above, the owners of the clubs should be members of that club and it should have democratic orientation i.e. members should be able to choose president and have right to participate in key decisions. Apart from this the owners can be government, trusted owners and investors, they should take good care of growing the club and follow the solutions that mentioned so that they won’t face any problems.

The priorities in managing the enterprise should be

Leadership: The club should be headed by a responsible and effective board, which could have the vision of long term development of the club, taking the views of members and fans’ into consideration.

Accountability: The board should be able to present clear view of balanced and understandable assessments of clubs position and prospects.

Supporter-led Governance: Suggestions here included, affordable prices to watch live matches, more facilities and access for disabled supporters, more supporters and representatives on the board of club.