Corporate Governance of Football Clubs Essay Example | Topics and Well Written Essays - 2000 words

Corporate Governance of Football Clubs - Essay Example The crisis has been mitigated by the return of Sir John Hall to the club board. These clubs have become plcs, and its stocks are floated on the stock exchange. The plc was seen as the modern way to run a football club although it has created conflicts between shareholders and fans. . (The New Statesman, March 27, 1997, p.2). Sheffield United's manager resigned in protest at the chief executive's strategy of trying to achieve Premiership status by selling his best players. Noisy demonstrations forced the chairman and chief executive to resign. The outrage of Newcastle fans at the behaviour of the two directors was due to Kevin Keegan's resignation as manager. Fan power was limited to invading the pitch, singing nasty songs and boycotting matches. However, the problems persist. Fans believe big clubs aim to please the shareholders rather than the supporters. This blatant behavior on the part of club managers is a form of To football fans, for whom transfer of loyalty is not an option, this trend is a form of betrayal for dedicated football club supporters. (The New Statesman, March 27, 1997, p.2). There are two strategies to solve these problems. The first is a new corporate governance policy which tightens the accountability of directors to shareholders while deepening the involvement of fans, councils and schools. Clubs are allowed to appoint fans as non-executive directors and conduct "supporter audits". The second strategy understands that supporters have a a distinct relationship with their team. Though there are many teams in the league, once one has made one's choice of club, one usually sticks to it. Fans also have to survive on trust. They purchase season tickets without knowing which players and managers will be at the club. Football clubs can be legally required to further the long-term interests of the club and its supporters as a whole rather than the narrow interests of shareholders.Football clubs were previously controlled by wealthy local businessmen. They invested their money in the club operations and most often than not, they had lost their investments. How ever, this situation was unimportant. Owning a club gave them status and prestige in their local community.There are many options to ensure corporate governance for football clubs. One alternative is to widen the share ownership of clubs. If it was the aim of the club to ensure that as many fans as possible owned shares, this could improve accountability and investor commitment. Another option would be for fans to invest in a trust which would hold a collective stake in the club on their behalf and this in turn, will provide a guarantee for fans that they will have a say in major decisions. A third alternative is having mutual forms of ownership in which fans became the club's members and legal owners. A fan-appointed board would select the manager. Shareholder meetings would replace pitch invasions as the vehicle for expressing discontent. A mutual football club would be focused in pursuing things fans really want (winning matches and establishing its own club stadium). However, no ownership structure is perfect. Fans usually have a strong consensus about ends (buying good players) and not (which particular players). CORPORATE GOVERNANCE AND FOOTBALL Shleifer and Vishny (1997) define the term as follows: 'Corporate governance tackles the agency problem: the separation of and finance' (p. 773). The term is used to refer to how the