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Fans in the ownership of Big Five leagues: lessons for better football governance
Abstract and Figures
The objective of this paper is to analyse the ownership of the Big Five (Big 5) leagues in Europe, the effects of fans' participation in the ownership of their clubs and how governance in European football can improve. The different structures used by fans to participate in the ownership of the clubs in the Big 5 leagues are analysed by showing the main features of ownership in the main leagues. The best practices of governance are identified, such as the protection of small shareholders, enhanced majorities for strategic decisions, two-tier boards with investors and fans, establishing fan representation by delegates or associations, and the limitation of voting rights or premium rights for seniority shareholders. Moreover, some flaws of the current structures should be avoided because these flaws hinder the raising of capital, increase the incentives to engage in risky management and reduce the incentives of fans to purchase shares.
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... Hoffenheim. However, this rule was not without loopholes, and as highlighted by Sanchez et al. (2021), some clubs, like RB Leipzig, operate under the control of the multinational Red Bull without proper authorization. ...
... Those who acquired shares obtained all the economic rights associated with the society. However, the political rights remained in the hands of an association controlled by the fans (Sanchez et al., 2021). Similarly, associations of fans of the three main Portuguese clubs (Porto, Sporting, and Benfica) as well as Ajax (from the Netherlands) remained as main shareholders even after the IPOs. ...
... Bundesliga stands as an exception thanks to a restrictive regulation to assure that clubs remained controlled by fans (see Sanchez et al., 2021). The process of internationalization of ownership supposed a breakdown of relations between the new owners and fans as discussed by Williams and Hopkins (2011). ...
Purpose: The landscape of football ownership has undergone significant transformations throughout history, particularly in recent years. This study endeavours to analyse this evolutionary process aiming to understand the shifts in the management of football clubs.
Design: This paper analyses and synthesises the evolution of football club ownership in the ’Big Five’ European leagues from their inception, employing a blend of theoretical frameworks and empirical evidence. Additionally, the authors have constructed a distinctive database encompassing the listings of football clubs and the emergence of foreign owners.
Findings: The evolution of ownership in European football can be delineated into six distinct stages, spanning from its origins as a community-based activity to its contemporary status as an entertainment industry under the control by international investors. Notably, this evolution varies significantly across different leagues, contributing to the observed disparities among countries today. Many alterations in football club ownership can be attributed to amendments in laws and regulations. However, these adjustments have frequently resulted in unintended consequences.
Implications: Numerous shifts in football club ownership stem from variations in laws and regulations. Nevertheless, these adjustments often lead to unintended consequences. The findings presented in this article offer key insights for future studies on football regulations and research into the ownership dynamics of football clubs
... Members' associations, also known as supporter-owned or community-owned clubs, are primarily found in Germany (e.g., FC Bayern Munich and BV Borussia Dortmund) and, to some extent, in Spain (e.g., Real Madrid CF and FC Barcelona) [16]. These clubs operate under models where the majority of voting rights are held by the club's members, who are typically fans [17]. ...
... These clubs operate under models where the majority of voting rights are held by the club's members, who are typically fans [17]. The German "50+1 rule" is a notable example, requiring that member associations hold at least 51% of the voting rights in a club, ensuring that supporters retain control [16,17]. Consequently, clubs operating under this model foster a strong connection with their local communities and fan bases. ...
... Reliance on member contributions and limited commercial revenue streams can constrain the club's ability to compete financially with privately owned or publicly listed clubs [9]. Additionally, the democratic decision-making process can sometimes lead to slower, more cumbersome governance, especially in response to rapidly changing market conditions [16]. The mutual ownership model emphasises democratic governance, with decisions made through member votes and elected representatives [16]. ...
Football clubs’ increasing commercialisation and privatisation have created a significant gap between clubs and supporters, necessitating innovative solutions to reconnect clubs with their fans. Thus, this article examines the feasibility and implications of implementing Decentralised Autonomous Organisations (DAOs) in the governance of football clubs. Utilising blockchain technology, DAOs offer a novel governance model that enhances transparency, accountability, and fan engagement. Through a qualitative research design, this study explores the potential benefits and challenges of DAO adoption in football clubs. Key findings highlight the potential for increased financial resources through decentralised fundraising, democratised decision-making, and improved operational efficiency via automated smart contracts. However, significant challenges remain, including legal uncertainties, technical vulnerabilities, financial risks, and governance complexities. To address these challenges, we suggest hybrid governance models that integrate traditional structures with DAO elements, phased implementation through pilot projects, and robust stakeholder engagement strategies. The findings provide valuable implications for football clubs and other organisations contemplating the adoption of decentralised governance models.
... A propriedade dos clubes de futebol foi um dos tópicos que experimentou mudanças importantes ao longo dos últimos 30 anos (Sánchez et al., 2021;Serrano et al., 2019). Países como Espanha, Itália, Portugal e Chile adotaram legislações que converteram os clubes em sociedades anônimas. ...
... No Brasil foi instituído o modelo de Sociedade Anônima do Futebol, visando oferecer aos clubes brasileiros uma regulamentação para a adoção deste modelo jurídico com tributações e exigências distintas do modelo anterior de associações civis sem fins lucrativos (Decreto Lei N o 14.193 de 6 de agosto de 2021, 2021). Embora recente no Brasil, em outros países a propriedade dos clubes de futebol tem se tornado cada vez mais concentrada em grandes empresários (Sánchez et al., 2021). Nos clubes das cinco principais ligas europeias, a presença de investidores estrangeiros representa 30% da propriedade dos clubes (Sánchez et al., 2021). ...
... Embora recente no Brasil, em outros países a propriedade dos clubes de futebol tem se tornado cada vez mais concentrada em grandes empresários (Sánchez et al., 2021). Nos clubes das cinco principais ligas europeias, a presença de investidores estrangeiros representa 30% da propriedade dos clubes (Sánchez et al., 2021). ...
... In this regard, researchers have acknowledged, on the one hand, how different managers have varying impacts on the strategic path and outcomes of a business (Helfat & Martin, 2015;Lakshman & Gonzalez, 2023) and on the other, how managerial transformations alter organizations (Schulze & Zellweger, 2021). As a result, these ownership strategies impact leagues, leading to competitive imbalances (Cuervo-Cazurra & Li, 2021;Sánchez et al., 2021). However,, not all investments have been equally effective or successful; while some clubs, like Manchester City, have leveraged significant investment to achieve domestic and international success, others, such as Chelsea or Manchester United, have faced challenges in translating financial backing into sustained competitive dominance. ...
... These findings extend previous research (Sánchez et al., 2021), highlighting the relationship between club ownership diversity and league stability. Regarding the integration of Chinese and Japanese football into the global market economy, the approaches differ significantly. ...
... The influence of fans, governance structures, and financing models has a significant impact on soccer clubs. Fan participation in ownership, as observed in the Big Five leagues, enhances governance and aligns club operations with community interests, fostering a sense of belonging and loyalty (Sánchez, Barajas, & Sanchez-Fernandez, 2021). For instance, FC Sankt Pauli exemplifies how organized fan activism can create a vibrant democratic culture that extends influence beyond the club, promoting community empowerment (Totten, 2018). ...
Introduction: Managing soccer clubs is a challenging and rewarding experience, requiring a combination of leadership skills and strategic decision-making. Objective: This study investigated professional soccer club performance determinants in the Ethiopian Premier League. Methodology: This study investigated professional soccer club performance determinants in the Ethiopian Premier League. A correlational analysis was conducted to examine the relationship between the variables and the performance of soccer clubs. Thirty-nine seven-point Likert scale questionnaires, deemed reliable (α = .91), were used to collect data from a sample of 214 participants selected through a simple random sampling method. Frequencies, percentages, means, standard deviations, correlations, and multiple linear regression analyses (with a significance level of P < 0.05) were performed using SPSS version 26 software. Results: There was a negative correlation between the performance of soccer clubs and fan influence (r = (214) -.170, p < .05); financing (r = (214) -.394, p < .01); club history (r = (214) -.106, p > .05); game situations (r = (214) -.480, p < .01); human capital (r = (214) -.024, p > .05); media (r = (214) -.365, p < .01); legal issues (r = (214) -.406, p < .01); and leadership and governance (r = (214) -.139, p < .05), respectively. Furthermore, eight predictors collectively explained 44.7% of the variance (F (8, 214) = 22.537, p < .001). Discussion: The study reveals that factors like financing, game situations, media, and legal issues significantly influence soccer club performance, accounting for nearly half of its variability. Conclusions: The study found that game situation, financial capability, and legal issues significantly impact football club performance, whereas human capital, fan influence, and club history exhibit greater variability.
... Publicly-owned clubs with dispersed ownership also benefit from efficient governance structures. On the other hand, clubs partially or fully owned by supporter trusts show a lack of speed in execution, as the joint exercising of voting rights and alignment of strategy slows decision-making (Garcia-Garcia and Welford, 2015;S anchez et al., 2021;Tobin, 2017;Treharne, 2016). Member associations are seen as ambiguous across literature. ...
Purpose
Since the beginning of the 2000s, investors have more frequently invested into professional football clubs, thereby radically changing the industry landscape. This review's purpose is to analyze and synthesize the state of research to understand motives, roles and implications of football club investors, and to provide recommendations for further research.
Design/methodology/approach
The paper presents an integrative literature review by identifying relevant English articles based on the search terms investor, owner, investment, ownership, shareholder and stakeholder in combination with soccer or football. Around 2,431 articles were reviewed. A total of 129 relevant articles was analyzed and synthesized within eight subject areas.
Findings
Investors in professional club football is a young research stream with a clear European focus. Investor motives and roles are diverse and implications are multidimensional. Investors mostly aim for indirect returns rather than pure profit- or win-maximization.
Research limitations/implications
Football clubs comprise an own investment class for which the identified, unique specifics must be considered to develop a financially successful investment model. Thorough academic research of investors' inherent characteristics, investor-club pairings and the pillars of long-term strategies for successful investor-club liaisons are avenues of future research. Furthermore, the results illustrate the need for research outside of Europe.
Originality/value
The paper is the first systematic, integrative review of existing literature in the domain of equity investments into professional club football. The findings genuinely show that, depending on the investor type and ownership structure, investors have a wide impact in professional club football.
... ese are the cases of Bayer with Bayer Leverkussen or Volkswagen with V Wolfsburg. Further details can be found in Sánchez et al. (2021) andFranck (2010). ...
The number of foreign owners in football clubs has recently increased in Europe and especially in England. This study aims to analyze whether clubs owned by foreign investors show different parameters of sporting and managerial efficiency. We use data on expected performance (from betting odds), wage costs, and the results of football clubs in the English Premier League (EPL) and English Football League Championship (EFL) over 13 seasons. We estimate different measures of efficiency using three alternative methods: expected vs. actual performance index, nonparametric conditional data envelopment analysis (DEA), and stochastic frontier, while considering foreign ownership as an exogenous factor. Our results suggest that there are not significant differences between domestic-and foreign-owned clubs.
Even though conflicts between supporters caused the majority of the riots, other factors were no less important. Specifically, those related to the organization of football matches that were not yet professional could not guarantee security or order. The incident at Kanjuruhan Stadium serves as a significant reminder that hosting football matches without prioritizing proper safety measures and collaborative procedures will undoubtedly fail to promote fair competition in line with the principles of organizing sporting events that uphold sportsmanship, fair play, and respect. This paper is compiled through normative research by prioritizing secondary data that focuses on statutory and case approach, which are collected and analyzed descriptively and qualitatively. The results shows that the legal construction used in carrying out security by the Police in the Kanjuruhan Tragedy refers to the Regulation of the Chief of Police of the Republic of Indonesia Number 1 of 2009 on the Use of Force in Police Action while after the Kanjuruhan Tragedy, the Police compiled a new legal construction, the Republic of Indonesia National Police Regulation Indonesia Number 10 of 2022 on Security for the Implementation of Sports Competitions which can be used specifically in securing the implementation of football in Indonesia
The influence of market size, purchasing power or sport success in sport pricing policies has been studied. However, the influence of competitive balance and clubs’ ownership is still underinvestigated. The present paper covers this gap and study the effect of both of them in the in the price of the season tickets in the teams of the four main European football leagues from 2014 to 2017. The results show that the competitive unbalance of a league has a positive influence on the price of season tickets of the teams. A possible explication is that fan teams paid an extra-price for competing with more powerful teams that can provide ‘stars effect’. The results also show that a bigger concentration in the ownership implies more expensive season tickets. These results are in line with the theory that the participation of customers and stakeholders-oriented owners in firms avoids excessive prices in no competitive situations.
The purpose of this study is to examine how the evolution of revenue sources and economic control measures has affected European football. Turnovers in European football have experienced strong growth, especially as far as television rights and commercial revenue are concerned. Such growth did not prevent clubs from undergoing financial difficulties, which led UEFA and national leagues to impose stricter financial controls. These events brought about an overall increased profitability for European clubs, as well as divergent developments in debt and expenditure on wages, which were furthermore concurrent with the fact that sporting successes concentrate in the strongest teams, both in continental and national competitions.
This article aims to increase an understanding of the German football governance system. We seek to achieve our objective, by summarizing and collating findings from two research projects on supporter governance using a mixed-methods approach since 2011. The first project has focused on the ‘50 + 1 Rule’, which stipulates that all professional football clubs need to be run as member’s associations or majority-controlled by member’s associations. The second project has focused on the articles of association of the clubs, which regulate the governance structures and processes that allow supporter participation in every individual club. Our research suggests that loopholes in the ‘50 + 1 Rule’ and weak definitions of club-specific provisions in the articles of association present considerable barriers to supporter participation. We suggest removing these barriers to preserve the historically grown German model of supporter governance. Otherwise, a transformation into a corporate model of football governance seems to be inevitable.
The purpose of this paper is to examine the relationship between profitability and sporting performance in European football. Profitability has been rarely studied because it has not been considered an aim of European clubs, in contrast with American clubs. However, the emergence of investors who invest on both sides of the Atlantic shows that the objectives of owners can be diverse and that profitability has to be taken into account. The study of the compatibility or incompatibility of sporting performance and profitability has implications for the existence of clubs with owners with different objectives in the same competition, or even owners with different aims in the same club. The paper finds that financial performance has a negative influence on clubs’ sporting performance, while sporting performance does not have a negative influence on profitability. Moreover, ownership concentration has a negative influence on both performance variables. These findings show that the pursuit of sport success could undermine the profitability and sustainability of clubs and that investors could focus less on sport results and focus more on maximizing the financial returns on their investments.
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https://www.sciencedirect.com/science/article/pii/S2444883419301639?via%3Dihub
The German Football Association and the German Football League prevent investors from having controlling influences over professional football teams. To compete in the Bundesliga, 2nd Bundesliga, 3rd League, and Regional Leagues, the Verein (non-profit organization) must control the professional football team. This is possible due to the so-called ‘50 + 1 Rule’. When comparing other top European football leagues, the ‘50 + 1 Rule’ is only being utilized in Germany. However, this rule is being increasingly criticized since it generates limitations on investors’ property rights within their professional football team. Some investigations criticize that these limitations on property rights impair investment incentives. Hence, some potential investors possibly have not invested in German football teams in the past. Taking into consideration the criticisms against the ‘50 + 1 Rule’, this paper serves as an initial investigation on the rule’s impacts from the perspective of potential investors. To empirically weigh and reveal possible investment barriers, potential investors were asked about their opinions on the ‘50 + 1 Rule’ and the rule’s future. Surprisingly, we have identified an advocacy of the rule. This finding illustrates a similarity regarding the perspective of German football clubs, as well as football fans, and a contrast regarding the perspective of current investors. Finally, our current and previous survey results form an important stakeholder-oriented base for discussion in order to assess the future decision regarding the retention or repeal of the ‘50 + 1 Rule’.
While several clubs in England have established possibilities for co-determination by supporters as part of the supporters’ trust movement, in Germany a repeal of the so-called ‘50 + 1 Rule’ is being discussed. The German ‘50 + 1 Rule’ was created to exclude controlling investors’ influence on clubs, therefore ensuring that non-profit clubs and their members have the decision making power over the management of their professional football team. Due to the ‘50 + 1 Rule’ affecting sociological themes like participation of club members, oligarchization and commercialization, we examined the interests of club members with regards to the rule. Club members were asked about their arguments for retention, as well as their arguments for repeal and their preference regarding the future of the ‘50 + 1 Rule’. The empirical results showed an endorsement of the rule, with advocacy largely explained in the context of participation, the exclusion of multi-club ownership, and the avoidance of increasing commercialization.
Chapter 5 explores the phenomenon of football supporters coming to the rescue of their club at times when the future of the club had been put at risk by the mismanagement of private ownership regimes. Through their rallying efforts, involving fundraising, lobbying, volunteering, campaigning, networking and ultimately taking control of the ailing club, fans have managed to preserve their clubs as valued local cultural institutions, in part by implementing more sustainable, democratic ownership and operations structures. A range of pressures have however made this a difficult ongoing task, not least in the form of inherited debt and other financial burdens, but also due to the prevailing wider context of a football industry still in thrall to more speculative private ownership and investment models. That is not to say however that fans haven’t made mistakes of their own along the way.
A major development in international sport governance is the increasing number of clubs owned by supporters. Researchers have advocated for more supporter involvement in the governance of sport teams but have not fully explained why some supporters attempt to become team owners. Sport governance scholars have also generally ignored the perspectives of those fans that do not seek to become club owners. In the current study, the authors took the perspective of psychological ownership theory and used semi-structured interviews to examine the perspectives of a professional football team's supporters, some of which were interested in becoming team shareholders. The authors found that a primary reason supporters attempt to become club owners lies in their sense of psychological ownership for their team. Following this sense of ownership, supporter ownership initiatives appear to follow a certain pattern of events, including a sense of dissatisfaction, expressing such dissatisfaction in an attempt to bring about change, and eventually, initiating a formal ownership movement after reaching a tipping point. Lastly, the authors found that during supporter ownership movements, the actions taken by supporters involved in such initiatives may impact fans not involved in the ownership movement. The study makes contributions to sport governance, fan behavior, psychological ownership and fan social network literatures. © 2018 Sport Management Association of Australia and New Zealand