Sean Hamil

Financial performance in English professional football: ‘an inconvenient truth’

This article presents an analysis of the financial performance of English football since the creation of the Premier League in 1992. It demonstrates that despite large increases in revenue, in particular from broadcasting, football clubs in the Premier League and Football League have year‐on‐year collectively failed to post a pre‐tax profit; there have been many examples of clubs in the Football League having to enter into administration; and debt levels have risen. The article argues that, in their denial that the financial crisis in the wider economy will seriously impact the economic health of English Football, many of the industry’s leading figures share many of the same hugely optimistic assumptions of those who seek to play down the significance of climate change. In doing so they overlook the ‘inconvenient truth’ coined by former US Vice‐President Al Gore in the context of the climate change debate, that English football is not immune from the impact of wider financial instability. The article questions whether, given the current economic climate, a failure to implement pro‐active regulatory action to address the problem of chronic unprofitability and unsustainable debt will lead to a major financial crisis in English football.

The governance and regulation of Italian football

Italian football represents a paradox. It produces teams which, at the elite level, are the most successful in European club competitions, and second only to Brazil in national competitions. The quality of its players, in terms of sporting excellence, make it one of the most admired football cultures in the world. The romance and tradition of Italian football captures the imagination of a global sporting public. On the other hand, the industry is chronically unprofitable and unstable, and characterized by a long history of financial scandal. The 2007/2008 season saw it continue to endure an ongoing crisis of confidence in the wake of financial and sporting scandals, an upsurge of spectator violence in dilapidated stadia and crowds well below their peak in the 1990s. This article presents a comprehensive case study of the recent history of Italian football focusing on its administration, governance and regulation. The objective of the case study is to provide a detailed context, in one of the big five European football markets (the others being England, France, Germany and Spain), against which to analyse and inform fresh thinking on how more effective systems of corporate governance in European football might be developed. Much of what is written about the governance of football tends to focus on the English industry. A premise of this article is that it is necessary to move beyond an anglo‐centric orientation and analyse the systems and experience in other European football markets and cultures. This is because football in individual countries forms part of a pyramid structure ultimately governed by the European football governing body, UEFA. What happens in individual country markets has the potential to affect what happens in other markets either by way of example, through influencing UEFA policy, or through precedent‐setting rulings in the courts, such as the Bosman ruling of 1995 which allowed players free movement at the end of their contracts without a transfer fee having to be paid as had hitherto been the case. The case study is interdisciplinary in its focus – economic, social and political dimensions are all important in trying to understand what constitutes the Italian model of football, a European model of football or indeed the European model of football. Critically the article asks the following questions: (1) Is it possible for Italian football to prosper in an environment in which there appears to have been significant shortcomings in governance? (2) If not, what should be the key planks of an agenda for reform? (3) Is there potential for ‘contagion’ of negative Italian experience in the rest of the European football market?

Corporate Community Involvement: a case for regulatory reform

The central thesis of this paper is that Corporate Community Involvement (CCI) is not a neutral activity with positive and mutual benefits for all involved. Rather, it is a much more complex activity which may also have negative impacts. Using Donaldson and Preston’s (1995) explanatory model of the stakeholding concept as a framework, this paper explores: (1) the practice of CCI in the UK (with some reference to US experience from which UK firms have drawn extensively), (2) the grounds on which it is justified, and (3) the material consequences of such activity for corporate governance. It concludes by arguing that there is a case for a review of the law on CCI to assess the need for fuller public disclosure so as to allow shareholders and other interested groups the opportunity to assess the impact and effectiveness of CCI more thoroughly.

The corporate governance of professional football clubs

Professional football clubs in England face serious financial and operational difficulties and challenges. Our survey reveals that less than a quarter of football clubs responding had an internal audit committee. Even where clubs had an audit committee, almost one third of those clubs report there being no regular board review of risk assessment reports. The need to undertake risk assessment is now accepted as part of good corporate governance. The collapse of the ITV Digital agreement, which led to Football League clubs losing significant revenue, forcing some into administration, simply illustrates the reasoning behind the practice (following the Turnbull Report). Football clubs (and the companies that own them) need improved corporate governance practice, financial planning and risk assessment procedures; 76 percent of clubs responded that they would benefit from a guide to good corporate governance and 80 percent that they would find advice on Company Law useful.

The model of governance at FC Barcelona: balancing member democracy, commercial strategy, corporate social responsibility and sporting performance

This article presents an in‐depth case study of the governance of FC Barcelona up to the end of 2008. An historical account of how the membership‐ownership model at FC Barcelona was threatened during the presidency of Josep Núñez between 1978 and 2000 is first presented. An analysis of the conditions over 2000–2003 which led to the election in 2003 of Joan Laporta as club president, on a radical platform for reform of the governance of the club, is then presented. A detailed analysis of the governance and management of FC Barcelona over the 2003–2008 period is then outlined, with the analysis focusing on four key strategic areas: the prioritisation of sporting success; the re‐assertion of member democracy and improvements in transparency of club governance; the implementation of a commercial strategy designed to generate increased revenues; and the development of an innovative series of corporate social responsibility initiatives. The analysis concludes with a critical consideration of the reasons why the mutual ownership and governance structure of FC Barcelona does not appear to have hampered its ability to compete in financial and sporting terms and whether this model could be replicated in the English Premier League.

Models of football governance and management in international sport

Historically, the governance of professional sport has been understood in relatively straightforward, indeed taken for granted, terms. Essentially, this has meant that association football clubs, for example – but the same is true of other professional sports clubs – have remained under the ownership of private companies or mutual associations and that these entities appropriately reward athletes of varying abilities for their role in delivering a sporting ‘product’. In doing so, they have mostly operated within systems of governance that have presented sport as something of a deviation from normal business practices, but this has meant that, as in this case, football began to constitute anything but a conventional industry. Clubs did not seek to profit maximize and did not regard themselves as part of the ‘entertainment business’, even if they did effectively provide this through their participation in various sporting competitions. Instead, ‘utility maximization’, or simply the achievement of success on the field of play, remained the key objective for most if not all clubs regardless of what levels of the professional game they competed at. For the most part, this was a relatively benign business approach because, despite many clubs ‘living beyond their means’, the financial stakes were sufficiently low that overall equilibrium was retained and the game followed a largely predictable course. However, significant and wide-reaching changes have taken place in a range of national sports settings, especially over the last two decades, which have begun to distort this picture – in certain cases dramatically so – and that, in turn, give rise to some worrying trends. This is a situation that has become especially apparent since the turn of the new millennium and has begun to raise questions about the very purpose of elite professional football clubs across Europe; in some cases this has included a debate over their continued existence. These and similar issues were placed under the spotlight in January 2008 following the remarks of UEFA (the governing body of European football) President Michel Platini, who, according to UEFA’s own website1 – uefa.com, issued:

The contests for power and influence over the regulatory space within the English professional football industry, 1980–2012

This study draws on the concept of ‘regulatory space’ to analyse the evolution of financial regulation of professional football clubs in England over the past 30 years. It begins by setting out the institutional context and, in particular, the internal governance structure of the Football Association. It then discusses three periods that demonstrate how the regulatory environment is characterised and shaped by different organisations, particularly the football authorities. It concludes by arguing that appropriate financial regulation is unlikely to occur under the following four circumstances: where internal governance structures of regulatory bodies are constituted in such a way as to inhibit the process of decision-making; where powerful actors maintain control of significant financial resources and have a desire to limit financial regulation; where minor actors do not have sufficient power and leverage; and where the government is unwilling to intervene and use legislation.

CHAPTER 2 – Ownership and Governance

Book synopsis: Managing Football is the first book to directly respond to the rapid managerial, commercial and global development of the sport and offers a thorough analysis of how the football industry can meet the challenges that flow from these developments. Expertly edited by two well known specialists in football business management, it draws together the work of a world-class contributor team to form a comprehensive analysis of the most important issues facing the managers of football businesses across the world. The cutting edge analysis examines all the important business challenges in the football industry and the management of football businesses and covers all of the key football markets including England, Spain, France, Italy, Germany, Australia, North America, China, South Africa, South Korea, the Netherlands & Belgium, and Mexico. Managing Football is simply a must-read for anyone studying or working in football business management and is set to be an important landmark in this rapidly moving and globally expansive field.

Financial Doping and Financial Fair Play in European Club Football Competitions

This contribution provides an explanation of ‘financial doping’ as a management concept in the context of European club football as well as on UEFA’s Financial Fair Play (FFP) regime, which can well be framed as the governing body of European football’s attempt to address this issue. The chapter is structured as follows: First, the historic development of financial regulation in European football is briefly outlined. The notion of financial doping as well as in what way it undermines the integrity of the sporting competition is addressed next. Afterwards, the FFP policy is explained, followed by a critical review of its discussion in scholarly literature as well as the presentation of an outlook on potential future research.

Regulation and the search for a profitable business model: a case study of the English football industry

This Handbook draws together top international researchers and discusses the state of the art and the future direction of research at the nexus between sport and business. It is heavily built upon choosing, applying and evaluating appropriate quantitative as well as qualitative research methods for practical advice in sport and business research.