Who ‘Owns’ the Game? A critical reflection on membership owned models of football governanceDavid Hassan

Original publication inspired by three shared concerns…• Little sign of according

proper recognition to the game’s social and cultural roots• Governance is a multi-

disciplinary concept – its an ethical issue• There is a competence

deficiency amongst significant numbers of those managing the game in Britain

Economics of Sport – Peculiar Characteristics (Neale, 1964)

• Clubs and Leagues constitute a form of joint production – achieve competitive balance

• Redistribution is critical – ensure than unequal financial power in the sport labour market does not distort overall competitive balance

• High degree of fan equity – supporters have an extraordinary level of loyalty

• Business objectives are different – frequently prioritise winning (utility maximisation) over financial profit

Economics of Sport – Peculiar Characteristics cont.• Players in sport possess monopoly power – leads to wage

inflation in sports labour markets• Professional sports leagues are dependent upon grassroots

programmes• Sport has deep social significance – assists governments

agendas across a range of sports• Similarly sport has deep cultural significance – sense of

identity and group loyalty• Need for regulations that ensure efficient outcomes against all

the above criteria

The British Game• Precarious position – top heavy – Premier League

typically posts circa a 65% higher rate of revenue compared to the German Bundesliga.• Foundation of Premier League combined financial

turnover risen 900% from £170 m to circa £1,600 m.• Never posted a collective pre-tax profit.• Last eight years half the Football League clubs have been

in administration – clubs have survived following additional investment or shedding debt• Is it time for a rethink on how to deal with clubs entering

administration?

The British Game cont.• Why in the face of obvious and challenging economic

conditions are clubs so resistant to any regulatory reform that might address chronic indebtedness and unprofitability?

• Hamil and Walters (2010) refer to this as football’s ‘inconvenient truth’

• Lack of long term planning – the FA is an absentee landlord – no one is protecting the game’s future

• Football Clubs are merely means of consolidating debt garnered outside of football and services owners’ with extraordinary salaries, which only add to the debt

Governance FIFA-style“Richard Scudamore is working to make money, while I’m working to have football as a social, cultural event around the world, being a school of life, bringing hope, bringing emotions. That’s the big difference” (Sepp Blatter, March 2009)

Club Ownership

• Used to be a relatively straightforward affair• Fit and Proper Person Test – paper thin in the face of employment

and ownership legislation (restraint of trade)• Appeal by UEFA President in Jan 2008 for the ‘safeguarding of the

essential values..of football’• Critique of the American sports entertainment model• Age old argument – the encroachment of commercial forces into

sport

Key Themes

• Pay-TV market – increased income but also instability• Irrational nature of fandom that is driving income – potential

source of strength for traditional governing bodies• Increased power of sports labour• Dominance of elite clubs over national associations• Football continues to extract revenue from the public purse

Alternative Model – Membership Own

• Can still be extremely successful – FC Barcelona owned by over 150,000 members or socios

• Implicitly democratic – policies and procedures can emerge from any member

• Members feel innately responsible for the well being of the organisation/club at all levels

• Intimately aligned with their identity

Four Strategic Aims of FC Barcelona

• A re-assertion of member democracy and transparency of club governance

• A commitment to significantly increase commercial revenues through more effective business management

• An explicit commitment to develop a corporate social responsibility strategy (CSR)

• A commitment to dramatically improve the club’s sporting performance

GAA: An Unrealistic Model?• UEFA Triple A rated stadium, fourth largest in Europe

• No pay-per-view television – all major games on free to air

• Players are important but dispensable – the only thing the GAA doesn’t offer is a living

• Relies upon skilled and committed volunteers – ‘sweat equity’

• Redistribution of revenue to the grassroots

Why does the Membership Model work?

• No one really ‘owns’ the organisation/club – in the same way no one really owns religious organisations• Mutual responsibility – local is always more important

that the national. Clubs are organic bodies• Much more than a sports organisation – it is a cultural

body and a way of life• Inherent competitive balance – unpredictability of

outcome and consistent funding streams

A cautionary note concerning the membership model• If a leadership void emerges then commercial forces will

exploit this – a lack of strategic direction wilts in the face of perceived ‘development’

• A heavily developed administrative core requires extra revenue streams. When this money can’t be generated ‘internally’ then ‘external’ sources are required to sustain the status quo.

• Players increasingly require a commercial context to sustain their sporting expectations resulting in greater demands upon those governing the club/ sport to meet their ‘needs’

• As TV and other media outlets require greater product consistency, at the heart of which is the unpredictability of outcome, a professional, dispassionate governance structure is inevitable.

Threats to the Membership Model• An outdated administrative model - should be replaced by

an elected board of directors with selection based on merit• The challenge of free-to-air television• Failure to adequately address players’ demands• Broader socio-economic movements threatening to

undermine volunteer-led ethos• Absence of strong leadership and a development of a

‘personality’ culture

Conclusion • Central to the success of this model is community

ownership – not amateur, incompetent leadership but one with a sense of self-confidence and self-help• Redistribution of revenue must be transparent, equitable

and for the greater good• Ultimately its about the role of sport in society – what

purpose does a NGB want its sport to perform?• Skilful management needed to address inevitable

challenges in a modern (sporting) world