The Impact of Corporate Governance on Football Clubs’ Firm Performance

The Impact of Corporate Governance on Football Clubs’ Firm Performance

A study has looked at the impact of how corporate
governance impacts a football clubs firm performance. The study was undertaken due to the fact that since 2000 there has been 44 football clubs enter into administration. Football clubs are the hubs of communities
and their wider context has not gone unnoticed, when Ian Holloway
was at Blackpool he stated that: If people don’t understand, we’re right on
the end of the M55 and you have to go through everywhere else to get to us. The only reason you’re going to come there
is to have a holiday and I want everyone to come there from the Premier
League and have a holiday, for all the businesses up and down the front and for everybody in the town. Football clubs can bring vitality to a local
area however, when a football club goes into administration, local businesses are impacted
especially if a local business supplies a service to the football club. An example of this is if a football club cannot
pay for the newspapers it receives each day from a local business. When the club goes into administration the
biggest creditors get paid first and the smallest creditors get paid last. Even though the non payment of a bill could
have a significant impact on the local business. The study looked at whether the level of corporate
governance within a club affected whether the club performed financially well or bad. The belief is that good corporate governance would mean better financial performance in a club and
therefore, there would be less likelihood for a company to
go into administration. The top, middle and bottom teams from the
English and Scottish leagues at the time of the study were picked for analysis. Questions were prepared to which the answers
could be marked on a binary scale of good or bad corporate governance. A good example of corporate governance would
be awarded a 1 a bad of example of corporate governance would be awarded 0. The following questions were obtained from three years worth of financial accounts of the football clubs
and were the questions to be used to determine good corporate governance: Is the football club a public limited company
Full set of accounts delivered 25% of the board women
Top 10 audit firm auditing their accounts Top 50 audit firm auditing their accounts
Director is not the company secretary Dividends paid more than 2 to shareholders
over four years Majority shareholder is not a director
The company has not been in administration in the last four years
From asking these questions it became apparent that the public limited companies had prominent
corporate governance with Manchester United scoring 6 out of nine and Celtic and Berwick
Rangers scoring five out of nine. All three clubs are public limited companies
and therefore, have to comply with more stringent rules due to the markets
that they operate in. An interesting result from the study was that
Luton town had the worst corporate governance, along with Ross County and Stenhousemuir, scoring zero out of nine. This is significant as Luton Town went
into administration in 2007-08 and this would highlight that poor corporate governance could
potentially lead to administration. Profit is essential to any business and football
clubs should not be an exception. Profit will decrease
as it goes down the leagues due to lower attendances and less opportunity for tv rights. However, it​ is possible to see that within the leagues the clubs which have better corporate governance generally usually do better with profit. For example, Ross County. Who had a very poor governance score, have
had huge fluctuations in their profit year on year. Where as a Public Listed Company like Berwick
Rangers have maintained the same level of profit and therefore have stability within
the club. Manchester United are not listed on the below
chart due to the huge sums of money which was made by the club during the time. In an ideal world football clubs would have
corporate governance at the standard of Public Limited Companies. This would mean there would be more information
to publish into the football clubs accounts and would highlight if there are
was any danger of the football club going into administration.

Comments (30)

  1. #notificationsquad 😛

  2. do a video on the new major shareholder of Arsenal….ArsenalFanTV

  3. Can you do an in depth video on Tottenham Hotspur

  4. I think more people would appreciate these kind of videos if they were dumbed down a little. As a foreigner I think it can be pretty confusing with all the business terms. And I think it's all a bit rushed. Take a bit more time and explain things instead of just namedropping… or well… termdropping.

  5. video on lahm or alonso and their roles?

  6. irony that ian Holloway ex Blackpool manager is used in a video on corporate governance considering the state of blackpool

  7. Small typo in the title, the second "of" should be "on" I think

  8. 25% of the board are women

    This is hilarious.

  9. Excellent video.

    My question is, is there a difference between native and foreign owned companies that go into administration?

    My theory is that more native owners go into administration than foreign, but i'm not completely sure.

  10. Do a video on Peter Bosz tactics at Ajax

  11. 25% of board members are women? How is that a positive?

    Women are highly illogical, have smaller brains and don't understand business or football.

  12. How does having 25% of the board be women have anything to do with good corporate governance? Is it not just ticking a diversity box?

  13. Why should the board be 25% women? This is not feminism this is an entitlement, if there would be a 100% women board nobody would care.

  14. So…having 25% women in your administration is considered "good corporate governance"???? Wtf is wrong with these people..

  15. Berwick is not pronounced in that way.  An exception does not make a rule.  The video did nothing to outline why any of these factors might lead to better governance.

  16. the FA allowing rapists like abramobitch and the shit'shiekh's into our game is a disgrace. They are scrupulous greedy guys who have terrorised our game

  17. Shows the lack of depth of general football knowledge when you cannot even pronounce Berwick correctly.

  18. i just wonder what troopz has to say about all this
    , fam

  19. Please do a video on the early 90's Barcelona side. The 'Dream Team' under Cruyff. Would be a very cool video.

  20. What about majority of the board being independent directors?

  21. This video highlights the importance of making a profit as a club, but fans hate it when their club appears to be "money hungry". Ultimately soccer clubs (yes, soccer, I apologize for being American🇺🇸) do mean more to their fanbase than just the average business, but fans must also understand that clubs do have to make ends meet. This way, fans would be more understanding when a club makes a decision based on finances and wouldn't put the club between a rock and a hard place with their criticism.

  22. There shouldn't be quotas for representation of certain groups, what if there is only 10% of women available who are competent enough for the job and better vs. their male competition? What are you going to force a few more in to get that 25% box checked off? That's ridiculous. Why do we stop there, why don't we set quotas on black women, Chinese women, Spanish women, disabled women, women who are obese, women who were bullied when they were younger, people of colour, people of certain religious back grounds etc. Also the assumption that someone belonging to a different group means they think just like all the other members of the group is sort of contradictory to what they are trying to do with that rule.

    If there was ever a rule or quota stating that I had to be included in something I would be embarrassed. It would be like getting your parents to come to the playground when you were younger and have them force the other kids to play with you.

  23. uMAXit Football, with the game between Reading and Huddersfield comming close, I'd like to see in Whiteboard Football or By the Numbers video about "The richest game in football" and does the English football need it

  24. Let me sum up the comments for you so you don't have to read them:

    1. Closet sexists come out in uproar about the requirement of having a 25% (read: still a fucking minority) female membership in the board of directors

    2. Uploader or somebody else states the obvious and well-researched point that diverse boards of ownership allow greater access to more diverse consumer demographics, often citing a well-known study

    3. Original commenter grumbles that HE'LL ALLOW IT despite not being convinced for no reason at all

    The only thing more fragile than Luton Town's finances is the masculinity in this comment section SMDH

  25. What about fan ownership?

  26. 25% of the board being women. Promoting women just because they're women isn't empowering.


  28. Who did this study that you talk about I would like to know

  29. Who did this "study" ?

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