Football Clubs: Strategies for Business Management and Governance

This essay delves into the intersection of football and business, emphasizing the need for football clubs to adopt robust business management strategies and corporate governance principles. It highlights the evolution of football into a multi-billion dollar industry, necessitating professional management to ensure sustainability and profitability. The essay explores the importance of stakeholder management, particularly the role of fans as major investors, and underscores the need for clubs to generate and effectively allocate income. It also examines how corporate governance, including transparency, risk management, and compliance with financial regulations like UEFA's Financial Fair Play, is crucial for long-term success. The recommendations section stresses the importance of aligning club interests with those of stakeholders and implementing sound governance practices. The essay concludes that in the modern era, football clubs must operate as businesses to thrive in a competitive environment, emphasizing the need for strategic financial planning, income generation, and professional management to secure their future.

Introduction
Football, or also known as soccer, has been one of the most popular sports activities in the
world. In fact in most parts of the world, it is the most well-known and played sporting event
among people. This popularity has gradually turned the football into a business industry that
is worth billions of dollars. In the twenty-first century, football is considered as one of the
biggest business sectors in the world, which drew the attention many large companies as well
as entrepreneurs who aim to generate profit by running the football clubs as business entities
(Chadwick & Hamil, 2010). These days, football is considered as a very profitable industry
that can easily return the investment back to the companies and entrepreneurs. Consequently,
more and more companies are interested in owning a football clubs, which has turned football
clubs into brands. Thus, they need to be managed as businesses so that they can generate
more profit and do not get affected by the negative developments in world economy (Moore
& Levermore, 2012). However, the current issues, such as Covid-19 pandemic, that have
caused major drawbacks in the world economy have also affected the football industry
creating losses for the clubs. These developments are forcing even some of the oldest sports
clubs to close down or down-size their operations in order to cope with the financial
difficulties (Galariotis et al., 2018). Nowadays, it is suggested that football clubs can
overcome these issues if they are run as business entities rather only sports clubs. This essay
will discuss the possible applications of business management strategies while running a
football club, provide some recommendations that will help the football clubs to resolve their
managerial issues and conclude by stating that in the modern world, football has become a
major industry, thus the football clubs can no longer be solely considered as sports clubs as
they are now businesses in this competitive environment. Therefore, not only they can be
managed as business entities but also they should be treated as businesses that aim to
generate income and profit for sustainability.
Good corporate governance in football is now essential.
While the economy of football is growing at a great pace, unfortunately football is having
difficulties in overcoming its own problems. Although football clubs have huge budgets, they
still try to rule themselves in feudal or conventional ways. The monetary development of
football goes ahead of the managerial development of football. For this reason, football clubs
cannot get rid of problems. So the monetary development in football is ahead of the social
awakening of football (Hamil et al., 2004). Most of the clubs around the world are still trying

to save the day by postponing the problem or by palliative solutions instead of keeping up
with changing and developing conditions. However, as the turnover of even an ordinary
business increases, the management style starts to change in accordance with the market.
Otherwise, that business cannot compete with its competitors and has to withdraw from the
market (Tricker & Tricker, 2015). If we have to give an example from Turkey, today's Super
League, which annually creates a value reaching 725 million euros, is actually forcing clubs
in a way to get themselves in order. Because, the transfer of this money to the clubs has to be
made in relation to the compliance with the UEFA criteria. Otherwise, the failure of Turkish
clubs to comply with the required criteria will cause them to be excluded from the race. For
this reason, clubs have to review their economic, financial and managerial configurations and
turn to the organizational structures required by modern football, even in order to spend these
money (Devecioglu et al., 2012). Nowadays, it is on the agenda that corporate governance
principles are put into practice in family companies, public institutions, political parties and
sports clubs as well as in public companies, taking into account their direct effect on the
stable continuity of their activities (Hamil et al., 2004). In this context, the "Governance: A
Guide for football clubs" study was prepared in 2005 in England offers us a content that will
guide the studies carried out for sports clubs. This study, which sets criteria for the ideal
management model of football clubs under the headings of board of directors, risk
management, audit, compliance with laws, transparency, and reporting, is a guide. This guide
basically expects clubs with different legal statuses, budgets and management models to take
appropriate systems and put them into practice in a certain process (Football Association,
2005). In this context, the urgency and importance of the issue is self-evident when the legal
framework formed within the framework of corporate governance principles and different
stakeholder expectations of clubs with public company status are taken into consideration.
Clubs must fulfill the requirements of modern football!
Even though, it is widely accepted in the modern world that football clubs must be run as
business entities, it is also suggested that a football club is not similar to other businesses.
One of the major differences is that the stakeholders, in the case of football clubs the
stakeholders are mainly the fans, as they make not only the biggest investment to their clubs
(Parnell et al., 2020). The fans get the emotional satisfaction from their clubs’ success and
continue to invest more by purchasing their clubs’ licenced products and tickets to the games.
In order for the football clubs to ensure this investment and support from the fans to continue,

all they need to do is continue their existence. Although it may sound a very easy to task to
accomplish, considering the current economic crisis in the world, it is not as easy as it sounds
because many clubs today are having problems with paying for the wages of their employees
(Riberio et al., 2019). It is claimed that in order to ensure the existence of a football club in
the future, it is essential for the worlds of football and business to combine their forces and
find a solution that can ensure sustainability in the sector (Soderman, 2013). Parnell et al.
(2020) suggest that football clubs have ignored the basic principles of business management
strategies such as employing a capable manager to run the club as a business entity, ensuring
continuity in the management team of the club, using all generated income to run the club
and find ways to generate additional income. Among all these simple management principles,
the investing all the generated income into developing the club can be named as the most
important of all, as it can both increase the credibility of the club, which is very important in
the business world for any company, and allow the club to invest in new areas that can
generate more income. It has been observed that many football clubs that are not managed by
a professional management use the income of the club to finance unrelated debts that have no
relation to the club (Galariotis et al., 2018). One of the best income generating activity for a
football club is selling players to other clubs after the income generated by the contribution
of the fans by purchasing licenced products and game tickets. The transfers can be used as an
income generator in both ways. By transferring a famous footballer the fans would feel more
emotionally satisfied and purchase more products and seasonal tickets to watch the famous
player (Moore & Levermore, 2012). Additionally, this would increase the brand awareness of
the club which can help them gain more fans around the world, which in return increase the
investment made by the fans. Similarly, by selling the talented players from the team can also
generate a large amount of income which can be used to transfer more players that can both
increase the popularity of the club and can be sold for more money in the future to make
profit (Galariotis et al., 2018). However, this is hard to achieve without a proper management
style as it requires outstanding management skills to perform these kinds of profit generating
activities, as they require absolute professionalism, a skills many football club directors lack,
as they approach the management of the club more emotionally. However, the in successful
businesses the emotions do not have any role to play as the actions the managers should take
must depend on logic and actuarial data rather than feelings. Only then the management team
can make sound decisions about the future of the club (Chadwick & Hamil, 2010). Overall, it
can be said that the fans are the biggest investors of the clubs and they will continue to invest
in the club as long as the club satisfies them emotionally. In today’s modern world this can

only be achieved under the management of professional managers as they can take the
necessary steps to ensure the continuity of the club and generate income to make fans trust in
the future of their club.
Football industry: new structure, dimensions and need for corporate governance
The evolution of football towards the industrial process, especially since the early 1990s,
transformed football clubs from sportive organizations to economic organizations. Football
clubs have created a new economy with budgets reaching 100 million dollars and their
structures that manage these budgets. During this period, football clubs, whose revenues
increased geometrically, began to corporatize and open to capital markets in order to get
more shares from the cake. Public offerings turned clubs into multi-partnered structures
(Farquhar et al., 2005). Especially in England, football clubs, organized as companies, have
become unmanageable with existing classical methods. For this purpose, while the universal
change and development of football transforms it into a show-business; On the other hand,
clubs seeking to increase their competitive power in the face of emerging innovations turned
towards corporate governance. Football's transition from being a local organization to a
position that markets global products has made the practices of "good corporate governance"
mandatory (Michie & Oughton, 2005). Considering the situation in terms of clubs, the quality
of corporate governance is high; In terms of bringing competitive advantage to clubs, it also
provided the opportunity to create low-cost funds. In this context, well-managed clubs are
increasingly widening their gaps with their rivals, and the huge budgets they have created in
the last 10 years by enormous growth reveal unfair competition in favor of big clubs
(Rezende et al., 2010). Additionally, the football clubs also come across UEFA's Football
License Rules and "Financial Fair Play" obligations. Compliance with these international
mandatory rules is now a must for clubs aiming to join UEFA's organizations. Conditions of
compliance with these rules lie at the basis of competition. However, for clubs that do not
have any vision and strategy to participate in UEFA organizations, the situation raises
compliance with local licensing systems. In essence, being able to get more shares from the
increasing income structure of Football, which has now become a business line, forces clubs
to become an industrial organization (Soderman, 2013). It is possible to claim that while
football itself evolves into an industrial character; the clubs, which are the main actors in this
business, cannot be expected to watch this development. They also need to keep up with this

transformation and development and review their organizational structures accordingly. This
now stands ahead of football clubs as an industrial imperative.
Recommendations
1. Basic philosophy
• The club and the board should look after the interests of its stakeholders and the public as
well as their own interests (Moore & Levermore, 2012).
• These interests should be basic level sports facilities, providing sports opportunities for
young people, training players, providing economic contribution to the region and ensuring
its sustainability (Moore & Levermore, 2012).
• Corporate governance principles should be put into practice for sustainability (Moore &
Levermore, 2012).
2. Regarding Stakeholders,
• The club should define all of its stakeholders and their rights (Moore & Levermore, 2012).
• These stakeholders must include members of the general assembly, fans, athletes, club
employees and suppliers (Moore & Levermore, 2012).
• General board members should be able to receive information and documents about the club
in a timely and regular manner (Acero et al., 2017).
• General board members should be able to easily elect board members or dismiss them when
a majority decision is made. For this, the election periods of the board of directors and the
conditions of the extraordinary general assembly should be clearly defined (Acero et al.,
2017).
• All members of the general assembly should have sufficient and necessary knowledge of
key strategic changes in the core activities of the club (Moore & Levermore, 2012).
3. The structure and responsibilities of the board of directors
• While making decisions in the club, members of the board of directors are given full and
sufficient information (Moore & Levermore, 2012).
• Boards of directors should be independent of the decision of a single person on the board.
• The duty of the board of directors should not be executive (Acero et al., 2017).
The board should focus its core functions on the following framework:

• Reviewing and guiding corporate strategy, basic implementation plans, risk policy, annual
budgets and business plans, setting performance targets, monitoring corporate performance
and implementation, managing core capital expenditures, acquisitions and liquidations
(Pereira, 2018).
• Selecting, compensating, monitoring and replacing key managers when necessary and
managing the change plan (Pereira, 2018).
• Aligning the earnings of key executives and the board with the long-term interests of the
company and its partners (Pereira, 2018).
• To ensure the accuracy of the company's accounting and financial reporting systems,
including independent auditing, and their compliance with the laws and relevant standards,
especially with the appropriate control systems, especially risk management, financial and
operational control systems (Acero et al., 2017).
4. Risk management and control
• The executive board should consider, at least annually, at least annually, the key threats that
could interfere with the club's performance and achievement of its financial, operational and
compliance objectives, including before the start of each accounting period. Each threat
should be evaluated based on the impact and probability of the risk it introduces to the club.
The level of risk can be evaluated as high, medium and low impact or probabilistic (Riberio
et al., 2018).
• The current debts of the club should be known by the general assembly. In addition, the
conditions for new debts should be presented to the approval of the general assembly.
Normally the following information should be provided for new debt (Riberio et al., 2018).
5. Transparency
• The annual activity report of the club must be published every year and published on the
website (Moore & Levermore, 2012).
• Anyone should have access to annual activity reports (Moore & Levermore, 2012).
6. Legal Compliance
• Clubs are obliged to comply with UEFA, local football federations and relevant country
laws. If there is a problem in this harmony, additional penalties should be defined for the
relevant managers (Devecioglu et al., 2012).

• The annual accounts of the clubs can be audited by independent, suitably qualified auditors.
Accounts should be audited by the report of a qualified independent accountant, if there is no
auditor (Riberio et al., 2018).
• Annual accounts should be reported to the relevant parties within the timetable defined in
appropriate regulations (UEFA, tax authorities etc.) (Devecioglu et al., 2012)
• Share / member records must be kept up-to-date, available during reviews, and available
upon request (Pereira, 2018).
Conclusion
In conclusion, football is one of the most popular sports in the world and the monetary value
of the sport is increasing everyday creating new opportunities to the people who are involved
in it. However, like in every other sports, for football clubs winning is the definition of
success. For this reason, most of the people who manage the football clubs aim to create
value for the clubs by winning games rather than achieving sustainable financial stability but
this strategy has been failing over the last decade and the current Covid-19 has deepen the
crisis for many clubs. Many clubs around the world are managed by people who do not know
much about running a sports clubs and most of the managers in the clubs are the friends of
the clubs’ presidents who are often wealthy businessman that try to run the clubs like they run
their own businesses without considering the fundamentals about running a football club.
Thus, recently it has become obvious for everyone that it is essential for the football clubs to
be managed as a business entity with the managers who are capable of running a club. The
examples from all around the world show that unless they are managed properly, the clubs
soon will reach the brink of bankruptcy. The only way to avoid such situations, the
management of the football clubs must acknowledge the benefits of applying business
strategies to the clubs. However, it is also important to note that the managers should
somehow balance the desires of the fans, which is often sportive success, and the financial
expectations from the stakeholders.
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