Corporate Governance in Soccer
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Corporate governance involves the mechanism through which a corporate organisation or firm is directed and controlled. Some of the advantages of enhancing corporate governance include the promotion of democracy, linking the club to the community that forms the major stakeholder, establishing stability and confidence, improving relationships with the local businesses and empowering the fans and stakeholders. The principal disadvantages highlighted are in the form of decision making, finance and sustainability. Ineffectiveness in corporate governance is a product of lack of competence in ...view middle of the document...
This prompted Vrooman (2007) to assert that the governance systems of the European soccer are living in denial because they are currently faced with internal corporate governance issues. The current rise in the governance scandals affecting corporations such as Royal Dutch in the UK has made various governance systems to be a subject of wide criticism. According to Buraimo, Simmons & Szymanski, (2006) the series of mistakes and unprofessionalism has led to poor standards of corporate governance among the executives; leading to financial crises. One of the measures intended to improve corporate governance in European football is the Cadbury Report in 1992 that intended to address its underlying problems, the pressure for the changes by the institutional investors and the absence of effective oversight boards.
State Of Football in the UK
Football is a hugely successful industry in the UK and contributes significantly to the community; culturally and economically (Appendix 2). The football clubs are uncomplicated organizations that exist with a goal of enhancing the participation and spectating of organized commercial football. The potential for revenue generation in the professional leagues has led to the tensions between the cultural and commercial value of football clubs. The regulation capacity of the FA to control the general English football has been faced by a myriad of challenges emanating from the power of professional football to influence its decisions and structures. The governance challenges facing various organisations e.g. soccer clubs have prompted them to adopt the globalising trends that emphasises on the shift from direct control of the sport to the corporate governance approach. According to Henry and Lee (2004), the current business environments are characterized by the interaction of organizations and other working groups within and across organizations. Sport is not an exception and this has seen the globalizing trends being characterized by the incorporation of the systematic governance in soccer management. Profound changes have been noted in the manner in which football is managed at a national and international context. Of importance is the fact that the new developments have led to an increase in negotiations among stakeholders in decision making. The governing bodies no longer control the football activities, but indulge into negotiations and cajoling for the achievement of the required objectives.
The commercialisation of the European Football has led to an increase in the interplay of the corporate governance in football issues. The products of the commercialisation are the establishment of the Champions league and European Championship (EURO). They generate large financial returns that are distributed to all the stakeholders including the member competing clubs and other national associations. The application of theories related to governance is crucial in ensuring improved...