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How stakeholders influence football clubs' strategy?

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par Eric Bailly
Staffordshire University (UK) - M.Sc. in European Management Strategy 2003
  

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LIST OF TABLES AND FIGURES

Table 4.1. Clubs' portrait

p.26 Table 4.2. Clubs' most important stakeholders

p.27 Table 4.3. Football fans' power

p.29 Table 4.4. Television rights and football clubs

p.34 Table 4.5. Sponsors and football clubs p.38 Table 4.6. Important vs. less important clubs p.51

Figure 2.1. Mendelow's model p.10 Figure 2.2. Archer's model p.11 Figure 2.3. Polonsky's model p.13 Figure 4.1. Mendelow's model applied to football clubs p.41 Figure 4.2. Archer's model applied to football clubs p.42 Figure 4.3. Polonsky's model adapted to football sector p.50

1. INTRODUCTION

1.1. The current context

There are so many football matches on television that people who like this sport can watch a game almost every night. Football entertains people, helps television channels to make large audiences, makes sportsmen becoming pop idols and manages huge amounts of money. This looks as a very lucrative business where every actor earns an important amount of money: clubs selling players, players earning important wages, players' agents getting their royalties...

The idea of this subject is very personal to the author. The author aims at work in football clubs, so his interest for this activity sector lasts since many years. This basic knowledge is essential to conduct an efficient research, because football is a very specific business sector. Like many other businesses, football clubs are owned by shareholders and run by employees skilled in sales, marketing, communication, human resources and finance... These departments exist in football clubs as well as in traditional companies. Clubs also manage retailing of their products to the fans. But their main activity is to produce a football game every weekend. According to that specificity, to manage a football club can be compared with managing a show-producing company. In fact, the most important element of the business is what happens on the pitch every weekend. If the team wins, sales will increase and sponsors will invest more money on the club but if the team looses, less money will be available for the club. As players' price depends on their performances, a team with little money should not be able to buy the good players and so, could not compete with the richest ones. Apart some sportive exceptions, clubs are engaged in an economic circle, whether vicious or virtuous.

As football concerns and interests so many people, politics and companies, communication about it is very careful: apart from the sport news and players interviews, few people know how the crisis in football clubs is important. Thanks to lower incomes (due to lower television rights), and to increase expenses (especially players' wages), almost every clubs in Europe are about to bankrupt. Shareholders have to invest always more money if they do not want their football team to shut down. This concerns the most important clubs

How stakeholders influence football clubs' strategy ? September 2003

(Arsenal, Real Madrid...) as well as second division clubs. French and English ones are not exceptions. We can notice that Manchester United is THE exception and that this club makes profits every year and they are successful on the pitch as well. Is there any link between profits and sport success? One thing is sure it is that Manchester United is one of the rare clubs who implemented a clear long-term strategy. Do the other clubs have no strategy? Hopefully they must have one, but most of them bet on a short-term and lucrative victory, rather than a long-term success. Football clubs' managers have long-term view as well, but they have to cope and satisfy the club's stakeholders. Fans and media want good and expensive players to `play the show', shareholders want a return on investment, and institutions want the club's commitment to develop and train young players... Unions (players, employees, coaches) also have a certain control on this business. A club has to take in account all those expectations when designing a strategy. The best example of this critical situation is the transfer of the Brazilian player named Ronaldhino from Paris Saint-Germain to F.C. Barcelona during summer 2003. This player played for Paris and was so talented that the richest clubs of Europe wanted to buy him. Paris SG's president did not want to sell him because fans and the coach put pressure on him and to keep Ronaldhino would have improve the team's efficiency for the following football season. This willing may have been sincere but the transfer of the player happened anyway. The reason of this event is the pressure put on the president by stakeholders to sell the player. First, the player wanted to leave the club because of the higher wages offered by clubs like F.C. Barcelona, Real Madrid or Manchester United and his agent wanted him to move in order to improve his football skills... or maybe to get enormous royalties on the new contract. Then, banks and the Ligue de Football Professionel wanted PSG to decrease its financial debt. PSG bought this player two years before and a sponsor (SportFive) helped the club to pay the fees, charging it with a very high interest rate. So, this sponsor was expecting its money back, as soon as the players' transfer would have been signed. This case is a perfect example of how clubs can be influenced by stakeholders and take decisions they did not wish to. This research analyses this influence and tries to highlight some successful stakeholders managing methods.

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