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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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4.2.2. Shareholders

Shareholders were considered important only by British clubs during this study. To explain that is very easy: in France, football clubs are not allowed to access private funds through Stock Exchange market. The government forbid it. Shareholders often seek return on investment when they invest their money. This is also true concerning football, like highlighted Michie (2001), but it is not compulsory. Football clubs shareholders often invest in football to benefit from its media exposition or to get advantages like access to games, meetings with players. For example, Granada TV owns ten percent of Liverpool F.C. because there is an efficient synergy between this sport and television. Liverpool F.C.'s chairman, who owns fifty-one percent of the club, is said not to be interested by return on investment. Passion drove him to invest in the club. It is real because Liverpool F.C. has never paid any dividend to its shareholders. Feelings have to be

How stakeholders influence football clubs' strategy ? September 2003

part of this investment because it is not a rational one: the value of most English clubs has halved in recent years, according to the Sir Norman Chester Centre (2002). It is also written in the same study that football clubs, like each Plc., may not seek return on investment but must endeavour to generate their satisfaction. Their source of power is obvious: they own the club! When English football clubs entered the Stock Exchange market, most of the owners kept a majority of shares. Only Manchester United was fully sold on the market. At Liverpool F.C., Mr Moore is the chairman of the club, with its 17,923 shares, about fifty-one percent of the club. Considering that a share price is about £4,000, it is understandable that his power on the club's management is important. That's why he is also president of the club. With this function, he can set the strategy of the club and appoint the key employees. Charismatic shareholders also uses of personal connections for the benefit of their clubs. This is an example of an internal stakeholder who runs the club. But Liverpool F.C. is composed of 34,000 shares which belong to 1,500 different shareholders; some are external to the club. This is a major challenge for a football club because these shareholders attend to the annual general meetings; they discuss the club decisions and influence the club's strategy. It is really important for the clubs that shareholders agree with the strategy proposed, otherwise they will have to negotiate. As British football clubs are Plc.'s, they can be targets of financial bid to control them. It happened in Stoke City F.C., when an Icelandic group took over the club and appointed the first overseas manager in the club history: Gudjon Thordarson. It also important to remember again the bid of supporters Trusts who now control AFC Bournemouth and Northampton Town FC. In July 2003, Roman Abramovitch bought Chelsea F.C. for £26.8 million. This ex-manager of Russian oil companies is now president of one of the most important English club. Juventus Turin also sold 7,5 percent of the club to Saadi Kadhafi, son of the Syrian Colonel, according to Attal (2003). He is now a professional player in the Italian League. Those two people bought shares at an interesting price for past shareholders and increased their power over these clubs. Take-overs have to be considered as a danger by clubs. Who would like to see its club owned by a Russian linked with the Mafia or the son of a terrorist dictator? Clubs have to be aware of these dangers and should try to manage their current shareholders to avoid any problem.

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