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The Choice of Legal Form and its Effects on Good Governance: A Case Study of an Austrian Professional Soccer Club

  • Armin Wiedenegger
  • Alexander Kern
  • Maria Rupprechter
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    The corporate governance of professional soccer clubs (PSCs) has come under close scrutiny as the financial situation of PSCs has worsened and numerous governance failures have occurred in European soccer. Literature argues that the choice of legal form is a main driver of good governance and the primary beneficiaries of enhanced corporate governance standards would be the PSCs themselves. The aim of this paper is therefore to investigate the impact of different legal forms on the level of good governance. By using a case study approach, the prevailing forms of the traditional non-profit association, business management agreement and spin-off of the first team into a corporation are assessed with regards to their degree of good governance. The Austrian PSC investigated has experienced all three legal forms within a time frame of ten years, which displays a unique setting. The measurement against the principles of good governance introduced in the ‘Guide for Football Clubs’ identifies significant failures for the legal forms of the non-profit association and the business management agreement. Results reveal that in terms of good governance the spin-off of the first team into a corporation seems to be the most adequate legal form for medium and large size PSCs.

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    Article provided by University of Economics, Prague in its journal Ekonomika a Management.

    Volume (Year): 2012 (2012)
    Issue (Month): 3 ()
    Pages: 23-43

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    Handle: RePEc:prg:jnleam:v:2012:y:2012:i:3:id:171:p:23-43
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    1. Andrei Shleifer & Robert W. Vishny, 1995. "A Survey of Corporate Governance," Harvard Institute of Economic Research Working Papers 1741, Harvard - Institute of Economic Research.
    2. Egon Franck, . "Private Firm, Public Corporation or Member`s Association – Governance Structures in European Football," Working Papers 0106, University of Zurich, Institute for Strategy and Business Economics (ISU).
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    4. Paul Gompers & Joy Ishii & Andrew Metrick, 2003. "Corporate Governance And Equity Prices," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 107-155, February.
    5. Jonathan Michie & Christine Oughton, 2005. "The Corporate Governance of Professional Football Clubs in England," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(4), pages 517-531, 07.
    6. Alexander Dilger, 2006. "Wieso sind Sportvereine Vereine?," IASE Conference Papers 0640, International Association of Sports Economists.
    7. Sascha L. Schmidt & Matthias Brauer, 2006. "Strategic Governance: how to assess board effectiveness in guiding strategy execution," Corporate Governance: An International Review, Wiley Blackwell, vol. 14(1), pages 13-22, 01.
    8. Babatunde Buraimo & Rob Simmons & Stefan Szymanski, 2006. "English Football," Journal of Sports Economics, , vol. 7(1), pages 29-46, February.
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