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Governance Failure and Financial Crisis in German Football

Author

Listed:
  • Helmut M. Dietl

    (University of Zurich)

  • Egon Franck

    (University of Zurich)

Abstract

The peculiar German football governance structure may be well suited to prevent integrity problems resulting from multiple club ownership or from ownership by "undesired'' persons or entities. However, this effect comes at a price. In the vacuum of power generated within large member associations, residual rights of control are de facto allocated to representatives who do not hold residual claims. Because these representatives externalize substantial parts of the risk associated with investment decisions, they are particularly ill-suited for managing the business of professional football, which has been transformed into a "gamble on success'' by ever-increasing revenue differentials between winners and losers. At the same time, low accounting standards for members clubs, combined with "soft'' law enforcement, invite club representatives to hide their consumption on the job behavior until their clubs are insolvent.

Suggested Citation

  • Helmut M. Dietl & Egon Franck, 2007. "Governance Failure and Financial Crisis in German Football," Journal of Sports Economics, , vol. 8(6), pages 662-669, December.
  • Handle: RePEc:sae:jospec:v:8:y:2007:i:6:p:662-669
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    Citations

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    Cited by:

    1. Egon Franck, 2010. "Private Firm, Public Corporation or Member’s Association Governance Structures in European Football," International Journal of Sport Finance, Fitness Information Technology, vol. 5(2), pages 108-127, May.
    2. Dietl, Helmut M. & Duschl, Tobias & Lang, Markus, 2011. "Executive Pay Regulation: What Regulators, Shareholders, and Managers Can Learn from Major Sports Leagues," Business and Politics, Cambridge University Press, vol. 13(02), pages 1-30, August.
    3. Budzinski, Oliver & Müller, Anika, 2013. "Finanzregulierung und internationale Wettbewerbsfähigkeit: Der Fall Deutsche Bundesliga," Ilmenau Economics Discussion Papers 82, Ilmenau University of Technology, Institute of Economics.
    4. Lionel Page & Markus Schaffner & Marie Beigelman, 2016. "Striking strikers. A case of player mispricing in Association Football," QuBE Working Papers 043, QUT Business School.
    5. Stephen Morrow, 2014. "Football finances," Chapters,in: Handbook on the Economics of Professional Football, chapter 6, pages 80-99 Edward Elgar Publishing.
    6. repec:hal:journl:halshs-00971782 is not listed on IDEAS
    7. Stefan Szymanski, 2011. "Sport Financing and Governance in Europe," Chapters,in: Contemporary Issues in Sports Economics, chapter 4 Edward Elgar Publishing.
    8. Helmut Dietl & Tobias Duschl & Markus Lang, 2010. "Gehaltsobergrenzen und Luxussteuern: Erkenntnisse aus dem professionellen Mannschaftssport," Working Papers 0136, University of Zurich, Institute for Strategy and Business Economics (ISU).
    9. Pamela Wicker & John C. Whitehead & Bruce K. Johnson & Daniel S. Mason, 2017. "The effect of sporting success and management failure on attendance demand in the Bundesliga: a revealed and stated preference travel cost approach," Applied Economics, Taylor & Francis Journals, vol. 49(52), pages 5287-5295, November.
    10. Men-Andri Benz & Leif Brandes & Egon Franck, 2009. "Do Soccer Associations Really Spend On A Good Thing? Empirical Evidence On Heterogeneity In The Consumer Response To Match Uncertainty Of Outcome," Contemporary Economic Policy, Western Economic Association International, vol. 27(2), pages 216-235, April.
    11. Tim Powlowski & Dennis Coates, 2013. "The habit for voting, “civic duty” and travel distance," UMBC Economics Department Working Papers 13-05, UMBC Department of Economics.
    12. Armin Wiedenegger & Alexander Kern & Maria Rupprechter, 2012. "The Choice of Legal Form and its Effects on Good Governance: A Case Study of an Austrian Professional Soccer Club," Ekonomika a Management, University of Economics, Prague, vol. 2012(3), pages 23-43.
    13. Budzinski, Oliver, 2014. "The competition economics of financial fair play," Ilmenau Economics Discussion Papers 85, Ilmenau University of Technology, Institute of Economics.
    14. Andrew Adams & Stephen Morrow & Ian Thomson, 2016. "The 'Typical' Club? A Configuration Analysis of Scottish Football Clubs," CFI Discussion Papers 1601, Centre for Finance and Investment, Heriot Watt University.
    15. Wladimir Andreff, 2014. "Building Blocks for a Disequilibrium Model of a European Team Sports League," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00971782, HAL.
    16. Andrews, Matt & Harrington, Peter, 2016. "Off Pitch: Football's Financial Integrity Weaknesses, and How to Strengthen Them," Working Paper Series 16-009, Harvard University, John F. Kennedy School of Government.

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