Chapter 6

Topics: Manchester United F.C., Stock, Fiduciary Pages: 4 (1018 words) Published: January 30, 2015
cHAPTER 6
Case: Corporate governance of professional football clubs
Ethical Dilemma: Who cares whose shares
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BUS 400

Case: Corporate Governance of professional football clubs.
In 2005, Malcolm Glazer, an American millionaire decided to by a 75% controlling stake for Manchester United football club. This moved football from a community sport to a multi-million pound international industry that is now organized, controlled, marketed, and financed. In 1966 the gate ticket revenues mainly paid for player’s wages and with the commercial television of games global audiences and fan bases grew. In 2009 clubs such as real Madrid, Manchester united and Barcelona became lucrative deals for investors. However, the investment model for football clubs changed and many investors started leveraging the investments through massive amounts of debt. Many clubs in the UK were public limited companies and were listed on the stock exchange but recently many have been brought into private ownership again through private equity.

Bankruptcies and corruption scandals have raised questions to whether many football clubs have been able to have a smooth transition into the professional business world. A clubs livelihood is directly related to their fan base (spectators, TV audiences, or consumers of merchandise) but over the past decade the average attendance to the English Premier League matches has stagnated and younger people have been wary to attend. With high prices for tickets, fans have been feeling alienated by the players’ wages and TV scheduling has greatly fuelled the feeling that football is no longer a fan’s game but a business oriented way of generating revenue for owners. Between 1996 and 2006, the seventy-two clubs of the English Football League made a pre-tax loss of £981m; in comparison, the other leagues clubs, that were predominantly owned by fans, made £210m operating profit through higher attendance at lower ticket...

Cited: Crane, A., & Matten, D. (2010). Business Ethics.Page 252 New York: Oxford University Press.
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