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Q 1. What are your suggestions to improve the governance of professional football clubs beyond whatthis explores?

ANS. overnance is a critical component of managing sport organisations! how to best monitororganisational activities" deliver benefits to organisations and guide an organisation is critical toorganisational sustainability. #he board plays a significant role in a governance system because

decisions made by the board can affect the entire organisation. #he literature review presented herehas suggested that we can draw on existing theories to understand how boards wor$ and use thisinformation to design appropriate board structures for sport organisations. %mpirical studies should beconducted to examine board composition in sport organisations" such as board si&e and boardindependences.'uture research is needed to explore the differences in board roles and board composition betweenprofit and non(profit sport organisations" between national and local sport organisations" betweenprofessional and amateur sport organisations" and between Western and Non(Western sportorganisations. )t has been argued here that sport organisations are in a dynamic and competitiveenvironment *Amis" Slac$" + ,inings" -/a0. omparing the differences in board governance withinthe sport sector can help sport organisations understand themselves and their rival organisations andin turn stand out in a competitive environment. According to an ancient hinese military treatise" titled

#he Art of War written during the 2th century 3 by Sun #&u" if you $now both yourself and yourenemy" you will come out of one hundred battles with one hundred victories *#an" -10. )n addition"examining differences in board governance between sport and non(sport sectors can not only help usclarify differences between the sport sector and non(sport sectors but also help researchers develop aframewor$ or a theory for sport governance.

We can try to develop some logical considerations on the economic nature of professional footballteams" generating some insights on the governance of this special $ind of business. 'irstly" it is 4uiteevident that professional football team management re4uires a good sport performance to besustained by a corresponding financial performance. )t is not possible to assume shareholder valuemaximi&ation as the ultimate goal of the firm. )ndeed there are some crucial sta$eholders who share

with the firm essential resources that cannot be easily replicate.#o a certain extent" these sta$eholders can be considered as firm suppliers" because they have thebenefit of a ris$less income granted by contractual agreements with the firm" in exchange for theirprofessional activities" but they are also residual claimants" since they might obtain considerableeconomic advantages from a successful season. #his further aspect entitles some prominentsta$eholders to have some informal influence on management decisions and sometimes in corporategovernance too. 5oo$ing at the whole business system these sta$eholders could be regarded asvirtual shareholders *apasso" 16620 and the ultimate goal becomes a negotiated system ofob7ectives directed towards the value maximi&ation of the business system as a whole sub7ect to somespecific constraints. 8easoning on the financial data" we observe how net losses are recurrent in theinco me statements of many teams" mainly due to the high costs of players and coaches. Also in thiscase" the systemic approach could help. )f we consider the value added *gross operating margin plus

labour costs0" rather than net income" the analysis of the economic e4uilibrium of professional footballteam would lead to different conclusions.9nder a systemic perspective" the football teams actually create economic value" the problem lies inthe distribution of the value created between profit and wages" but m oreover in the allocation of theris$ among the multiple sta$eholders. Some residual claimants *players and coaches0 obtainconsiderable benefits from successful sporting performances but can also count on a significant floorto their economic returns in t he adverse scenarios. )n addition it is possible to consider that when aplayer performs particularly well" and many competing teams try to hire him" normally his agentmanages to get relevant salary increases" notwithstanding the existing contract" but if a well paidplayer performs badly" the team:s management cannot reduce his base salary. )n this perspective ris$

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allocation is definitely asymmetric.#o correct" at least in some measure" this situation a viable solution could be a stronger correlationbetween salary and performance" either individual or team performance. Not casually there is ageneral trend to introduce ris$ mitigating covenants in the contracts between teams and top players*or top(coaches0 and also between teams when a player contract is transferred to another team *partof the payment can be indexed to future performances of the transferred player0. #he underlyingrationale is to redefine the ris$ (eward profile of the main sta$eholders in a way more suitable for their

being residual claimants *i.e. paying a significant share of salaries in stoc$ options0.

#he orporate overnance of the football clubs tells that the 'ootball clubs that are listed are trying toadhere to the re4uirements of the 9; orporate overnance ode even though it is not mandatory.#his shows the commitment of these clubs to implement best practices of orporate overnance.,owever" the details provided in the orporate overnance guidelines of these clubs are insufficientand doesn:t consider many of the important principles of the 9; orporate overnance ode"especially the training of the 3oard members" 3oard evaluation" procedure for forming committees indetail. A flurry of investigations" scandals and hostile ta$eovers" indicates the importance of bettercorporate governance in football. #he clubs are bought as a matter of fact for pride than running it as a

professional organi&ation. #he decrease in number of clubs getting de(listed from the Stoc$exchanges is also an indicator of poor corporate governance.