The 50 + 1 rule: What to consider before buying a football club
(Sprache: Englisch)
This study analyses the legal and statutory environment for investments in football clubs in Germany, as opposed to the situation in England. Whereas German regulations limit the acquisition of shares of football clubs, the legal framework is much more...
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This study analyses the legal and statutory environment for investments in football clubs in Germany, as opposed to the situation in England. Whereas German regulations limit the acquisition of shares of football clubs, the legal framework is much more liberal in England. The paper looks at the potential conflicts of interest involved with club ownership issues as well as at the arguments for and against the German 50 plus 1 rule and how this rule may cause a shortfall in competitiveness as compared to English football. Finally, the study looks at doubts over the lawfulness of the rule in relation to European antitrust legislation and doubts over its effectiveness concerning legal loopholes provided by German corporation law. The paper relied predominantly on the analysis of literature concerning the regulation of club ownership in England and Germany, whereas a significant amount of German literature was used. Essentially, the research found that there is reason for severe scepticism about both the lawfulness and the effectiveness of the 50 plus 1 rule. It would probably not bear up against a test before the European Court of Justice. There are several opportunities in German corporate law to circumvent the rule. Finally, the paper urges the German Football Association (DFB) to consider a softening of the regulations currently in place, and effective modifications of the underlying licensing system, respectively, as well as the introduction of supporters trusts and fit and proper person tests. Finally, the paper claims that competitive balance on a European club level can only be restored if club ownership issues are resolved on a European level.
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Text Sample:Chapter 1.2, Scope of this study:
This study, however, will assess the effectiveness and lawfulness of restrictions prohibiting the acquisition of shares of a professional football club in Germany, following the pretension to safeguard the integrity of competition and regardless of the fact whether or not such shares provide for a controlling influence over the club. The study will also compare the German situation to the respective legal framework and its economical impact in England.
Ethical questions of possible dominance of institutional investors over members and supporters are only covered marginally by this study. To quote Szymanski (2007: 199), this study is about the tension, between the desire to allow clubs greater market freedom in order to find their own economic solutions, and the desire to regulate the operation of markets in order preserve existing competitors and structure .
1.3, Drivers of club ownership:
(Multi-) Football club ownership can be driven by various objectives. Ownership of football clubs can relate to maximisation of financial gains. Investment in a football club may be seen as similar to many other business investments and be justified using financial criteria such as discounted cash flow, internal rate of return, asset appreciation, or payback (Foster et al, 2006: 97).
Investments may as well be driven by strategic considerations, seeking to put the owning company in a good position to acquire certain rights, such as TV rights or merchandising rights. Another motive might be the fear of competing media corporations from the clubs themselves, which have recently shown increasing tendencies towards broadcasting their own pictures on TV or the Internet or even towards creating their own leagues (Weiler, 2005: 179).
There is no dominant opinion about what club owners are trying to maximise. Nikolychuk and Sturgess (2007: 844) refer to other authors who argue that clubs are less profit oriented than other commercial
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organisations because they are attempting to maximise utility with sporting performance. Morrow (2003: 75) sums up the numerous different interests and motivations among and within football s stakeholders as more diverse than ever before . After all, corporate governance, which involves a set of relationships between a company s management, its board, its shareholders and other stakeholders, provides the structure through which the objectives of the company are set, and the means of attaining those objectives and monitoring performance are determined (OECD, 1999: 2). The differences in corporate governance in English and German football clubs will be outlined in more detail in Chapter 5.
In practice, apart from individuals like Roman Abramovich, a certain group of investors has shown interest in holding a controlling share in one or more football clubs. Firstly, clubs themselves might be interested to, directly or indirectly, invest in other football clubs in order to secure talent education or to pursue other purposes. Secondly, marketing companies show an increasing involvement in football club shareholding. Thirdly, media corporations, such as Rupert Murdoch s BSkyB, have shown enhanced interest in capital investments in football clubs (Glover et al, 2004). Finally, the sporting goods manufacturing industry seeks to get involved in football clubs in order to enhance its core business. According to Scaglione (2007: 110), referring to the Deloitte Sports Business Group, the European professional football market generated total revenues of 12.6 billion in 2005/2006 and hence represents a very attractive playground for investors.
In practice, apart from individuals like Roman Abramovich, a certain group of investors has shown interest in holding a controlling share in one or more football clubs. Firstly, clubs themselves might be interested to, directly or indirectly, invest in other football clubs in order to secure talent education or to pursue other purposes. Secondly, marketing companies show an increasing involvement in football club shareholding. Thirdly, media corporations, such as Rupert Murdoch s BSkyB, have shown enhanced interest in capital investments in football clubs (Glover et al, 2004). Finally, the sporting goods manufacturing industry seeks to get involved in football clubs in order to enhance its core business. According to Scaglione (2007: 110), referring to the Deloitte Sports Business Group, the European professional football market generated total revenues of 12.6 billion in 2005/2006 and hence represents a very attractive playground for investors.
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Bibliographische Angaben
- Autor: Max Kindler
- 2014, Erstauflage, 80 Seiten, Maße: 15,5 x 22 cm, Kartoniert (TB), Englisch
- Verlag: Anchor Academic Publishing
- ISBN-10: 395489243X
- ISBN-13: 9783954892433
Sprache:
Englisch
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