How a football club lines-up in the boardroom can be as important to their league success as how they line-up on the pitch, a new study of 80 elite clubs suggests.
Researchers from 明星八卦 and the University of Southampton set out to determine how the on-field and off-field performance of a football club is affected by the make-up of its senior leadership.
They found that clubs owned and run by a few wealthy individuals perform best because they were able to prioritise on-field performance – their position in the league – over their off-field financial performance, but where clubs don’t have the luxury of a ‘sugar daddy’ owner, they tend to perform better on the pitch if they have a diverse leadership.
The researchers suggest the results could indicate that Financial Fair Play rules aren’t going far enough to level the playing field for elite clubs.
“Most football clubs are non-profit making businesses, so they’re in a dilemma as to whether they want to improve their financial performance or their non-financial performance – their off-field or on-field performance,” said Dr Ahmed Elamer, a senior lecturer in accounting at 明星八卦 Business School. “We were looking at how the structure of football clubs, specifically the board structure, affects the performance of those clubs.”
The researchers found that where clubs had ‘CEO duality’ – the CEO is also the Chairperson of the Board of Directors – there is a positive relationship with on-field performance but not off-field performance, a likely consequence of those clubs being able to spend big on players whilst not having to overly concern themselves with turning a profit.
However, where clubs were not backed by super-rich owners, the researchers found that those clubs with a large board and a significant number of non-executive directors performed better on the field than clubs which favoured a smaller senior management team.
“We also found having a higher percentage of foreigners and younger directors also had a positive relationship with on-field performance,” said Dr Elamer, “although having a higher percentage of female directors doesn’t have any significant effect on on-field performance.
“Surprisingly though, we didn’t find any relationship between bigger, diverse boards and financial performance, suggesting that most of the people involved in these clubs’ mentality are focussing on on-field performance and not financial performance.”
Dr Elamer said the findings suggest clubs are still heavily overinvesting in their on-field performance – an issue the UEFA Financial Fairplay Rules are attempting to address – and that it could cause severe long-term issues for the sustainability of traditionally owned and managed clubs.
“This overinvestment is driven by what we call the ‘sugar daddy’ financing model,” said Dr Elamer. “This results in huge issues, as a lot of chasing clubs now declare bankruptcy or end up in administration because they didn’t focus on their long-term sustainability and their financial performance. We need more initiatives to improve financial fair play.”
The paper – – was published by the International Journal of Finance and Economics.
Reported by:
Tim Pilgrim,
Media Relations
+44 (0)1895 268965
tim.pilgrim@brunel.ac.uk