Governance Failure and Financial Crisis in German Football

Helmut Dietl and Egon Franck

Journal of Sports Economics, 2007, vol. 8, issue 6, 662-669

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.

Keywords: German football; league governance; member associations; overinvestment; 50 + 1 rule; licensing system (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (32)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:8:y:2007:i:6:p:662-669

DOI: 10.1177/1527002506297022

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