For Profit or Glory - Assignment Example

Professionalization of modern sport “For Profit or Glory” Place Introduction There is a general perspective on sports and professional football, in particular, to be the industries where large sums of money are involved (Dorgham, 2008). However, there is a big gap between the success of each of the football club and its traditional management analysis and devices that are necessary to professional sport clubs. For that reason, a stakeholder approach is considered the most appropriate in analyzing the complex environment of professional football clubs (Donaldson & Preston, 1995). It represents a model of what a corporation is and how it cooperates and competes; it also shows the connections between the practice of shareholder management and the achievement of different performance goals; it recommends attitudes and structures to the stakeholder management. Stakeholders and their respective interests For football industry, there is a need to capture stakeholder in order to re-examine its governance structure and practice, meet the increasing expectations and standards of accountability and maximize its economic performance. Otherwise, a conflict can arise between the football club and its stakeholders, where the fans are the main priority in the field of success of the certain football club (Hoye & Cuckelly, 2007). Besides, sport organizations are also the subject of scrutiny from such stakeholders as members, sponsors, consumers, and the government funding agencies that expect the football club will deliver the highest quality outcomes. The football supporters argue to make the sport’s governance a serious political issue (Rae, 2014). That is an evidence of a random survey conducted among the four thousand adults, the eighteen per cent of which consider their clubs are in the well financial state, while thirty-eight per cent call for the regulation connecting supporters to be involved in the ownership of the club directly. If to speak about the English football and in case of any conflict arises, the Company Law, protecting the clubs’ investors, can replace certain fans (Michie & Shay, 1999). With the introduction of the Companies Act 2006, its Section 172 states that “a director of the company should act in the way of good faith” and “most likely to promote the success of the company for the benefit of its members as a whole” (Companies Act, 2006). In that case, the director of the club should understand all the consequences of any decision in the long term perspective should care for the company’s business relationships with stakeholders and make an impact on the company’s operations in the community and the environment (Burnham, 2008). Heinemann (1999) state that stakeholders for Manchester United are the supporters, the shareholders, the playing staff and the management team, the suppliers of sporting equipment, and the building materials as well as programs’ sellers and financial institutions are among the stakeholders. The employees are considered the important shareholders for the club, therefore, they should be well-appreciated. Thus, Ashton (2011) reported about the Manchester United owner to pay a record bonus to more than five hundred Old Trafford staff. That would be the annual salary in recognition of the club’s success. According to James and Rushe (2012), the employees of Manchester United will obtain more than two millions of pounds in new owner share plan. Selling more than nineteen million shares in the Premier League club at twenty dollars per piece, the funds would reduce the Manchester United’s dept. For employees the plan would mean that the owner wants to attract, retain and motive the selected staff and the awards would be made using the wide range of schemes of the company. Governance issues and possibilities for Manchester United stakeholders With the appearance of sports’ commercialization, sports’ clubs have strengthened their players’ abilities, enhanced global exposure and economic fortunes within their organizations. This has also increased the attention of different stakeholders of the sports clubs, in particular football ones. However, with the wide variety of stakeholders to have different levels of involvement in the governance of the organization, Heath and Norman (2004) state that their level of interest in sports governance became also cultivated by different concerns about the management of sport organization. Hindley (2007) declares that such concerns are called by greater organizational effectiveness and also by the demands for more effective engagement stakeholder and better accountability of board members. Thus, within international sports’ federations and national governing bodies of sport the notion of stakeholders calls for concerns about how the interests of groups such as athletes, volunteers and supporters will be displayed. In addition, there are the emergence of issue-oriented groups that continue debating about the future governance of different sports. The vivid example of such concern was the campaign led by Manchester United Supporters Trust that wanted to secure a meaningful ownership of the football club in terms of Manchester United takeover made by the Glazer family. Thus, when in 2005 the U.S. financier Malcolm Glazer raised his stake in Manchester United football club to more than seventy-five per cent and then obtained full control of the club, that became the sale of the century, according to McKenzie (2007) and the biggest concern for its main stakeholders-fans or supporters. The event led to the formation of Manchester United set up by its supporters. The formation of Manchester United Supporters Trust and Manchester United Football Club was an attempt of supporters to try to influence the running of the game as well as participation and exclusion and exercise of power in football. However, the new owner of Manchester United challenged the performance, when it was bought and delisted from the UK stock exchange, which generated a great outpouring of anger among the ticket holders and fans. That called for a great concern even among the soccer experts as to the long-term survival of the club. The new owner brought a big debt to the club, and supporters were not participated in the decision making process of what was best for the club. Manchester United takeover was a microcosm of the complex issues that the organization faced in its attempt to deal with the corporate governance and stakeholder involvement (Cunningham & Harney, 2012). According to Kelso (2013), the main goal of the current owner was to deliver on the vision of club, where its commercial potential will be used at full and it will achieve success in the Premier League and on the global scale. Supporters, managers and players of Manchester United would be involved more into the game if there was given an ease with which the powerful corporate media interests had football’s governing institutions, unaccountable and private governance of football. For that purpose, the alternatives should be identified in the governance to football clubs in order the supporters would own the club itself (Budd & Levermore, 2004). In terms of delivering social value, the current position of Manchester United is to motivate and educate future generations to build better communities, according to its Corporate Social Responsibility (2015). Achieving of such goal can be exercised through free football sessions that help bringing the communities together, provision of learning opportunities about the football development, of equal educational possibilities for youngsters. Besides, MU Foundation is aimed to coach, train, and ensure personal development and life changing experience to young people which will be an important basis for future of football sports promotion. Thus, MU Club helps developing young footballers’ capabilities through its Schools and Schools’ camps, which create best opportunities for young players and help to express themselves in enjoying their football. Governance challenges of Manchester United and how it deals with them Hart (1995) considers that corporate government issues are raised whether there is an agency problem or conflict of interests within the organization, which involve the members of the business, owners, managers, employees. The other reason for corporate governance to appear is the transaction costs that such agency cannot deal with. Since the governance structure exists in the world of incomplete contracts, it can be seen as the mechanisms for making decisions in the initial contract. Sotiriadou and Bosscher (2013) state that with the growing attention to high performance sports, the governing responsibilities of the sport organization differ between the different context of commercial sport and nonprofit sports. While commercial entities are dominating in bringing profit, more shareholders invest in them and have later financial return on their investment. Manchester United is the example of such organization, where the direction accounts for control of activities, regulates behavior on behalf of the owners or shareholders and search for profit. As a part of its competitive strategy, Manchester United owner wanted to increase its revenue and profitability through expansion of its high growth of business and thus leverage the global community. However, there was also no single notion in the governance sense who owned the sport organization. García (2008) states that the governance of European football can be illustrated in the pyramid way where each of the levels takes different responsibilities of governing body, clubs and the players. According to the geographical level of regulatory authority they have, they have different powers. One of the biggest dilemmas of sport governance is that there is a great deal of uncertainties that come to the notion of ownership. In addition, there is a tension between the priorities of high performance sport and sport participation to be reflected in the governing role. Houlihan (2013) considers the central element of good governance is the existence of effective accountability processes. Giles (2015) states that one of the reasons why Manchester United is successful through years is that its players contribute much in the club well-being and despite who are its owners and directors, the team brings high results and the club continues to be good whoever is in charge. There is an importance of appropriate decision making process in addition to better processes that enable the team to produce better results. What priorities should be considered by senior management at Manchester United? The mutual structure of football club ownership can become the possible solution to future objectives. The members of such structure would be the owners of the club. For sure these members would have nominal shareholding capabilities that will not give them right to be sold at a profit or have value of appropriate sale of the club. Instead, Jaquiss (2000) offers the mutual model to represent a democratic style of ownership in order to return football role and independence in the society. In addition, the total football mutual concept would have such features of its structure that would enable the owners to build a healthy relationship with its supporters and the entire community. These are the clear statement of rules of the relationship nature and its importance as a guiding principle. The representative board will be charged to set standards and monitor the clubs success during the meeting of its community aims. In case of a chosen separate executive board, it will be responsible for running the club effectively and together with its structure and needs of the representative board. There is a need in membership to share in the capital of the club on a sale without any right. Executive should not be under pressure to secure a return for shareholders. The modern democratic structure of the election of board representative and community opinion will guarantee the successful implementation of an ownership model in top level clubs and will bring the ownership of football club its full circle, offering a solution to a wide range of issues that modern clubs face at the same time. The most successful option for supporter involvement in ownership is the supporter’s trust that would be provided a democratic framework for fans and would have more exclusive role in the management of their club. Robinson (2014) reports, that being in the top of the competition requires the club of Manchester United to spend another million to obtain the other skilled players in its staff. Thus, the major acquisitions of summer 2014 were to Manchester United the Spanish middle-fielder and English fullback, which are expected to bring a lot to the club. Reuters, (2015) report about the main priority of Manchester United senior management in its Champions League spot, while the FA Cup can offer a trophy in the first season in charge of Manchester United, however its current manager strives to restore the club’s image to Europes elite club competition after it missed out the current season following their worst Premier League. Conclusion Regarding the nature of the sports industry, in particular the football one, the role of stakeholders is extremely vital as they contribute positively to the success of the functions it performs (Metcalfe & Warde, 2002). Being involved in an important decision-making processes, they should be treated in the open way that would allow them to follow the transparent objectives and culture of trust and honesty and organizational resilience. This in turn would allow football industry to communicate with a wide range of supporters, shareholders, employees and commercial partners. While a big challenge is to tackle the perception of football club such as Manchester United having both football and business sides, the main message is that the club should work together in order to achieve the biggest goal, which is the success and off the pitch following the well-run business with the well-run football team. References Ashton, N. 2011. 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