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

overnance is a critical component of managing sport organisations! how to best monitor organisational activities" deliver benefits to organisations and guide an organisation is critical to organisational 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 here has suggested that we can draw on existing theories to understand how boards wor$ and use this information to design appropriate board structures for sport organisations. %mpirical studies should be conducted to examine board composition in sport organisations" such as board si&e and board independences. 'uture research is needed to explore the differences in board roles and board composition between profit and non(profit sport organisations" between national and local sport organisations" between professional and amateur sport organisations" and between Western and Non(Western sport organisations. )t has been argued here that sport organisations are in a dynamic and competitive environment *Amis" Slac$" + ,inings" -../a0. 1omparing the differences in board governance within the sport sector can help sport organisations understand themselves and their rival organisations and in turn stand out in a competitive environment. According to an ancient 1hinese military treatise" titled #he Art of War written during the 2th century 31 by Sun #&u" if you $now both yourself and your enemy" you will come out of one hundred battles with one hundred victories *#an" -..10. )n addition" examining differences in board governance between sport and non(sport sectors can not only help us clarify differences between the sport sector and non(sport sectors but also help researchers develop a framewor$ or a theory for sport governance. We can try to develop some logical considerations on the economic nature of professional football teams" generating some insights on the governance of this special $ind of business. 'irstly" it is 4uite evident that professional football team management re4uires a good sport performance to be sustained by a corresponding financial performance. )t is not possible to assume shareholder value maximi&ation as the ultimate goal of the firm. )ndeed there are some crucial sta$eholders who share with the firm essential resources that cannot be easily replicate. #o a certain extent" these sta$eholders can be considered as firm suppliers" because they have the benefit of a ris$less income granted by contractual agreements with the firm" in exchange for their professional activities" but they are also residual claimants" since they might obtain considerable economic advantages from a successful season. #his further aspect entitles some prominent sta$eholders to have some informal influence on management decisions and sometimes in corporate governance too. 5oo$ing at the whole business system these sta$eholders could be regarded as virtual shareholders *1apasso" 16620 and the ultimate goal becomes a negotiated system of ob7ectives directed towards the value maximi&ation of the business system as a whole sub7ect to some specific constraints. 8easoning on the financial data" we observe how net losses are recurrent in the inco me statements of many teams" mainly due to the high costs of players and coaches. Also in this case" the systemic approach could help. )f we consider the value added *gross operating margin plus labour costs0" rather than net income" the analysis of the economic e4uilibrium of professional football team would lead to different conclusions. 9nder a systemic perspective" the football teams actually create economic value" the problem lies in the distribution of the value created between profit and wages" but m oreover in the allocation of the ris$ among the multiple sta$eholders. Some residual claimants *players and coaches0 obtain considerable benefits from successful sporting performances but can also count on a significant floor to their economic returns in t he adverse scenarios. )n addition it is possible to consider that when a player performs particularly well" and many competing teams try to hire him" normally his agent manages to get relevant salary increases" notwithstanding the existing contract" but if a well paid player performs badly" the team:s management cannot reduce his base salary. )n this perspective ris$

allocation is definitely asymmetric. #o correct" at least in some measure" this situation a viable solution could be a stronger correlation between salary and performance" either individual or team performance. Not casually there is a general 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 *part of the payment can be indexed to future performances of the transferred player0. #he underlying rationale 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 1orporate overnance of the football clubs tells that the 'ootball clubs that are listed are trying to adhere to the re4uirements of the 9; 1orporate overnance 1ode even though it is not mandatory. #his shows the commitment of these clubs to implement best practices of 1orporate overnance. ,owever" the details provided in the 1orporate overnance guidelines of these clubs are insufficient and doesn:t consider many of the important principles of the 9; 1orporate overnance 1ode" especially the training of the 3oard members" 3oard evaluation" procedure for forming committees in detail. A flurry of investigations" scandals and hostile ta$eovers" indicates the importance of better corporate governance in football. #he clubs are bought as a matter of fact for pride than running it as a professional organi&ation. #he decrease in number of clubs getting de(listed from the Stoc$ exchanges is also an indicator of poor corporate governance.

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