4.2.2. Shareholders
Shareholders were considered important only by British clubs
during this study. To explain that is very easy: in France, football clubs are
not allowed to access private funds through Stock Exchange market. The
government forbid it. Shareholders often seek return on investment when they
invest their money. This is also true concerning football, like highlighted
Michie (2001), but it is not compulsory. Football clubs shareholders often
invest in football to benefit from its media exposition or to get advantages
like access to games, meetings with players. For example, Granada TV owns ten
percent of Liverpool F.C. because there is an efficient synergy between this
sport and television. Liverpool F.C.'s chairman, who owns fifty-one percent of
the club, is said not to be interested by return on investment. Passion drove
him to invest in the club. It is real because Liverpool F.C. has never paid any
dividend to its shareholders. Feelings have to be
How stakeholders influence football clubs' strategy ? September
2003
part of this investment because it is not a rational one: the
value of most English clubs has halved in recent years, according to the Sir
Norman Chester Centre (2002). It is also written in the same study that
football clubs, like each Plc., may not seek return on investment but must
endeavour to generate their satisfaction. Their source of power is obvious:
they own the club! When English football clubs entered the Stock Exchange
market, most of the owners kept a majority of shares. Only Manchester United
was fully sold on the market. At Liverpool F.C., Mr Moore is the chairman of
the club, with its 17,923 shares, about fifty-one percent of the club.
Considering that a share price is about £4,000, it is understandable that
his power on the club's management is important. That's why he is also
president of the club. With this function, he can set the strategy of the club
and appoint the key employees. Charismatic shareholders also uses of personal
connections for the benefit of their clubs. This is an example of an internal
stakeholder who runs the club. But Liverpool F.C. is composed of 34,000 shares
which belong to 1,500 different shareholders; some are external to the club.
This is a major challenge for a football club because these shareholders attend
to the annual general meetings; they discuss the club decisions and influence
the club's strategy. It is really important for the clubs that shareholders
agree with the strategy proposed, otherwise they will have to negotiate. As
British football clubs are Plc.'s, they can be targets of financial bid to
control them. It happened in Stoke City F.C., when an Icelandic group took over
the club and appointed the first overseas manager in the club history: Gudjon
Thordarson. It also important to remember again the bid of supporters Trusts
who now control AFC Bournemouth and Northampton Town FC. In July 2003, Roman
Abramovitch bought Chelsea F.C. for £26.8 million. This ex-manager of
Russian oil companies is now president of one of the most important English
club. Juventus Turin also sold 7,5 percent of the club to Saadi Kadhafi, son of
the Syrian Colonel, according to Attal (2003). He is now a professional player
in the Italian League. Those two people bought shares at an interesting price
for past shareholders and increased their power over these clubs. Take-overs
have to be considered as a danger by clubs. Who would like to see its club
owned by a Russian linked with the Mafia or the son of a terrorist dictator?
Clubs have to be aware of these dangers and should try to manage their current
shareholders to avoid any problem.
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