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Fans Who Own Their Teams
Tue, 05/22/2012 - 14:22
The idea of fans owning their own sports teams has never gained much ground in the U.S., in part because the sports leagues have generally prohibited it (with the approval of the U.S. Government, which grants antitrust exemptions to the major leagues). The salient exception is the Green Bay Packers, renowned for being owned by its loyal fans. In England and Europe, however, the issue is less about whether fans can own a sports team but rather how to make it work well. In the Guardian (UK), Dave Boyle has a provocative analysis, “Would Your Football Club be Better Run as a Cooperative?”
Boyle has been the CEO of Supporters Direct for the past three years, an organization founded in 2000 to "promote sustainable spectator sports clubs based on supporters' involvement and community ownership.” The fact that Supporters Direct even exists shows how much more advanced the UK is on cooperative ownership of sports teams! In any case, Boyle writes:
What's the point of a football club? If we look at the motives of its owners, we'd get some strange answers. It could be a millionaire's pension fund, a property development opportunity, a shot at a capital gain, a millstone, a tax dodge, an ego-trip, a nest-egg, a birthday present, a promotional tool, a political tool; the list is far from exhaustive.
No club was ever founded with this in mind, of course. They began life as genuine clubs, open to membership from the community of players, and later supporters, who had an interest in their success.
But over time – mainly for the need to raise capital to build stadia – clubs became companies, and lots of members gave way to a smaller number of shareholders. They coalesced over time and soon clubs were dominated by a small handful of people, most eventually becoming the private property of a single person.
This seems at odds with the true nature of the enterprise, which has an inherently public character. Football's magic is to take all the emotions that define what a club means to one fan and make it equate to those of every one of the hundreds, thousands or millions of people who share the same allegiance. Football serves a deep human need for community, and that – plus the unscripted drama of the game – explains its success. We love our clubs because of what they are, not for what they do for their owners or employees.
That's why a co-operative form is a perfect fit with football, because in a co-op economics flow from purpose, not the other way around....
But running a sports team as a fan coop introduces its own problems. First, fans usually come to buy shares in a club only after it is beset by a financial disaster. While fans may therefore be able to acquire equity shares at a bargain price, they also must manage a team facing formidable financial difficulties with very little working capital. Then, even if a fan-owned team succeeds both on the field and financially, it may face debilitating bidding wars with rich private owners of other teams. This can be either ruinous to the fan-owned teams or demoralizing to the overall quality of competition in the league.
Notwithstanding these problems, fans own a controlling stake in 25 of the teams in the Union of European Football Association, Boyle writes. Not bad.
A recent piece in The Economist, “Buy This Team” looked at the issue of fan-owned teams in greater depth. It noted how the AFC Winbledon football club was bought by fans who pay £25 a year, which created an ownership entity, Dons Trust. Fans are entitled to "vote on big issues, such as moving the club or taking out a loan. They also elect the team’s directors." The Economist continues:
To raise over £2m to buy a ground, traditional leverage was combined with a share offer to fans. According to the Dons Trust chairman, Matthew Breach, crowdfunding generated not only money but also loyalty, which has been essential in maintaining support as the club has risen through the divisions.
A less happy example is provided by Ebbsfleet United. In 2008 three-quarters of Ebbsfleet was sold to MyFootballClub and its 27,000 subscribers, each paying £35. Subscribers not only elect a management team but also vote on which players to sign, how much a season ticket should cost and what colour the kit should be. At first members were allowed to vote on the team and its tactics, too, but this proved not conducive to effective management.
As all this suggests, sports teams as cooperatives is both a natural and potentially disastrous management scheme. It’s natural because sports is a community activity at heart. Why shouldn’t the fans own and control their own teams? Yet fan management is potentially disastrous because a sports team, while obviously beholden to certain economic realities, is fundamentally based on volatile, non-rational emotions and unpredictable performance. Sporting events are not like most other economic activities, which tend to have some regularity to them if not tangible output.
In any case, what a boon to economic literacy to be able to entertain these options in the U.K. and Europe! We need more venues in which to explore how community aspirations and economic self-determination may be artfully combined.