‘They think it’s all over – it is (for) now
By Peter Snowdon | 28/04/2021 in Blog posts
Reflections on the European Super League debacle
As well as providing the UK media with the opportunity to brush off their favourite footballing puns, the spectacular own goal of the European Super League (ESL) may also be a symptom of governance failures at the companies that control the clubs.
Although it is highly unlikely that there has been any breach of company law, the Companies Act 2006 does provide a guide as to the approach the boards of the clubs might have taken when considering the proposals.
Perhaps the best-known directors’ duty is the requirement for directors to promote the success of the company. Directors are required to act in a way that they consider, in good faith, would be most likely to promote the success of the company for the benefit of its shareholders as a whole. When making decisions, directors must consider the likely consequences for stakeholders including employees, suppliers, customers and communities. Directors are also required to consider a number of other factors including the reputation of the company.
Had the six English clubs successfully joined the ESL they would have enjoyed significant financial benefits. It has been said that JPMorgan Chase had underwritten the new competition to the tune of 3.25 billion Euro and that each of the founder members would have benefitted from an initial payment of 200-300 million Euro. Millions more would have followed and there is little doubt that the impetus for the arrangements would have come from the owners of the clubs.
The ESL would have operated on the basis of the US sports model such that the 15 founder clubs would never have been relegated, guaranteeing the owners a more stable investment return. Other arrangements would have included greater control over broadcasting revenues.
At first sight, one can understand why a director might have concluded that the financial benefits of the ESL were such that deciding to join was a ‘no-brainer’ against the benchmark of promoting the success of the company and the interests of their members.
Yet a simple financial analysis ignores the special nature of football clubs, as Simon Kuper observed in the Financial Times it seems the decision makers ‘[failed] to grasp that [football] clubs are more than for-profit businesses’ . The apparent focus on potential financial rewards ignored the nature and standing of the English clubs, a point not missed by politicians. The directors seemingly overlooked or underplayed the need to consider the consequences for stakeholders, especially the fans and the clubs’ wider local communities.
This seems surprising as the importance of fans as stakeholders is acknowledged by all the clubs concerned. A good example is the Tottenham Hotspur 2020 Annual Report which includes the following passage regarding ‘other stakeholders’:
Fans are the lifeblood of our club and are always foremost in our decision-making
the board meets regularly with the Tottenham Hotspur Supporters Trust, a representative of the fan base, to discuss the key issues affecting fans.
It seems unlikely that the fans views were ‘foremost’ when the club made the decision to join the ESL.
Furthermore, football’s relationship with the public reaches far beyond those who are willing, or able to pay to see games, as anyone who has been in Manchester on Derby day will testify, the city ‘lives’ football.
Did the boards of the clubs consider the potential consequences for their wider community? Had the ESL gone ahead it seems that there would have been a focus on the growing Asian interest in European football. As with American football it seems likely that some games would have been played away from the home venues, clubs renamed to lessen their geographical reference and the possibility of a gradual, but inexorable, detachment from their local communities.
It is surprising that the club boards appear not to have given much thought to managing the reaction to the ESL proposals. According to the press, Florentino Perez, who would have been chair of the ESL, has said that the ESL has been four years in the planning. If that is accurate, it is fair to ask why the boards of the English clubs were not better prepared – what strategic planning did they do? How could the response to the proposals have been such a surprise?
The ESL affair has been a reputational disaster for the clubs involved. If the directors did consider this factor when decision making, it seems fair to say their judgement was spectacularly flawed. Did the directors seek to suggest ‘road testing’ the idea with fan groups? Did the non-executive directors ask for non-financial management information on the possible consequences? Did they consider how the decision should be communicated both internally and externally?
The absence of any obvious supporting PR was a prominent feature of the affair. The public face of the clubs, the managers and the players, had seemingly been left in the dark. Watching the normally ebullient Jurgen Klopp, a key asset of Liverpool and an important stakeholder at the club, attempting to field journalists’ questions about proposals from which he had been excluded, was surely evidence of poor planning. How could the clubs have got it so wrong?
Others with commercial interests in the game may have arrived at a better view on the potential reputational damage, observers have noted the complete absence of broadcasters’ support suggesting that that BT Sport, Sky and Canal + all saw the risks.
In their defence the directors may argue that there was little they could realistically have done when their owners were so committed to the ESL and the riches it would have delivered. Yet, while this may be true, surely it was incumbent upon them properly to assess the proposals and, where appropriate, challenge them.
 A helpful summary of these duties is available on the Companies House website – 7 duties of a company director
 Simon Kuper Super League would break football’s essential promise Financial Times 19 April 2021