Off Pitch: Football's Financial Integrity Weaknesses, and How to Strengthen Them

Abstract

Men's professional football is the biggest sport in the world, producing (by our estimate) US $33 billion a year. All is not well in the sector, however, with regular scandals raising questions about the role of money in the sport. The 2015 turmoil around FIFA is obviously the most well known example, creating a crisis in confidence in the sector. This study examines these questions, and the financial integrity weaknesses they reveal; it also offers ideas to strengthen the weaknesses. The study argues that football's financial integrity weaknesses extend far beyond FIFA. These weaknesses have emerged largely because the sector is dominated by a small elite of clubs, players and owners centered in Europe's top leagues. The thousands of clubs beyond this elite have very little resources, constituting a vast base of 'have-nots' in football's financial pyramid. This pyramid developed in recent decades, fuelled by concentrated growth in new revenue sources (like sponsorships, and broadcasting). The growth has also led to increasingly complex transactions-in player transfers, club ownership and financing (and more)-and an expansion in opportunities for illicit practices like match-fixing, money laundering and human trafficking. We argue that football's governing bodies-including FIFA-helped establish this pyramid. We explore the structural weaknesses of this pyramid by looking at five pillars of financial integrity (using data drawn from UEFA, FIFA, clubs, primary research, and interviews). In the first pillar of Financial Transparency and Literacy we find that a vast majority of the world's clubs and governing bodies publish no financial data, leaving a vast dark space with no transparency. In the second pillar of Financial Sustainability we estimate that a majority of global clubs and governing bodies are at 'medium to high risk' of financial failure. We find, additionally, that European tax debts have grown despite Financial Fair Play, and confederations and FIFA contribute to a pattern of weak Fiscal Responsibility. We then create a new metric of Financial Concentration and find that the football sector is at 'high risk' of over-concentration, which poses existential questions for many clubs and even leagues. In the final pillar of Social Responsibility and Moral Reputation, we find that football's governing bodies face a crisis of legitimacy stemming from a failure to tackle moral turpitude, set standards and regulate effectively. We suggest a set of reforms to restructure FIFA in particular, separating its functions and stressing its regulatory role.

Private order building: the state in the role of the civil society and the case of FIFA

“…This creates a pyramid in which a vast majority of clubs and governing bodies are at '''medium to high risk' of financial failure.'' 99 To address these concerns, UEFA introduced new regulations that are in stark contrast to what is generally acceptable under the EU competition law.…”

Financial performance and corporate diversification strategies in professional football – evidence from the English Premier League

“…Breuer, 2018, 2016b;Wilson et al, 2013), amongst other factors, have been recently examined, almost no academic research has focused empirically on the financial outcome of both corporate diversification strategies in the football market context. Existing diversification research in this context concentrates on business diversification of a few clubs (Teichmann, 2007), clubs' historical narratives (Andrews, 2015), internationalization case studies (van Overloop, 2015;Post and Druker, 2018), the league level (Andrews and Harrington, 2016) or a conceptual framework (Schmidt and Holzmayer, 2018). This lack of empirical research on business and international diversification in the football industry is puzzling, as the interplay between the current growth trajectory, volatile sportive performance, and influential wealthy investors provides promising ground for investigating corporate diversification strategies and their financial effects.…”

Sports Elementals and Value-Added Factors in Promotion of Football in Cross River State, Nigeria

“…As a result people began to associate and are a supporter (fans) of a particular club. In light of this, in the word of Andrews and Harrington (2016) sports bind people together in local communities and over national boundaries. People across the world play sports and identify with sports teams and events, looking to these for a sense of identity, deep purpose and passing entertainment.…”