This piece of work analyses the legal and statutory environment for investments in football clubs in Germany, as opposed to the situation in England. Whereas German regulations limit the acquisition of shares of football clubs, the legal framework is much more liberal in England. The paper looks at the potential conflicts of interest involved with club ownership issues as well as at the arguments for and against the German “50 plus 1” rule and how this rule may cause a shortfall in competitiveness as compared to English football. Finally, the dissertation looks at doubts over the lawfulness of the rule in relation to European antitrust legislation and doubts over its effectiveness concerning legal loopholes provided by German corporation law.
The paper relied predominantly on the analysis of literature concerning the regulation of club ownership in England and Germany, whereas a significant amount of German literature was used.
Essentially, the research found that there is reason for severe scepticism about both the lawfulness and the effectiveness of the “50 plus 1” rule. It would probably not bear up against a test before the European Court of Justice. There are several opportunities in German corporate law to circumvent the rule.
Finally, the paper urges the German Football Association (DFB) to consider a softening of the regulations currently in place, and effective modifications of the underlying licensing system, respectively, as well as the introduction of supporters’ trusts and fit and proper person tests. Finally, the paper claims that competitive balance on a European club level can only be restored if club ownership issues are resolved on a European level.
Table of Contents
1. INTRODUCTION
1.1 Terms and definitions
1.2 Scope of this dissertation
1.3 Drivers of club ownership
1.4 Limited comparability of English and German football
1.5 Limitations to free trade with football club shares
1.6 Overview of the chapters of this dissertation
2. RESEARCH QUESTIONS
3. RESEARCH PROCESS AND METHODOLOGY
4. LITERATURE REVIEW
4.1 Literature related to football club ownership
4.2 Literature related to the lawfulness and effectiveness of rules regulating football club ownership
5. COMPARISON OF THE STRUCTURES FOR PROFESSIONAL FOOTBALL IN ENGLAND AND GERMANY
5.1 General remarks
5.2 The structure of English football clubs
5.2.1 The predominant legal forms for football clubs in England
5.2.2 History of legal forms for football clubs in England
5.2.3 English rules related to football club ownership
5.2.4 Financial performance of English football
5.2.5 Threat from external investors
5.3 The structure of German football clubs
5.3.1 Significance of tradition
5.3.2 Financial aspects of German football
5.3.3 The human factor
6. POTENTIAL CONFLICTS OF INTEREST IN CONNECTION WITH CLUB OWNERSHIP
6.1 The rat race
6.2 Potential conflicts of interest in case of the absence of rules limiting club ownership
6.3 Conflicts of interest in relation between English and German football
6.4 Conflicts of interest among the stakeholders of a football club
6.5 Protection of competition or competitors?
7. THE GERMAN “50 plus 1” RULE
7.1 Definition, history and purpose of the “50 plus 1” rule
7.1.1 Membership associations
7.1.2 The governance vacuum within membership associations
7.1.3 Spin-off of football branches
7.1.4 Exception to the “50 plus 1” rule
7.1.5 Purpose of the “50 plus 1” rule
7.1.6 Capability of the rule to safeguard its intentions and possible circumventions
7.1.6.1 Main arguments in favour of the “50 plus 1” rule
7.1.6.2 German football clubs as investment targets
7.1.6.3 Main arguments in opposition of the “50 plus 1” rule
8. MODIFICATIONS OF THE “50 plus 1” RULE AND ALTERNATIVE SOLUTIONS
8.1 Modifications of the “50 plus 1” rule
8.1.1 Extension of the licensing system
8.2 Alternative solutions
8.2.1 Supporters’ involvement
8.2.2 A “Fit and Proper Person Test” for Germany?
Research Objectives and Themes
This dissertation examines the structural differences in professional football club ownership between England and Germany, specifically evaluating the legal and economic implications of the German “50 plus 1” rule. It aims to determine if current restrictions on club ownership in Germany place its clubs at a competitive disadvantage compared to English counterparts and explores the compatibility of these regulations with European antitrust legislation.
- The legal environment for investment in German vs. English football clubs.
- The effectiveness and lawfulness of the German “50 plus 1” rule.
- Potential conflicts of interest associated with various ownership models.
- Competitive balance and the impact of regulation on international success.
- Potential modifications to German regulations and alternative governance solutions.
Excerpt from the Book
7.1.2 The governance vacuum within membership associations
This legal framework creates dysfunctional incentives, as there are no incentives to generate and accumulate profits. On the other hand, club representatives have strong incentives to reinvest all available cash flows and even enter loans against the club’s future because the only way to benefit from the Verein personally is through its sporting success and glory (Dietl and Franck, 2007: 664). Theoretically, all the power within a Verein is with the members, not with the providers of capital. Interests of the members are usually rather heterogeneous and can barely be aggregated, and as there are no governance mechanisms in a Verein comparable to the ones in corporations, the result is a clear governance vacuum. This, coupled with the mentioned dysfunctional incentives, results in a situation that invites the elected representatives to seize control of German football clubs to derive personal utility from the fame and publicity associated with success, without being personally liable for financial losses of the club (Dietl and Franck, 2007: 665).
Summary of Chapters
1. INTRODUCTION: Outlines the scope of the dissertation, defining key terms like multi-club ownership and introducing the commercialisation of football as a background for the comparative study.
2. RESEARCH QUESTIONS: Formulates the core inquiries regarding competitive disadvantages in Germany and the lawfulness of ownership restrictions under European antitrust law.
3. RESEARCH PROCESS AND METHODOLOGY: Details the qualitative, deductive legal research approach, including the use of semi-structured interviews with industry representatives.
4. LITERATURE REVIEW: Analyzes the limited body of academic literature on the subject, highlighting the specific focus on German ownership regulations.
5. COMPARISON OF THE STRUCTURES FOR PROFESSIONAL FOOTBALL IN ENGLAND AND GERMANY: Compares the legal forms and corporate governance models of football clubs in both countries, contrasting English market-driven approaches with German traditional structures.
6. POTENTIAL CONFLICTS OF INTEREST IN CONNECTION WITH CLUB OWNERSHIP: Illustrates various conflicts, including the "rat race" for Champions League revenue, and the tension between protecting clubs versus protecting competition.
7. THE GERMAN “50 plus 1” RULE: Explores the history, purpose, and legal challenges of the "50 plus 1" rule, examining its effectiveness and potential for circumvention through legal loopholes.
8. MODIFICATIONS OF THE “50 plus 1” RULE AND ALTERNATIVE SOLUTIONS: Proposes amendments to the licensing system and alternative measures, such as enhanced supporter involvement and the implementation of a "Fit and Proper Person Test" in Germany.
Keywords
50 plus 1 rule, football club ownership, professional football, corporate governance, European antitrust legislation, Bundesliga, Premier League, competitive balance, membership association, Vereine, investment, multi-club ownership, sport regulation, stakeholder interests, fit and proper person test.
Frequently Asked Questions
What is the core subject of this dissertation?
The dissertation analyzes the legal and economic differences in football club ownership between England and Germany, with a specific focus on the German "50 plus 1" rule.
What are the central thematic areas covered?
The study covers corporate governance, the impact of external investment, international competitiveness in European football, and the compatibility of national club ownership rules with European antitrust laws.
What is the primary objective of this research?
The primary goal is to assess whether the restrictive German ownership model hinders the competitiveness of German football clubs on a European level and whether these rules are legally sound.
Which research methodology was utilized?
The research is qualitative and deductive, relying primarily on a legal analysis of existing frameworks, literature, and semi-structured interviews with experts in sports marketing.
What does the main body of the work address?
It provides a comparative analysis of English and German football structures, examines conflicts of interest in ownership, critiques the "50 plus 1" rule, and proposes potential modifications for a more sustainable model.
Which keywords best characterize this work?
Key terms include "50 plus 1 rule," "corporate governance," "football club ownership," "European antitrust legislation," and "competitive balance."
What does the author conclude regarding the "50 plus 1" rule?
The author expresses skepticism, suggesting the rule may not withstand scrutiny before the European Court of Justice and highlighting several loopholes in German corporate law that allow the rule to be circumvented.
What specific alternatives to the "50 plus 1" rule does the author suggest?
The author suggests strengthening the licensing system, introducing a "Fit and Proper Person Test" for club directors and owners, and fostering more structured supporter involvement through trusts.
- Citar trabajo
- Dr. Max Kindler (Autor), 2008, Football Club Ownership in England and Germany , Múnich, GRIN Verlag, https://www.grin.com/document/120479
