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Journal of Sports Economics
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Governance Failure and Financial Crisis in German Football

Helmut M. Dietl

University of Zurich

Egon Franck

University of Zurich

The peculiar German football governance structure may be well suited to prevent integrity problems resulting from multiple club ownership or from ownership by "undesired'' persons or entities. However, this effect comes at a price. In the vacuum of power generated within large member associations, residual rights of control are de facto allocated to representatives who do not hold residual claims. Because these representatives externalize substantial parts of the risk associated with investment decisions, they are particularly ill-suited for managing the business of professional football, which has been transformed into a "gamble on success'' by ever-increasing revenue differentials between winners and losers. At the same time, low accounting standards for members clubs, combined with "soft'' law enforcement, invite club representatives to hide their consumption on the job behavior until their clubs are insolvent.

Key Words: German football • league governance • member associations • overinvestment • 50 + 1 rule • licensing system

This version was published on December 1, 2007

Journal of Sports Economics, Vol. 8, No. 6, 662-669 (2007)
DOI: 10.1177/1527002506297022
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