The ball’s in... whose court?

Last week, chairman of Leicestershire County Cricket Club Neil Davidson hit the news. He is refusing to step down amid calls from the head coach and team to resign on the grounds of alleged interference in team matters.

Davidson insisted, “My job as chairman is to represent the members ... the players are trying to set the agenda ... as a members’ club, it is the board who are supposed to run the club’s affairs on behalf of those members. I was appointed by the board, and am accountable to it.” (http://news.bbc.co.uk/sport1/hi/cricket/counties/leicestershire/8940096.stm)

Everything Davidson stated here is true. But the controversy raises bigger questions over the corporate governance practices in sports clubs. Where exactly do the interests of shareholders and fans overlap (bearing in mind that fans themselves are often shareholders)? Can and should the performance on the pitch and the performance in the boardroom be kept separate?

Closely related to this is the emergence of issue-centred groups that contribute to a debate about the future governance of various sports. An example of this is the campaign led and orchestrated by Manchester United Supporters Trust (MUST) to secure a meaningful ownership stake in their football club in light of the takeover of Manchester United by the Glazer family. The latter also led to the formation of FC United of Manchester (FCUM) a semi-professional football club set up by supporters, disaffected by the Glazer takeover.

The formation of MUST and FCUM can be located within a wider attempt by supporters to try and influence the running of the game - raising questions of regulation and control - but also of participation and exclusion, of the organisation and exercise of power in sports. There are now over one hundred supporter trusts across England, Wales and Scotland, formed as democratic, transparent, representative bodies for fans whose aim is to ensure supporter representation at boardroom level through the collective ownership of shares.

Sports clubs are notoriously poor, compared with other corporations, at complying with corporate governance regulation and codes of practice. One report found, for example, that less than a quarter of football clubs responding to their survey had an internal audit committee and, even where clubs had an audit committee, almost one third of those clubs reported there being no regular board review of risk assessment reports: practices which are now seen as foundational to good corporate governance. (Sean Hamil et al., (2004) "The corporate governance of professional football clubs", Corporate Governance, Vol. 4 Iss: 2, pp.44 – 51).

It seems that sports clubs would need to implement dramatic changes in order to come into line with the UK Corporate Governance Code. An alternative is for sports to be issued with a tailored set of guidelines that are more suited to reconciling the conflicts of interest underlying decision making in this sector, not unlike the guidelines published for the voluntary sector and building societies by NCVO and BSA respectively. Without some regulatory action, disputes over the division of responsibility, authority and fiduciary duty are bound to continue, with everyone wondering in just whose court the power lies.