Private vs Public Ownership

Private vs Public Ownership


A study has found that football clubs registered
as public limited companies have a better firm
performance compared with football clubs registered as private limited companies; meaning those
registered as public limited companies have better financial performance than those as
private limited companies. Football clubs within the English premier
league are housed in one of the following formation of companies;
i) A public limited company regulated by the stock exchange to which it isregistered or ii) a private limited company which has shareholders
who hold sway over the direction in which thefootball club is going; this is the arrangement for the majority of clubs in the English Premier League. An example of how shareholders can change
a club is when Chelsea almost went into administration under Ken Bates, before Roman Abramovich became the majority shareholder – and Chelsea’s future changes. The main exception to this rule is Arsenal,
as they have a parent company. The parent company is a public limited company; Arsenal Holdings PLC. Public Limited Companies have their
shares listed on a stock exchange where they are traded and regulations must be adhered to. Although Arsenal’s shareholder is a public
limited company, their shares are traded infrequently onthe NEX Exchange, which itself is a niche exchange. Public limited companies have far more stringent
rules and this was highlighted by the purchase of shares of Arsenal Holdings PLC by Stan Kroenke. As the majority shareholder of Arsenal Holdings PLC, Kroenke has to make an offer on any shares that are put forward for sale, this is to comply
with company law rules. Although public limited companies have more
laws and corporate governance protocols to follow there are still difficulties that arise and Kroenke’s purchase shares of Arsenal Holdings
PLC is a prime example of this. Kroenke was not trusted when he purchased
shares in the company in 2007. Therefore, there was a sell off of shares
between Kroenke and the second largest shareholder Alisher Usmanov. Over a period of four years Kroenke went from
being seen as a hostile shareholder to now an ally of Arsenal football club and a non
executive director of Arsenal Holdings PLC. Kroenke holds 66.64% of Arsenal Holdings PLC and Usmanov holds 29.25%. As mentioned, Public limited companies have
significant governance rules and laws to abide by and this gives a significant security to the company as every move made by the public limited companies
is scrutinised. Private Limited companies on the other hand
do not have the stringent rules to follow. An example of how a single shareholder can
change a football club, with little resistance is Hull City AFC. In December 2010, Assem Allam and his son
Ehab Allem took over Hull City AFC for £1 on the condition that they invested £30 million into the football club. As sole shareholders, through a
private limited company and the only two directors of Hull City AFC, there are no barriers to stop any changes by the board. This became evident in the summer of 2013,
when Assem Allam announced that the club would dispense its 109 year
old name and would be remarketed as Hull Tigers. This received strong criticism from the fans; however, Allam retorted “nobody questions my decisions in my business”. In normal circumstances a private limited
company would not need approval to change their name however, as Hull City AFC belongs to the football association, the association gets the final say. The FA rejected the name on a number of occasions
and this infuriated Allem who stated that he would “not invest a penny more in
the club” unless he is allowed to change the club’s name ​to Hull Tigers. In the same interview, Allam said, “I have
never been a football fan. I am still not a football fan. I am a community fan.” Since the year 2000 forty four football clubs
across the Football League have been placed into administration, which is a significant number and shows that there is a fundamental flaw in the management of football clubs. Both forms of company seemed to be flawed when it comes to running football clubs however, public limited
companies are much more regulated than private limited companies and therefore, there is
more scrutiny over the actions taken by the clubs which appears to lead to greater financial protection. The evidence also identifies that it is imperative that clubs are protected and are not run into the
ground by owners as football clubs are part of local communities.

Leave a Response

Your email address will not be published. Required fields are marked *

71 thoughts on “Private vs Public Ownership”

  • literature shows that privately owned clubs (e.g. rich sugar daddy owners) are win maximisation seekers whilst stock market ownership model is a profit maximisation model. Sugar daddy owners are seen as wreckless in pursuit of success.

  • There really needs to be more transparency in how clubs are run. As said in the video, a football club is directly or indirectly responsible for thousands of jobs/businesses and it can all come crumbling down a bit too easily.
    Big money can come and go far too easily and quickly in football, jeopardising long term stability. This coming from a Chelsea fan…I love Roman and all he's done but Chelsea can't be reliant on his billions indefinitely.

  • Being own by some company or a business man is really bs, I mean you sell the club to someone who just cares about profit, they don't care if the fans are happy just as long they keep earning money, at least in Portugal the clubs are own by the fans in which every 4 years there is an election for club President, if the guy elected starts to fuck the club he can be sacked and things like the hull city case can never happen.

  • you should really do more of the "tactics explain" videos!! do some for the world cup winners!! I would love to see them. not just the final match but important games as well.

  • Hello,

    The official name of the club is still hull city afc but you'll struggle to find it anywhere at the club. The badge changed getting rid of the name, every aspect of our internet presence of social media refers to us as hull tigers.

    This is why it means a lot to see your channel use our proper badge, with our name and nickname.

    Great videos btw

  • Please a video on the fall of Le Mans FC. They had a really strong side in 07/08 under Rudi Garcia, now they are in 5th tier of french football.

  • The music you guys play on the background of the whiteboard videos is super smooth . . . love the whiteboard videos and you guy's taste in music.

  • This is really good but I would like to see this episode expanded to continental Europe and look at ownership of other clubs like RM and FCB.

  • Thanks for including my team.(Hullcityafc)

    We honestly feel like a powerless crowd, with the fa unable to act. A 700% annual in ticket fees for children and old people with no mention in news. Thousands of fans cancelling season tickets (Prior to Marco Silva) and a frequent attendance below our league 2 standards.

    Finally just like to say I think the name change was to do with the power struggle at the club; the Allams own the club but the council own the stadium.

    Allam prior to the name change frequently wanted to build a new stadium but due to the rights of the council he couldn't. Therefore, I speculate that he wished to change the name so that the stadium is not linked to the club and he could carry out his plans. I could be wrong but it makes sense…

  • great video as usual. you guys could compare the English ownership model with the fan ownership of the Bundesliga, Spain (Specially Real, Barca and Bilbao) and most clubs in South America!

  • your Ligue has the best players in the world but i am really happy that we have in Germany stricter rules in privat ownership like the 50+1 rule. Although Teams like Leipzig, Hoffenheim, Leverkusen or Wolfsburg exist or Ismaik more or less took over 1860 Munich. Hopefully we never get rid oft this rule. Many people unfortunately want this.

    Anyway, you do a great job guys. Love watching your Videos.

    Greetings from FC Schalke 04 and Germany 🙂

  • this shows you how important that you DONT piss off your owner

    complain/protest = no investment into your favourite club = you watch your club being shit and suffer

  • Love this channel, great content and whoever narrates the videos has the most unbelievably relaxing voice it's ridiculous! Please could we have a video on arguments for/against more technology in football?

  • You should have mentioned a bit on how clubs are runned outside England… Especially teams like Barça and Real Madrid that are still owend by the fans and are, in my opinion, the best runned clubs in the world

  • as an arsenal fan i can tell you no one likes kroenke still, i'm still hoping he gets bought out from his shares because none of the sport teams he owns are any good i always wanted usmanov to take over or at least the nigerian man ( i forgot his name but he's in the concrete business i believe) to finally launch a bid

  • This is where it makes sense why MLS NBA Nfl and MLB have salary capes the competition is even and teams don't go broke

  • can u do a video on Bangor FCs downfall, they got relegated twice in a row and now dont have a league to play in, one of Northern Irelands more successful "local" clubs, very well supported and known, i would love love to see this

  • Do a video on Partick thistles rise from league 2 to the spl and now having a 5 million pound training facility being built

  • Though the book "Soccernomics" suggests that it is relatively easy for a club to phoenix if they get blown up financially.  So is it more of a problem that these clubs don't take fan input and potentially stagnate in their footballing or that they are financially stable.  Keep in mind Real Madrid, the biggest football club in the world, is half the size of the smallest fortune five hundred company (at least at the time of the writing of the most recent edition of "Soccernomics")  Football is not big business for the clubs.

  • It would be interesting to see how this type of ownership compares to the 51%-model that they use in Bundesliga in respect to the amount of clubs going into administration.

  • You didn't talk about 100% supporters owned clubs. Where club members who are fans pays an annual membership fee to support the club. The administration of the club elects a President voted by its members. But anyone running for club president is required to invest money as a patron into the club. It could be his own money or funds guaranteed by his own supporters. A great example for this is Real Madrid and Barcelona

  • all clubs should be fan-owned. fotball is not an industry like all others, there are different parameters.

  • Hull Tigers is Better name… damn.. it can change better… and actually the club mascot is tiger tooo…

  • not gonna lie. arsenal fans do not like kroenke. he is only in it for the money. usminov actually cares about the club

  • One flaw here bates bought Chelsea for £1 literally and sold the shares to abramovich for 30 or 40 million

  • They are both quasi-privately owned, not publicly owned. Public ownership is ownership by an elected state. Public assets cannot be sold by individuals and members of the state have no incentive and limited capability to maximize their value.

  • incorporated as a plc did not mean it is a listed company…..listed company certainly better performance as regulated

  • It's very dangerous to make this type of conclusion. Strict government regulation have almost always been damaging to firms. Take for sad example the Gender Pay Act, a significant law that persuaded Ford to reduce the size of the Dagenham plant which now mainly makes engines and pull out of British business somewhat (not that I don't believe in equal pay, I do). Government regulations are bad for an economy and not every action a football club takes is scrutinised – LSE is free from gov intervention hence how it functions properly. The fact that stocks and shares move around concerning the football clubs is why no individual can damage the clubs hence how public LCs perform better than private LCs. PLCs perform better than private ones because shares change hands frequently restricting the powers of any certain individual whereas private companies are ran by an owner who can run the club as stable or unstable as they can. It is the lack of control, rather than the greater control, which means that public limited companies perform better than private limited companies, and if there were such strict regulations on the stock exchange and the free market, the British economy would come to a standstill.

  • The growth of china’s state sector and the number of allegedly capitalist western multinationals in joint ventures with the communist party’s SOEs prove that state ownership can and does work