The Choice of Legal Form and its Effects on Good Governance: A Case Study of an Austrian Professional Soccer Club

The corporate governance of professional soccer clubs (PSCs) has come under close scrutiny as the financial situation of PSCs has worsened and numerous governance failures have occurred in European soccer. Literature argues that the choice of legal form is a main driver of good governance and the primary beneficiaries of enhanced corporate governance standards would be the PSCs themselves. The aim of this paper is therefore to investigate the impact of different legal forms on the level of good governance. By using a case study approach, the prevailing forms of the traditional non-profit association, business management agreement and spin-off of the first team into a corporation are assessed with regards to their degree of good governance. The Austrian PSC investigated has experienced all three legal forms within a time frame of ten years, which displays a unique setting. The measurement against the principles of good governance introduced in the ‘Guide for Football Clubs’ identifies significant failures for the legal forms of the non-profit association and the business management agreement. Results reveal that in terms of good governance the spin-off of the first team into a corporation seems to be the most adequate legal form for medium and large size PSCs.