Column: Buying a professional football team? Ten lessons learned: #8 - The president needs to back off and respect the chain of command, otherwise only lame ducks will stay onboard

25 August 2020

Berlusconi
Photo: PA Images For many years the former Italian President Silvio Berlusconi was a high profiled and very powerful President and owner of AC Milan.

The bond between a football club's top management trio - the president, the CEO and the sporting director - needs to be extremely strong. Their relationship must be based on trust, and it needs to be crystal clear exactly who is responsible for what.

Alexander Janssen was involved on the ownership side of two clubs, one in Belgium and the other in Spain, where he learned that the football industry is not only extremely competitive but very, very different to the environment that he used to work in.

As a successful consultant with deep knowledge of turnarounds, he inexplicably experienced a sudden disregard of the discipline and long-term mindset that normally characterised his every move.

 Janssen has written ten columns about the insights he gained from being involved with those two clubs. This is the eighth.

Alexander Janssen, Sports Investor contact@offthepitch.com

Today we elaborate on lesson #8: STRENGTHEN THE CHAIN OF COMMAND

At most football clubs, the management committee (or leadership team) consists of three parties: the president, CEO and sporting director (or football manager). Each will have his own areas of responsibility, but all strategic decisions and high-cost supplies and/or investments (e.g. player transfers, capital expenditures related to the stadium, leasing contracts, staff hires, IT systems, etc.) are to be approved by the group.

A president's focus is on the macro perspective (the big picture) of the club's performance and the CEO's focus is on the business aspects. The focus of the sporting director is, as the title suggests, on all sporting aspects of the club, including both the first team and the academy. In order for these three to be efficient, their tasks should be clearly defined. In general, the following roles and responsibilities can be assigned to each member of the leadership team:

PRESIDENT. The president is a strategist and a top decision-maker of a club, with a focus on the big picture - vision and strategy - and sets the tone and positions for the club's brand image and operations. Should he also be the owner, he should proactively seek funding if and when necessary.

Highest ethical standards

1.    He is the chairman of the board and presides over the management committee. Other optional responsibilities include: club correspondent for the federation, external affairs, head of business club, stadium and shirt sponsors, cooperation and/or M&A activity.

2.    He sets an operational philosophy that is performance-driven, maintains a high level of employee morale and motivation, is sensitive to and driven by fans' needs, and meets the highest ethical standards. The president must also ensure that all operations are conducted in full compliance with applicable laws and regulations.

Alexander Janssen, football investor.
Photo: PA Images Alexander Janssen, football investor.

CHIEF EXECUTIVE OFFICER (CEO). The CEO focusses on the execution, turning the vision and strategy of the president into results that ensure the day-to-day business operations of the club. The CEO delegates most of the tactical and operational aspects of the strategy's implementation to senior management team members.

1.    The CEO is a member of the management committee, heads up the business side of the club (both B2B and B2C) and the infrastructure, including stadium and academy. He is the "housefather" when it comes to issues such as day-to-day integrity, adherence to the club's code of conduct, etc. 

2.    He works with the board, keeping it informed to the extent that it can fulfil its oversight role.

3.    In addition to overseeing financial performance, the CEO also develops, implements and monitors the business strategies, plans, organisational structure, policies and controls, as approved by the board and president.

 
4.    He supervises staff and develops key senior managers.

5.    And finally, the CEO will seek out business opportunities for the club, drive top-line growth, accelerate fan-centric strategies, and improve efficiency.

He is the link

SPORTING DIRECTOR. The sporting director focusses on the execution, turning the vision and strategy of the president into results that ensure the day-to-day sporting operations of the club.

1.    The sporting director manages the first team and oversees the youth academy.

2.    He develops long-term plans, policies, and values for the team and its integration with the academy. He also develops the strategy and objectives for youth development, and he is responsible for its rollout. 

3.    He manages and executes transfers and contracts and is responsible for players and players' on-boarding. He is the link between the leadership team and the head coach.

4.    The sporting director also develops and rolls out scouting policies and oversees their execution.

At the beginning of a season, right after a takeover and after a relegation, a club is in shock, and people are disoriented. A complete reset - a new order - is required, yet there is no time.

MANDATE. A mandate is the sum of expectations placed on the CEO and sporting director by stakeholders in terms of what will be accomplished, by when, and to what standards. It is the licence given by the board and president to the CEO and sporting director to deliver on these expectations.

Lack of time

CASE STUDY: In one of our transactions, the president was also the 100 per cent shareholder. In addition, being a former player and a club manager, he knew the sporting needs of an elite team. It goes without saying then that this president was entitled to have things executed his way. Whereas the organigram - and no doubt the leadership's initial intentions - may indicate that all big decisions would be taken as a group by the management committee (i.e. the president, CEO and sporting director), the pressure, lack of time, and individual tempers/emotions will often compromise the integrity of decision-making processes.

At the beginning of a season, right after a takeover and after a relegation, a club is in shock, and people are disoriented. A complete reset - a new order - is required, yet there is no time. In our case, the first games started; we lost. The call for strong leadership could be heard before the season had even started, and it only got louder over time. All eyes were on the president...

Frustration and confusion

PITFALLS:

•    Mr President, stop running the club and my staff. The danger is that the president takes the place of and/or overrules his CEO and/or sporting director. This is detrimental, not just to himself, but even more so to the efficiency and credibility of the other two. Should this happen too often, the latter two become "lame ducks" - they won't feel trusted and empowered. Second-level managers will start reporting directly to the president. This causes frustration and confusion to all parties involved. Indirectly, the entire organisation suffers as the chain of command is broken. Proper delegation includes the assignment of responsibility, granting of authority, and the creation of accountability. Some argue (I don't always agree) that the president's most important job is "to employ a great CEO and sporting director - then to get out of their way." Should the president be a more capable candidate for the job than, for example, the sporting director, and he has the time and energy, then he should save the associated pay cheque and add the job to his own scope of responsibilities.

•    No feedback loops. In order to continually improve, people will have to be given - and ask for - feedback. Management meetings should take place weekly and should always include feedback loops to recheck the alignment with the vision and objectives, reset consensus, and potentially repair that which is broken.

Compliance issues

•    Shifting the goal posts. It is surprising how often presidents will delegate authority to CEOs and then intrude upon that authority at random as and when they feel the need. Of course, a president's intervention is justified if there are serious compliance issues or some other crisis. However, few things are more frustrating to a CEO and a sporting director than a president constantly overruling or bypassing his authority. The possibility that the president will shift the goal posts in the middle of the game creates great uncertainty for the CEO and/or the sporting director. 

The two most common reasons for a CEO or a sporting director to quit:

•    Disagreement on the general direction and results of the club (and/or the president's performance or decision-making).

•    Intruding upon the role of the CEO/sporting director. It is essential to a senior officer that he receives an undivided mandate from the board and the president. The breach of such a mandate will be considered a lack of trust and it will prevent him from delivering upon the expectations. Sooner or later this will lead to friction and ultimately to separation.

CONCLUSION: A well-functioning management team is based on trust, structure, accountability, and transparency. The leadership team should therefore delegate, set goals and communicate wisely to the rest of the organisation, but also within the team! Despite mounting pressure and a lack of time, the team should continue to have frequent feedback meetings (there are no higher priorities!) and prepare cohesive actions and group decisions. Subsequently, major decisions, plans, policies, etc., should be communicated by this team as a unified group. For all business-related issues, the responsibility for internal follow-up and ultimate accountability lies with the CEO, whereas for sports-related topics, the buck stops with the sporting director. 

The upcoming lesson learned - the ninth of this ten-part series on the takeover process of a football club - will deal with the timely anticipation of missing targets.
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Alexander Janssen is an economist holding a master's degree from Tilburg University and an MBA from ESCP Europe (Paris/Oxford/Berlin). For 17 years he was CEO at JURAN Inc (USA), a global management consultancy. In 2012, Alexander took a stake in TopSportsLab (Belgium) and assumed the role of CEO for six years, working with elite football teams as well as UEFA and FIFA. Then, in 2018 and 2019, he became involved in the acquisition of two professional football clubs in different European competitions. Throughout his career, both as an entrepreneur and as a consultant, he has been involved in over 30 acquisitions.