No. 193 August 2021 Management Quality of Professional Football Clubs The Football Management (FoMa) Q-Score 2021 Henning Zülcha, Moritz Palmeb, Sébastien Jostc, Benedikt Kirschc a Prof. Dr. Henning Zülch is Holder of the Chair of Accounting and Auditing at HHL Leipzig Graduate School of Management, Leipzig, Germany. Email: [email protected] b Moritz Palme is a research assistant at the Chair of Accounting and Auditing at HHL C Sébastien Jost and Benedikt Kirsch are research associates at the Chair of Accounting and Auditing at HHL Acknowledgement We gratefully acknowledge the valuable and constructive comments of our interview partners, namely high-level represent- atives of distinguished German football clubs (Borussia Dortmund, Eintracht Frankfurt, FC Bayern München, Hamburger SV and RB Leipzig), media representatives (11 Freunde, FINANCE), and external stakeholders (Group Lagardère, Puma), as well as the members of the Sports Management Strategic Interest Group (SIG) of the European Academy of Management Confer- ence, where we presented a similar working paper based on an earlier data set in June 2019. The authors would also like to thank Jonas Böttger for his content-related contribution and editorial review during the preparation of this working paper as well as IHK Leipzig for the continued support of the Chair of Accounting and Auditing. Management Quality of Professional Football Clubs: The Football Management (FoMa) Q-Score 2021 Abstract Managing a football club has become much more complex in recent years, as the clubs have turned into football companies and a growing number of stakeholders have entered the in- dustry. The clubs’ capabilities to handle the increased complexity vary, turning management quality into a crucial competitive (dis-)advantage. This new 2021 edition of the FoMa Q-Score ranking builds on the framework established by ZÜLCH & PALME (2017), which comprehensively assesses management quality along four dimensions, namely Sporting Success, Financial Per- formance, Fan Welfare Maximization and Leadership & Governance, in order to perform a longitudinal and cross-sectional analysis of the German professional football clubs’ manage- ment quality. As confirmed by high-level football club executives, these dimensions are able to objectively quantify relevant success factors of a professional football club (ZÜLCH, CRUZ, & SCHREGEL, 2021). Ultimately, the performance in all dimensions, referred to as FoMa Q-Score, indicates a club’s management quality. Consequently, the FoMa Q-Score has become a well- established management tool with high practical relevance in recent years, even more so in light of the fallout of the COVID-19 pandemic. Interested football managers can make use of our findings, which now also reflect the initial COVID-19 effects on financials (for months of Mar20 - Jun20) and non-financials (for the full season 2020/21) in this latest edition, and de- rive specific actions to benchmark their club’s setups in order to make up ground or defend their competitive positions. Keywords: Balanced Scorecard, Sporting Success, Financial Performance, Fan Welfare Maxi- mization, Leadership & Governance, Team Performance, Branding, Internationalization, Social Responsibility, Board Quality, Transparenc Table of Content Abstract Table of Content ...................................................................................................................... I List of Figures ......................................................................................................................... III List of Tables ......................................................................................................................... IV List of Abbreviations .............................................................................................................. V 1 Starting Point .................................................................................................................. 1 2 Literature Review and Scientific Approach .................................................................... 3 2.1 Preliminary Remarks .............................................................................................. 3 2.2 Literature Review of General Company’s Management ........................................ 5 2.2.1 Financial Perspective ...................................................................................... 5 2.2.2 Customer Perspective .................................................................................... 6 2.2.3 Internal-Business-Process Perspective ........................................................... 7 2.2.4 Learning & Growth Perspective ..................................................................... 8 2.2.5 Implications for Assessing Management Quality of Football Clubs ............. 10 2.3 Determination of Football Clubs’ Managerial Dimensions .................................. 11 2.3.1 From Management to Sports: a First Reconciliation ................................... 11 2.3.2 Sporting Success ........................................................................................... 14 2.3.3 Financial Performance .................................................................................. 17 2.3.4 Fan Welfare Maximization ........................................................................... 21 2.3.5 Leadership and Governance ......................................................................... 23 2.3.6 Intermediate Result ...................................................................................... 25 3 Evaluation Procedures and Data Foundation .............................................................. 25 3.1 Preliminary Remarks ............................................................................................ 25 3.2 Validation Using Expert Interviews ...................................................................... 26 3.3 Football Management Evaluation Framework (FMEF) ........................................ 26 3.4 The Football Management (FoMa) Q-Score ........................................................ 29 3.4.1 KPIs - Basics .................................................................................................. 29 3.4.2 Data Collection for the German Bundesliga ................................................. 30 I 3.5 The FoMa-Scoring Model ..................................................................................... 39 3.5.1 Overview ...................................................................................................... 39 3.5.2 Composition of the Bundesliga Members in the 2020/21 Season .............. 41 3.5.3 COVID-19 Impact on FoMa-Scoring Model .................................................. 43 4 Results of and Implications Based on the FoMa-Scoring Model ................................. 43 4.1 Results of the FoMa-Scoring Model: the Bundesliga’s FoMa Q-Scores ............... 43 4.2 Implications Based on the FoMa-Scoring Model ................................................. 49 5 Conclusion .................................................................................................................... 51 6 Appendix ...................................................................................................................... 54 6.1 Expert Interview Partners .................................................................................... 54 6.2 Calculation of Measured KPIs for the German Bundesliga .................................. 55 6.2.1 Sporting Success ........................................................................................... 55 6.2.2 Financial Performance .................................................................................. 58 6.2.3 Fan Welfare Maximization ........................................................................... 60 6.2.4 Leadership & Governance ............................................................................ 62 6.3 Scores Distribution for the German Bundesliga ................................................... 64 6.3.1 Sporting Success Scores Distribution ........................................................... 64 6.3.2 Financial Performance Scores Distribution .................................................. 64 6.3.3 Fan Welfare Maximization Scores Distribution............................................ 64 6.3.4 Leadership & Governance Scores Distribution ............................................ 65 6.4 FCs’ webpages ...................................................................................................... 66 List of Sources ..................................................................................................................... VIII II List of Figures Figure 1: Balanced Scorecard Perspectives ........................................................................... 4 Figure 2: Managerial Dimensions of Football Clubs............................................................ 14 Figure 3: Bundesliga Revenue Mix 2019/2020 ................................................................... 18 Figure 4: Bundesliga Expenditure Mix 2019/2020 .............................................................. 19 Figure 5: Football Management Evaluation Framework .................................................... 27 Figure 6: Illustrative Example of a FoMa Q-Score Calculation ............................................ 41 Figure 7: Overall score dispersion in 2019/2020 and 2020/2021 ......................................