Stakeholder Capitalism

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Reading Time: 5 minutes

In the wake of Zurich arrests and subsequent resignation of newly elected FIFA president Sepp Blatter, a lot of questions have been raised about the running of the world’s greatest game. At the end of World Cup 2014 in Brazil there was a lot of debate about FIFA’s choice for the Golden Ball Award, Lionel Messi. A lot of people felt, and rightly so, that Thomas Müller or Arjen Robben deserved the award more than Messi. While discussing this issue in one of my Whatsapp groups, I came up with an analogy that describes football for what it really is – a business, with owners, products and customers. The hallmark of capitalism. My analogy: Football is a business and we (fans/spectators/supporters) are the consumers, the Blatters are the owners and the Messis are the products. If at an international exhibition (read World Cup) the owners decide Messi is the best product they have at the moment you have no choice but to accept. However, you as the customer, you can pick Müller, Robben or Rodriguez, because customer (supporter, fan, spectator) is king.

Well, from what I have come to learn this is an aspect of commercial capitalism, organisations like FIFA choose to serve the stockholders as opposed to the stakeholders. If you read through the scandals now in the press you quickly realise that the main stockholders in the business of football are the sponsors and broadcasters, with various executive committee members ‘representing’ their interests at underground meetings.

Did you know?

The main building of the FIFA complex in Zurich has only three upper levels, but five underground levels, resulting in two thirds of the headquarters lying underground.

fifastrasse
FIFA headquarters in Zurich

There is nothing wrong with this business model. In fact most corporations are still run with the same model – to maximise value for the stockholders. However, in the 1980s things began to change and corporations began to take into account the stakeholders. Perhaps this is where organisations such as FIFA failed to adapt and adopt new practices and operations that ensured the systematic taking into account the interests of ‘those groups which can affect and are affected by the corporation (read organisation). This is what is referred to as stakeholder capitalism.

So who are football’s stakeholders? Players, supporters, referees, coaches, clubs, leagues, national associations, governments, sponsors, broadcasters and society. This list is not exhaustive but a key stakeholder that also serves to capture the essence of stakeholder capitalism is society. An organisation like FIFA needs to do more to be seen as an integral part of the society within which it operates rather than an institution that is separate and purely economic. This thinking should then be reflected in national associations charged with running football in various countries more so in the developing world. Stakeholder capitalism is not the solution to all the problems bedeviling football at the moment but no doubt a great mindset for aspiring sports administrators.

With the Zurich arrests comes an opportunity and a challenge for aspiring leaders in football and not just at the world level. It is easy to sit down over a beer, enjoying the FIFA Under 20 World Cup or the FIFA Women’s World Cup, while applauding news of the FIFA arrests. Oh yes, FIFA is not going anywhere soon but later this year the Football Kenya Federation, just like FIFA, will be holding elections. Perhaps an opportunity for fresh thinking from both new and seasoned players.

Interestingly an article in the Bloomberg Weekly, A League of His Own – How Sepp Blatter controls soccer, pointed out the fact the Blatter’s challengers for the FIFA presidency pretty much had the same message as Blatter in trying to woo votes. And the writer’s conclusion? “You can’t blame them for trying. It’s straight from Blatter’s playbook. But if the best his opponents can do is promise to out-Sepp Sepp, perhaps he’s precisely the man soccer deserves.” Basically they all pledged to increase financial allocation to countries. With such an approach it is only normal that people become more concerned with their position in the football ecosystem ‘food’ chain and forget about football itself. Unfortunately this is situation in most developing countries like Kenya where people with little or no interest in football position themselves to ‘eat’.

However it was not all doom and gloom at the FIFA Congress and even as others were escorted to the land of milk and honey some good stories came out too. One particular one caught my attention – Cape Verde. Many Kenyan football fans have to agree with me that one of the best moments of their fan-hood was when Dennis Oliech scored against Cape Verde sending Kenya through to the 2004 Africa Cup of Nations.  For those of us who were at the “Scoreboard” that goal came with something extra…point is Cape Verde was then a small footballing nation and beating them was more or less a formality.

Dennis Oliceh
Dennis Oliceh

Ten years down the road the tables have turned completely. According to the latest FIFA rankings (June 4, 2015) Cape Verde is now ranked 38, while Kenya is ranked 123. The average ranking of these 2 countries since FIFA World Ranking was created is 120 and 101, respectively. Below are the words of Mario Semedo, former President of the Cape Verdean Football Federation at the FIFA Congress 2015.

…I note with satisfaction that after having no grass pitches in 1998, Cape Verde now has 25, five of which were financed by FIFA. Thanks to the impetus of the international federation, its financial assistance, the projects we have been allocated, plus the training and expertise – all under the leadership of President Blatter – we have been able to secure funding from the government and other bodies who would never have contributed to our development in the past. We have been able to invest in our youth, in all those young people who dream of being able to play football.”

An encouraging case of stakeholders coming together for the advancement of the game. An illustration of stakeholder capitalism. It would be naive to think that one day we will have a system that runs purely for the benefit of all, but broadening the community involved in both the creation of value and the capture or consumption of that value in a collaborative environment is definitely doable. Food for thought for leaders and aspiring leaders in the world of football and beyond.

And just in case you want to know what my take is on the current FIFA scandal, whether Blatter should also be arrested or not, whether we are still going to have a World Cup in Qatar…let me just say I think Blatter did not resign, he retired. Word has it that he could consider coming out of retirement if no suitable replacement emerges. Another challenge to aspiring leaders in the world of football.

REFERENCE

Edward Freeman and Jean Liedtka (1997) Stakeholder Capitalism and the value chain, European Management Journal, 15(3): 286 – 96, Edited version

*The main building of the FIFA complex in Zurich has only two upper levels, but five underground levels, resulting in two thirds of the headquarters lying underground.

photo credit: Ben Sutherland Body of the main part of Fifa headquarters in Zurich via photopin (license)

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