Most professional sports teams are privately owned by wealthy individuals or companies that are the major stockholders and the final decision makers regarding any business or team related issues. The fans are the team’s customers, and as such generate revenue from tickets, merchandise and F&B. This private model stands in juxtaposition to a fan-owned model, in which the team’s fans are also the stockholders and decision makers.
Fan-owned teams can be structured in several ways. In some fan-owned teams, the fans have full ownership, while in other cases, they have majority or minority ownership. F.C. Barcelona, which is one of the most successful soccer teams in the world, is a non-profit that is entirely owned by nearly 200,000 fans that pay annual membership fees. The German soccer league incorporated the “50% + 1” rule. This states that members of a club must retain more than 50% ownership, thus preventing any single entity taking control. In the last case, a team owner may sell a minor stake of the team to its fans. In recent years there were several cases of fans taking control over a team after being dissatisfied from the private owner or after the team failed financially and professionally. In those situations, the team’s fans united into a non-profit organization and bought the team from the owner in order to recommission the team. This usually happens in low tier leagues where the capital required is affordable.
The biggest value created for a fan-owned team is the revenue stream coming from membership fees or from purchased team stocks. Additionally, the level of fan identity and fan engagement is dramatically increased as fans feel more loyal and have stronger connection to their team and fellow fans. The result is that there is higher attendance during games and greater support in good and bad times. The value capture is being reflected in revenue channels mentioned above that are being affected by the increasing attendance. Having more fans also leads to more advertisers, higher TV rights fees, and a better atmosphere in the stadium that creates a better customer experience.
The value created for the fans is that they get to be part of an ownership group of their beloved team, a dream of almost every young fan. They also get actual voting rights and a chance to influence business decisions. For example, every six years, the FC Barcelona fans get to elect a Team President. This means that fans’ best interest is always on a top priority for the team managers. For instance, the cost of tickets in the English Premier League, where teams are privately owned, is double the cost in the German Bundesliga. Lastly, “member” fans get to enjoy benefits that “non-member” fans can’t, such as priorities, discounts and exclusive team events. Lastly, there is always a possibility for a member to take a professional position in the team and have a direct impact on how the team operates.
There are however a few challenges in the fan-owned model. There is a big concern that there would not be enough fans that want or have the ability to pay the membership fees, resulting in a major loss of revenue. Another risk is that a candidate for a senior position in a team would care more about his popularity among the fans rather than acting in the best interest of the team. For example, a candidate for the position of Team President would announce that if he would be elected as President, he would sign a big superstar such as Cristiano Ronaldo, just to increase his popularity among the voters, without having a real financial ability to sign the player.
Personally, I believe that the 50% + 1 is the most successful model, as it allows a team to enjoy a big private investment along with the support of a big fan base that feels part of the team.