Sociedad Deportiva Eibar S. A. D.: A Modest Club in the Elite of a Unique Sector

Description

It was the summer of 2015. Sociedad Deportiva Eibar S.A.D. was playing in the First Division in the same years it was celebrating the 75th anniversary of its founding--a unique case in the history of Spanish football. The club had several characteristics that set it apart: the town where it was based was smaller than any other that had produced a First Division team; austerity was a defining feature of the club, which strived to live and disseminate the values it believed in; and its finances had always been in order. In 2014, the club had been forced to increase its capital and had accomplished this using a crowdfunding approach that few expected to succeed. Unlike most professional teams, Eibar did not have a single owner or reference shareholders. Despite, or perhaps because of, all this, Eibar had the audacity to compete in the League of Stars. After being promoted in 2014, the team's performance in the First Division had been quite uneven-a magnificent first round, followed by a disastrous second leg. In the end, when another team (Elche CF) was relegated for not paying its debts, Eibar managed to hang on to its place in the top tier. The tension generated by the situation had led to public disagreements between members of the board of directors. Steps needed to be taken to get things back on track. After this roller-coaster ride, Eibar needed to rethink its lines of action in relation to the sports and business sides of the club and its governance. They wanted to do much more than just satisfy fans by achieving good sports results. The club hoped to become an engine for economic and social development in the local community and a channel for people's aspirations in the small industrial town.

Learning Objective

To encourage reflection on business models in highly changeable environments such as those found in sports corporations, and to consider how they impact profitability and the financial situation of such organizations. To facilitate discussion on governance models in commercial entities whose capital is highly dispersed, and which do not have reference shareholders and/or controlling groups. To reflect on some of the basic principles of good governance and assess the impact of regulators (the LFP) on decisions related to investment, financing, revenue and spending.

Keywords

corporate governance