Public Limited Companies in Soccer
There are different legal practices in the world of sports. In this article, we'll explain about Public Limited Companies (PLC) in soccer and its main contributions to sport and society.
Public Limited Companies (PLC) are one of the most successful models in Spanish soccer. However, in terms of attributions and objectives, people often confuse PLC with sports clubs.
What are Public Limited Companies?
Public Limited Companies -better known as SAD from its Spanish acronym- are a type of Limited Company. This means that they’re a commercial company and as such have their own legal personality. Its capital is expressed in shares and is made up of the contributions of the partners.
It’s important to note that these companies operate under a limited liability regime. This means that the holders of shares don’t respond with their personal assets, but with the capital of the said company.
In Spain, this figure was created by the Sports Law in the year 1990 and finished developing in 1999, after the publication of Royal Decree 1251, which specifically talks about corporations in sport.
Specifically, Royal Decree 1251 establishes that all organizations detailed in article 19 of the Sports Law must be registered as professional sports corporations and national levels. In this way, this type of institution cannot be constituted as mere corporations —SA—; but its corporate name must be accompanied by the abbreviation SAD.
Objectives and specifications of the SAD
Articles 19 and 29 of the aforementioned Spanish Sports Law determine a wide range of objectives and specifications for sports corporations. Here are some of the most relevant:
- Corporate purpose: the corporate objective of sports corporations limits to participation in professional sports competitions. They can also participate in the promotion, organization, and realization of sports activities or sport-related events.
- Corporate name: as we mentioned, these companies must accompany their corporate name with the acronym SAD, clearly differentiating themselves from common corporations.
- Minimum share capital: the average expenses incurred and the negative equity balances determine the minimum share capital for the constitution of sports corporations.
- Special approvals: these companies will need to have a special approval that allows the acquisition of more than 25 percent of their shares by the governmental National Sports Council.
- Acquisition of shares of other SAD: sports corporations cannot acquire shares of other SADs of their same sports discipline.
- Guarantees: all corporations in sport must comply with the presentation of guarantees.
The expansion of Public Limited Companies in soccer
More and more soccer clubs are becoming Public Limited Companies (SAD) with commercial character. However, this point isn’t controversial. Many experts and fans point out that the triumph of the SAD marks the soccer age as a business, and no longer as the vocation to build up communities.
Many times, the nostalgic idea of a neighborhood sports club is still valid in the popular imagination. In these meetings, children and young people would dream of playing in the First Division.
Plus, the neighborhood sports club maintenance generally depended on the effort of the community. Most of the time, the workers were fathers and mothers willing to give everything to see their children succeed.
In SAD, shareholders replace partners, who logically pursue profit. Because of it, this perspective also alters the classic democratic decision making among club members. In societies, the owners -who are the shareholders- determine guidelines that the whole club follows.
Does this mean that sports corporations come to ‘distort’ soccer? Not necessarily, since they can generate benefits, such as attracting external capital and sponsors.
However, fans and soccer supporters must be careful not to let SAD exterminate the essence of soccer.
This way, people must remember that soccer is a sport that’s, above all, a social event. In the end, it’s the essence of soccer that makes it so popular around the globe.