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IESE: Eibar show that a small organisation can compete with the big ones if things are done well

Three professors from the University of Navarre IESE Business School, have produced the «Eibar case» with the title «A modest club in the elite of a singular sector»

The IESE is situated among the top ten Business Schools in the world and is the leader in Europe according to the ranking produced by the New York Times. It has campuses in Madrid, Barcelona, New York, Munich and Sao Paolo and more than 50 percent of its students are foreign.

This study, carried out by professors José Antonio Segarra, Alberto Fernández Terricabras and Javier Aguirreamalloa will be the subject of a discussion with senior managers on a course about management and governance of SMEs that these three professors teach, as well as on other courses across the five continents.

The study begins by stating that the football sector, which has 2,328 million Euro of income and represents 0.75 percent of the GDP in Spain, has stratospheric levels of debt, valued at 3,000 million Euro and 22 of the 33 SAD (Public limited sports company) that have been in the First Division since 2003 have entered into arrangements with creditors.

In this context, the peculiarity of Eibar is remarkable «a singular club in a sector that is very important, constantly in the media and yet has such manifestly improvable governance».

Some of the singularities of Eibar cited in the study are the small population of the city (with 27,000 inhabitants it occupies the position 280 in the population ranking in Spain); the atomisation of the shareholders «with a democratic base and fragmented capital»; the two consecutive promotions leading to the First Division in spite of budgetary constraints; the increase from one to 32 million in the income budget in only three years; and its economic singularity, with 4.4 million Euro profit after tax, 7.6 million Euro of own resources, zero debt and 9.6 million in liquidity.

The professors from the IESE uphold that «all of this is not due to coincidence but rather aspects such as the symbiosis that exists between the supporters, team, management and government, or the existence of a virtuous circle characterised by immovable principles such as always compete - loyalty to principles - effective management - financial stability - use of surpluses».

As they point out, «in a context characterised by misgovernment and high risks, Eibar represents the general principals of good governance of mercantile companies that are doing well:

1.- Immutable and non-negotiable values: Effort and sacrifice, resilience, seriousness and responsibility, humility and authenticity, innovation and daring, implication, proximity, participation and transparency and accountability.

2.- Accounts without froth; with rigour and transparency, fleeing from creative accountancy.

3.- Use of resources such as savings, capitalisation and investment, that are characteristic of «modest but sensible» clubs.

4.- Initiative as a motor, with examples such as crowdfunding for the capital increase in 2014 «of which there is no world precedent».

5.- Organisation for action: simplicity and efficiency, eschewing bureaucracy.

6.- Proximity to the members, with the cheapest season tickets in the league and with their shareholders: 80 percent of whom reside in the Basque country, but with 1,500 in the rest of Spain and another 500 abroad.

7.- Capacity to develop the values of the brand.

8.- A solid institutional structure, with an active local corporate environment in which there are eight sub-committees on the board of directors.

«In these companies internal wars have to be avoided. The majority of companies succumb to fratricidal confrontations between directors and shareholders. Eibar has a signed code of conduct that will be a guarantee of efficiency and seriousness» assured the authors of the study.

«The ball has to go in the net, but it will do so more easily working with a good government. Eibar is a good example and one of which everyone at the club should feel proud. When clubs are healthier and financial management doesn’t distinguish Eibar from the rest, it will continue being distinctive for other reasons», they add.

For his part, Alex Aranzábal, President of Eibar, emphasises that «we need to have talent and initiative to continue being different. If we don’t do something different, the tide will come in and cover us».

«You have to be a bit of a transgressor. The story of Eibar is an asset that we have to be able to manage», according to the President of the Club armero.