Governance failure at Dutch football giant AFC Ajax

The major system and procedure failures at Ajax simply cannot be dismissed as “administrative errors,” writes Paul Dijkhoffz, management consultant and corporate governance expert.

My red and white striped soccer heart dropped when I woke up to the news that “an administrative error” led to Sébastian Haller, the Ajax record-breaking winter signing, not being eligible to play Europa League games for my club.

As a lifelong fan, I was especially stunned as Ajax finally managed to sign a high calibre striker and relieve it from the ongoing central striker woes it has experienced since striker Luis Suarez left the club in 2011.

The lucrative EL matches are vital for Ajax as the club’s mission is to be among the top European clubs. It needs all the income it can generate to bolster its first team’s success.

Ajax head coach, Erik Ten Hag, referred to the epic blunder as follows: “Sébastian Haller was indeed on the (EL players) list, but it is an administrative error. Something went wrong with the computers, just a checkmark on and off”.

What?

So here comes the obvious question: how come a club of Ajax’s stature, one that is listed on the Dutch stock exchange Euronext Amsterdam since 1998, can have such a massive failure in player registration systems and procedures? A failure that can jeopardise the financial viability of a club already having to cope with unprecedented COVID circumstances where revenues are down to historic lows and players, technical staff and management of Ajax are having to endure pay cuts.

The simplicity of the error seems to conceal a seemingly wider malfunctioning of proper corporate governance within the club, namely on a risk mitigation level. But before we delve into that, let’s first examine the governance structure and chief ‘players’ at Ajax in brief.

Ajax is led by a two-tier corporate governance structure, which is common for Dutch organisations and businesses, with an (executive) board of directors reporting to a (non-executive) supervisory board.

Longtime Manchester United goalkeeping icon Edwin van der Sar serves as the chief executive, Arsenal winger Marc Overmars (both part of the famous Ajax team that won the Champions’ League in 1995 under coach Louis van Gaal) is the director of football with finance director Suzanne Lenderink and commercial director Menno Geelen complimenting the Ajax board of and Van Der Sar serving as its chairman.

The supervisory board at Ajax comprises of five (non-executive) members headed by chairman Leen Mijaard and all having diverse professional backgrounds ranging from economics and finance (Meijaard), risk and corporate governance (Mosman), Law (Ligthart), Mensing (economics), professional football (Blind).

At first glance, the board seems to rank high on the corporate governance skills matrix but lacks certain aspects of diversity (gender, age, ethnicity). The latter may well contribute to groupthink but this cannot be concluded without being an actual fly on the Ajax boardroom wall.

If we may believe the social media postings, Ajax team manager, former Dutch top tennis player Jan Siemerink, is being blamed for the costly mistake of omitting to checkmark the box next to Haller’s name upon submitting the Ajax EL players list to UEFA.

Oddly enough, Ajax’s most recent signing left-winger Oussama Idrissi, who joined Ajax on deadline day on loan from Sevilla was included, apparently properly checkmarked and is cleared by UEFA to play EL matches for Ajax.

While Siemerink and other staff may carry the personal burden of blame, director of football Marc Overmars is ultimately responsible for any and all operational failures concerning Ajax player registration matters.

The debacle lays bare the seemingly ineffective risk management systems and procedures at Ajax. One may well argue that the supervisory board has a good part of the blame to carry for not adequately assessing (1) and monitoring (2) the major risks to the club as a result of incorrect player registration.

Looking at the detrimental effect such blunders can have on the mission of Ajax (join Europe’s top soccer clubs on a structural basis) and on its annual financial performance, it should be expected that this particular risk is listed at the very top of its risk registry, especially when Ajax has a risk expert, who was a chief financial and risk officer in previous roles, currently serving on its supervisory board.

And while Marc Overmars has performed exceptionally well as director of football at Ajax both in terms of Ajax’ football achievements (semi-final Champions League in 2019) and his savvy transfer deals, landing him the name “Marc Net(to)”, compounding the club’s net equity by several hundreds of millions of euros in inbound transfer sums, the “Haller registration fiasco” should be grasped as an opportunity to further develop Ajax’ internal player registration systems and procedures, which starts at the very top.

At the club’s inception on November 18, 1900, it was decided that it be named after the mythological Greek warrior that battled in the Trojan War against Troy. He was fearless, strong and powerful but also possessed a very high level of combat intelligence and was also referred to as “Ajax The Great”.

If Ajax wants to pay proper homage to its name, it would do well for the Ajax Supervisory Board to instruct the board of directors to have a risk audit performed, as an integral part of overall operational analysis, sooner rather than later.

Ajax’s football philosophy is etched in playing attractive, offensive-minded football – preferably in a 4-3-3 line-up – that is based on intelligent positioning of players and pressing constantly ‘high up the pitch’ (on the side of the opponent): this can be seen as Ajax’s operational intelligence etched into their football DNA.

The same operational intelligence seems to be missing at the club’s administrative level when it comes to having proper player registration systems and procedures exposing a major risk issue.

In many sports, especially football, coaches and players are measured by their last performance: you are only as good as your last game. This should also be the case for the club’s directors and supervisors: major failures in systems and procedures cannot be just simply brushed under the rug by dubbing it an “administrative error” as a result of a computer input glitch. Not when it can have such profound consequences for a club trying to make it to the top of Europe consistently.

Accountability starts at the top of any organisation. Ajax’s shareholders should take keen note of what happens next at the club and make sure this is properly addressed to ensure Ajax has a bright, sportive and financial future. Only then will we hear “the angels sing: Ajax, Ajax, Ajax!” emphatically again.

Main photo by Ajax Jasper Ruhe: Marc Overmars: director of football (executive); Edwin van der Sar, chief executive; Menno Geelen, commercial director (executive); and Susan Lenderink, finance director.