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On the example of professional football in Germany, this paper analyses the conflict about the punishment of fan misbehaviour within an agency-theoretical framework to cast light on the reasons for the ineffectiveness of the sentences and to show possible solutions.

In a pre-study, more than 1,300 hand-collected past sentences against clubs by the German and European sports courts were analysed to demonstrate the ineffectiveness of the penalties so far. Additionally, in the main study, 26 expert interviews with German representatives of the football association, courts, clubs, sponsors, police and active fan scenes allow a deep insight into the relationships of the involved parties.

The paper suggests that the sentences do not sufficiently consider several agency problems. Due to moral hazard, they exert hardly any influence on fan behaviour and only a small one on the clubs. While the lighting of pyrotechnics is by far the most punished type of misbehaviour, most of the interviewees cite the impossibility of preventing it. Despite the sentences, some clubs make non-public agreements with their fans about still tolerable misconduct or do not pass the penalties on to the polluters as intended by the association. The findings highlight the importance of communication for less misbehaviour.

For the first time, the agency theory and the economic theory of optimal punishment are brought together with insights from interviews with the involved parties. The authors discover a two-stage principal-agent problem and get new insights into stakeholders' hidden motivations and attitudes. The results should encourage a debate on the current penalties and possible solutions to the recurring problem of pyrotechnics.