A consultant’s view: Breakaway threats - is running your sport well the best defence?

Breakaway groups and leagues are familiar threats to established sports federations but seem to be particularly prominent at the moment. While the rise of commercial sports organisers is a trend which looks set to continue, the best defence that sports federations can offer is probably to run their sports well.

High profile recent cases include the Global Champions League in show jumping, which launched this year following a legal battle with the Fédération Equestre Internationale, (FEI), and a dispute between Euroleague and the Fédération Internationale de Basket-ball (FIBA), which involves a move by FIBA to set up a rival to an established club competition. These build on at least a century of breakaways in sport, including the separation of Rugby League from Rugby Union in 1895, originally motivated by a desire among players to be compensated for lost wages when they missed work.

In some instances the breakaway is largely successful, as in the example of Indian Premier League (IPL) cricket, which quickly generated a huge amount of revenue after emerging in 2007. The IPL forced its way into the calendar with the result that the International Cricket Council (ICC) and national associations have had to work around it.

Other attempts at setting up rivals to incumbent competitions fail to come to fruition. Despite persistent rumours, there is not yet a European Super League bringing together the top football clubs in Europe. Such an entity would presumably guarantee participation and riches for the most famous clubs without the need to qualify.

Familiar patterns
It is possible to discern a few familiar patterns in breakaways. Usually, the planning by the disrupting organisation takes place in secret, although word tends to get around within the sport. The new outfit approaches clubs, athletes, venues and potential partners on a confidential basis to try to sign them up. By the time of the high profile launch, the new organisation could well have a number of firm commitments and other expressions of interest. The incentive is money, frequently with guaranteed sums for players and clubs, backed by a broadcast deal.

For the public, the promise is entertainment in the form of their favourite sport presented in a new way for both paying spectators and the TV/online audience, generally via subscription channels. Typically, there are changes to the presentation of the sport which, depending on your perspective, either make it more engaging and exciting, or cheapen a respected and noble endeavour.

Under pressure, the international federation governing the sport has to work to keep the support of many of their most important stakeholders: athletes, clubs, national federations, fans, sponsors, broadcasters and potentially national governments. 

The international federation often responds angrily, perhaps accusing the breakaway organisation of greed and irresponsibility. It is labelled a free-rider, profiting from the work of others and not contributing to the development of the sport. Sometimes the international federation also makes threats. Sanctions may take the form of declaring individuals, clubs and/or national federations ineligible for mainstream competition, including world championships and the Olympic Games. As in a trade union dispute, those affected are virtually forced to take sides even if they would prefer not to. Legal disputes are fairly common and can be instigated by either party. Breakaway organisations may challenge the effective monopoly enjoyed by the international federation or the federation itself complains about breaches of exclusivity contracts. 

The outcome, of course, is not predictable as the struggle frequently continues for a period of years. One important determinant of the balance of power is the effectiveness of the sanctions at the federation’s disposal. For its part, a breakaway organisation probably has a better chance of success if it benefits from credible backers who can give confidence to those being encouraged to sign up.

It is instructive that both the calendars of the IPL in cricket and the Global Champions Tour in show jumping were set up in such a way that athletes could combine participating in the new competitions with the traditional championships run by the federations. In this way, leading players and riders could increase their earnings without giving up completely on the competitive structures in which they had made their names. Although the ICC and the FEI surely do not welcome the insurgent organisations, it has at least been possible to reach a compromise. A new format that requires an all-or-nothing switch of allegiance represents a higher risk and probably has less chance of success.

Federations constrained but protected
When a breakaway attempt occurs, almost by definition it is a sign that the sports federation has missed an opportunity, or at a minimum that one or two of its stakeholders are dissatisfied. Unless the upstart organisation’s plans are pure fantasy (which has been known to occur), they have identified a way to package the sport to reach a different audience.

However, the international federation’s complaints are likely to have a degree of validity: usually the breakaway organisation is interested only in commercial opportunities linked to a tiny elite group of athletes. Free from obligations to the rest of the sport, it is much easier to develop a profitable business model by setting up a controlled, closed competition.

In addition, sporting calendars are crowded. Even if the international federation would ideally like to revamp the competition schedule, it may be very difficult to do so due to existing commitments and vested interests. An external body lacking accountability to the member bodies of the federation can simply seek to impose an event in the way that it wants.

Another, more complex issue relates to the recognition of sports bodies. The IOC only recognises one international federation per sport, which from time to time has helped federations protect themselves from insurgents. Sport seems to lend itself to natural monopolies as it makes sense for everybody around the world to play by the same rules. The curious example of darts, which has two annual world championship events run by different federations, together with the fragmentation of professional boxing, provide evidence that sports are unlikely to benefit from being overseen by multiple organisations.

Nowadays, the longstanding model of one federation, one sport is under close scrutiny from EU anti-trust investigators in particular. As Jens Sejer Andesen points out, if more organisations were permitted to organise and administer sport, “it would most likely increase the outreach of sport and create more access to physical activity for a larger number of ordinary people”.

Anxiety is healthy
Most of the international federations governing sports that generate reasonable commercial income could face a breakaway. If the federation leaders are not horizon-scanning in a fearful fashion then they probably should be because established sports bodies can easily find themselves responsible for running the sport while the majority of the revenue goes elsewhere.

Fending off the threat of breakaways is one of several areas in which the introduction of independent directors could make a valuable contribution to international sports federations. Independent individuals who are not representing a specific interest group would arguably be in a better position to challenge the status quo, whether it is in relation to competition structures, the calendar or event organisation.

Ultimately, anxiety about attempts to create rival competitions could lead to a positive outcome. By thinking proactively about how best to promote and popularise their sport, even if it means abandoning some valued traditions and tackling vested interests, federations stand the best chance not only of defending against a breakaway but also of fulfilling their mission.