Governments tighten control of national sport organisations

A number of spectacular scandals have marred international sports federations and exposed flawed governance standards. This need for better governance was also exposed in Play the Game’s report ‘Sport Governance Observer 2015’ covering all 35 Olympic sports.

But the lack of proper governance standards is not only afflicting international sport. National sports organisations can be challenged as well. In response, mandatory sports governance principles are now being introduced by some governments supporting sport as supplements to a more limited regulation of the sector, which is fairly common in many countries.

“While good governance does not guarantee success, its absence almost certainly guarantees failure," argued the Chairman of the governmental agency, John Wylie, when the Australian Sports Commission introduced its first set of ‘Mandatory Sports Governance Principles’ back in 2013.

Australia has since been a frontrunner in the field and is now working on a second wave of governance reform trying to streamline fundamental business processes within Australian sports.

Following suit, the United Kingdom recently published a new and comprehensive Code of Governance, to which all sports bodies and organisations receiving public funding through UK Sports and Sport England must adhere from next year. The new code operates with no less than 58 specific mandatory requirements for organisations receiving the most funding while organisations receiving limited funding will only have to meet seven very basic governance requirements.

“We want to ensure that they operate efficiently and successfully while being transparent and representative of society. We have been clear that we will expect them to adhere to the new Code for Sports Governance if they are to receive public funding in the future,” Sports Minister Tracey Crouch said when the code was published at the end of October.

And in Flanders, Belgium, the government of the self-ruling Flemish part of the country will link part of its public support to 29 so-called ‘hard’ indicators covering transparency, democracy and internal check and balances, supplemented with 14 ‘soft’ indicators that federations only have to report on. The requirements will gradually come into force over four years starting from 2017.

The Flemish governance standard has been developed by political scientist Arnout Geeraert, who is a senior research fellow at the University of Leuven and author of Play the Game’s Sport Governance Observer from 2015. He sees the focus on good governance in sport as part of a broader, international trend, which could motivate even more countries to introduce comprehensive codes.

“We do see that some steps being taken, so there is an increased focus on good governance in national sports federations. I think that countries are looking at what exactly they could do to improve the governance standards,” Geeraert says.

Sports governance as crisis therapy
Where outright corruption and lack of the most basic democratic control has prompted the need for international governance reforms, less than a full-blown scandal can trigger change on a national level.

The Australian code, which is likely the most advanced governmental sport governance code that is fully up and working, was partly born out of a sporting crisis. Disappointing Australian results at the Olympics in London in 2012, especially in the iconic Australian sport swimming, led to an independent review of the swimming federation, which concluded that it suffered from “a culture of non-strategic business practices” and a malfunctioning governance system. Consequently, the report called for a broad governance reform.

The Australian Sports Commission (ASC) followed up by introducing its ‘Mandatory Sports Governance Principles’ that aim at securing the value of public investments into sport. This need was further stressed as the ASC also decided to give the national federations a more central role in the implementation of the government’s sport investments under its high performance strategy.

“To put it simply, an important objective is to reduce the risk that the federations make ‘bad decisions’. The principles represent what we regard as minimum standards for good and measurable management and some federations have had to make changes to their statutes. In this process, we try to support and give advice,” ASC Deputy General Manager Michael Johnston explains.

Sitting in the ASC head office in Canberra, Johnston and his colleagues are guiding organisations on how to implement the governance principles in a department dedicated to sport governance and business development. In the beginning, only the seven sports that received most national funding, including swimming, were obliged to adjust to the principles, but since 2015 the ASC has extended the circle to the 23 organisations that each receive ASC funding of more than 1.5 million AUD (USD 1.15 million) a year.

At first, some federations questioned parts of the regulation, and the incorporation of the principles was often work-heavy. But today Johnston believes that most federations perceive the requirements as a relatively non-controversial tool to improve their management. Several federations have even taken pride in being frontrunners, he says. 

Corporate inspiration
Many of the 21 individual principles covering formal structure, board composition and operation, as well as requirements for transparency and integrity, are general and well-established indicators of good governance. That includes precautions against conflicts of interest, requirements to annual reports and term limits for board members.

Others are inspired by corporate management normally seen in public limited companies, for instance the demand that the chairman should be elected by the board, not by the members at a general meeting. In fact, the ASC sees it as one of its goals to introduce corporate rather than association structures in the national sport organisations and to involve people with business skills on boards. The purpose is to improve the ability of the organisations to handle a growing number of commercial activities but also broader sports development. 

In order to pursue this objective, the ASC has now followed up with a second wave of governance reform that tries to unify fundamental business processes within Australian sports organisations from state to federal levels.

After a nation-wide series of meetings with stakeholders in sport, the ASC launched its conclusion in its Governance Reform in Sport paper that among other things urged organisations to adopt what it names “unified whole-of-sport”. Specifically, the ASC is encouraging sports to align their behaviours across strategy, finance, digital and commercial areas, Johnston explains.

Too much government – too little sport?
However, the latest wave of reform in Australia has also led to warnings from actors in the sports sector and independent academics, who argue that there are limits to how far the government agency should go to enforce uniform standards upon a very diverse and partly volunteer-based sector. And after another rather disappointing Olympic performance in Rio, the President of the Australian Olympic Committee and IOC Vice-President, John Coates, went public launching an attack on the overall governmental sport programme and its underlying corporate-inspired philosophy:

"The corporate model of having leaders of Olympic sports who are connected to the top end of town, such as Swimming Australia's John Bertrand and Cycling Australia's Malcolm Speed, has failed. It is OK to have these business-oriented men on the board of Olympic sports, but not as president," he said in the Sydney Morning Herald, getting questions about his own 700,000 AUD annual NOC salary in return.

In its paper from June 2016 summing up the Commission’s position after the consultation phase on the second wave of reform, the ASC is stressing the importance of volunteers and the need for some flexibility in certain governance fields. But it also stands firm on its objectives: to lead the governance reform process in Australian sport.

The right balance
Coates’ criticism may also reflect that stricter government control questions the idea of sport’s autonomy, which has historically been defended tooth and nail by national and international sports organisations.

Although Arnout Geeraert acknowledges the importance of finding the right level of governmental interference, he warns against using ‘autonomy’ the way it has been done.

“In the past, it has all too often been used as a way of shielding the sports world from external interference. What is interesting is that this autonomy discourse from the sports world is now evolving from autonomy per se to conditional autonomy. For instance, IOC President Thomas Bach has said that sport federations need to justify their autonomy by demonstrating good governance,” Geeraert says, mentioning the Dutch governance code from 2005 under the auspices of the Dutch NOC and sports confederation as an example of self-regulation.

In any cases, adopting a purely hieratical approach without leeway for federations is just as unwise as ignoring real governance challenges, Geeraert believes.

“Too many and detailed rules preclude responsibility and ownership. Actors will focus solemnly on the rules instead of questioning their own behaviour. Good governance becomes an exercise on paper, and that is something we certainly need to avoid.”

In addition, Geeraert points to the fact that the governance requirements can vary across countries and cultures. Both the codes in Australia and the UK, for example, are inspired by corporate governance, which counters the commercialisation of sport, but most likely also reflects a strong corporate tradition in the Anglo-Saxon world. Conversely, Flanders did not find it necessary to duplicate the Australian corporate inspired requirement that the chairman of a national federation must be elected by the board.

So all principles of good governance are not carved in stone and can be discussed, developed and adapted locally. Still, seen across the board sports organisations are under-regulated, Geeraert believes. Many operate in ways that do not match their historical transformation from relatively weak organisations for amateur-based leisure activities to actors with commercial and public responsibilities.

“They still operate in a regulatory framework that allows for a lot of organisational leeway, which often comes to the detriment of implementing basic good governance standards. Sports organisations need a stricter regulatory and policy framework,” he concludes.