Old Sport, New Money Games

Old Sport, New Business and Governance Challenges

 (this first appeared in The Conversation as “Moneyball: Why sporting organisations need to start playing by the rules”

Rangers Football Club, the historically Protestant half of Glasgow’s “Old Firm” (the other half being the Catholic Celtic) has entered financial administration to prevent UK tax authorities installing their own independent administrator. (http://www.telegraph.co.uk/sport/football/teams/rangers/9082630/Rangers-in-administration-Sir-David-Murrays-plan-to-live-the-dream-caused-this-nightmare.html ).  One of the world’s famous playing clubs, itself or Celtic always first or second in the Scottish league, is now one of its business basket cases, facing tax liabilities in excess of £50 million.

Many observers discern a broader crisis of football governance and management, others look beyond even that to see the same issues in top-end global sport generally: the famed LA Dodgers are financially stricken in baseball (http://www.bloomberg.com/news/2011-08-05/los-angeles-dodgers-baseball-agree-to-financial-terms-on-bankruptcy-loan.html ); West Indies cricket problems have finance and governance at their heart, while the recent Woolf Report sees a massive hole in International Cricket Council credibility. (http://static.espncricinfo.com/db/DOWNLOAD/0000/0093/woolfe_report.pdf )

The underlying theme is that the modernisation and commercialisation of traditional sporting forms outstrip the traditional management and governance structures that oversee the sports themselves, with catastrophic results.

The Rangers case is instructive.  An old community-based club became caught up in the hyper-inflation of player salaries and transfer fees over the past twenty plus years, relying increasingly on media-based revenue rather than numbers through the turnstiles.  Sponsors had to produce larger and larger supporting funds to bear the costs, managers thought increasingly that more expensive players were the solution to football goals.  That all became too much for old style community service-oriented committees, who yielded to private ownership.

Enter Sir David Murray who bought Rangers in 1988 for £6 million, funded by his steel empire once valued around £500 million but now slammed back to £100 million by recent economic crises.  That forced his sale of the club to Craig Whyte last year – for £1. (http://www.bbc.co.uk/news/uk-scotland-glasgow-west-14880473 )    Being good at business has often proved a poor qualification for running a modern sports franchise.  Whyte is even more interesting because he was bankrupt at a young age but bounced back via various businesses into venture capital and, as they say, has a “colourful” record, not least in the way he has run Rangers (http://news.stv.tv/scotland/west-central/297450-firm-linked-to-rangers-owner-craig-whyte-banned-after-using-clients-money-to-pay-bills/ )

Both men were at the micro if expensive level in the huge global money machine that is football (or soccer).  Overseeing that is a tainted governance organisation, FIFA, itself notorious for corruption and double dealing.  Some senior officials were sacked recently for selling votes, others for rigging ticket sales, and there is an on-going scandal about just how Qatar won the right to host a World Cup. (http://www.telegraph.co.uk/sport/football/international/8535640/Fifa-corruption-and-bribery-allegations-a-timeline.html )

The delightfully named Jerome Champagne, once FIFA President Sepp Blatter’s right hand man but then sacked, is now running a “reform FIFA” campaign that many see as a tilt at the Presidency.  He has circulated a governance reform program that not only highlights football’s problems, but also those of many other international sports.  (http://www.playthegame.org/fileadmin/documents/FIFA.Which_FIFA_for_21st_century.pdf )

Among other things Champagne calls for: redistributing power between the President, the Executive Committee and the Associations; restoring democratic debate within the football hierarchy; broadening the decision-making process; strengthening management and governance; and reconnecting FIFA with the “people of football”.

What this means, of course, is that in Champagne’s view FIFA is currently autocratic, secretive, non-democratic, poorly managed and governed, secretive, and dismissive of the fans.

This is fascinating, if only because it reflects the sentiments of the Woolf Report on the International Cricket Council.  (https://professorbrianstoddart.com/2012/02/09/a-woolf-the-icc-door/ )   Lord (Harry) Woolf served as Lord Chief Justice of England and Wales, and has long been noted as an advocate of human rights and procedural transparency.  In the words of Yes Minister, it was a “brave decision” to have him head the ICC review.

Ever since the early 1990s when the ICC became wealthy on the back of massive television rights generated out of India, it has been out of its depth in trying to run the game.  The new wealth, or more precisely its sources, ran counter to the ICC’s essentially post-colonial structure and outlook.  Dissatisfaction was inevitable.  In crucial matters such as the failed attempt to slide former Australian Prime Minister John Howard in as a Vice-President India, aided and abetted by several “small” nations, simply ranged up against the “old gang” of Australia, New Zealand and South Africa.

Woolf’s 65 recommendations are shattering both in what they intend and in reflecting the situations they are designed to remedy. One set of recommendations argues for both an independent Chair to lead the Board, and three (3) independent Directors.  This is a massive change because until now, the boss role went to someone who worked his way through the world of cricket administration (rather than management) and landed up at the top.  If Woolf has his way this changes, and a new world of professional, independent management comes in.

Recommendation B7 suggests that anyone appointed as an ICC Director must relinquish all positions on the home Board – that will make life difficult if applied to regional associations in India, where people like Sharad Pawar, India’s Union Minister for Agriculture and just ending his stint as President of the ICC, have traditionally made their power bases.

This pressure is accentuated in Recommendation E1 which pushes for all conflicts of interest to be declared.  The immediate suggestion, of course, is that hitherto they have not been declared. Much of this emanates from the Indian Premier League (IPL) where the present President of the Board of Control for Cricket in India (BCCI), N. Srinivasan, also chairs the family company that owns the IPL Chennai Super Kings.  Many consider this a clear conflict, and similar incidents have been experienced at ICC level.

Woolf, like Champagne, argues that the old membership power base should disappear, too.  Not so long ago the ICC had over 100 members around the world, yet just ten (10) of them had anything like full membership.  When it came to the distribution of the spoils, the minnows felt dudded – 75% of the profits go to the 10 full members (who do pay higher subscription fees it should be said).

What both Champagne and Woolf indicate, then, (as did all the ructions that surrounded the first wave of International Olympic Committee reforms a decade ago) is that international sports organisations find it difficult to the point of impossible to react quickly to changing conditions brought on by financial or social shifts.  There is much talk of ethics as a result, as in the Woolf Report, for example, but the real message is that major governance overhaul is close to the only real answer.  And therein lies the test – in the cricket case, India has already categorically rejected the Woolf findings (http://timesofindia.indiatimes.com/sports/cricket/top-stories/BCCI-rejects-Woolf-report-recommendations/articleshow/11873035.cms ) and, no doubt, Champagne will discover that many football powerbrokers prefer flat to fizz.

4 Responses to “Old Sport, New Money Games”
  1. Lynne McDonald says:

    Then there’s the Otago Rugby Union. http://www.stuff.co.nz/sport/rugby/6520245/Otago-stalwarts-asking-hard-questions-of-union Whoever heard of a rugby union going broke?

    • Therein lies a complex tale of (i) the rise of the “professional” game and the fate of what the NZRFU calls the “community” game, (ii) the financial hangover from the World Cup, (iii) weak financial management – the mortgage on Carisbrook was bigger than the sum raised for same, and (iv) hardening economic times. Not a great prescription

      • Lynne McDonald says:

        Spot on.

        Note – I was chagrined to notice that I had written ‘whoever’ instead of ‘who ever’ in my first-ever reply to one of your posts! The shame, the shame. Aged English teacher crawls off to sprinkle ash on head.

      • I am not sure anyone notices anymore, sadly, so go easy on the ash!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: