Australian Institute of Company Directors (AICD): Are there any common traits that the most financially strong sporting bodies and clubs have?
Gideon Haigh (GH): The strength of sporting bodies is often determined by the size of their market and relative market position. It would be very, very difficult to be a financially strong canoeing club because there just isn’t the market for it.
I suspect that financial strength is a necessary, but not a sufficient, condition of success for sporting organisations. I think that the ones that have been successful here are the ones that have somehow maintained some sort of semblance of a transcendent appeal in sport. They’ve been good at creating and nurturing a competitive culture that emphasises sport as an end in itself rather than a means towards profitability.
AICD: In an essay for the Griffith Review on sports governance, you talked about businesspeople, mostly businessmen, being on sporting boards. Has it helped when successful businesspeople have come onto the boards of sporting organisations?
GH: I can’t imagine that it’s a hindrance to have people who are at home with handling large sums of money, who are capable of thinking strategically, and do have experience of the world outside of that particular sport.
One of the limitations of sports administrators in Australia over the years is that they have been so incredibly wedded to their own sport that they haven’t been particularly broad, imaginative or enterprising individuals. Sports have been famous for attracting the sort of jockstrap-sniffing administrators who have been so obsessed with the minutiae of their sports that they’ve let other considerations go by the board.
But I suspect that we’re at risk of teetering too much in the other direction. That now, business smarts are over-represented on boards and perhaps direct playing experience, or a sort of romantic attachment to the sport, is not a particular qualification.
AICD: The AFL is often presented as the model of sporting governance in Australia and lots of organisations look to it, but you’ve suggested that it’s not necessarily the most appropriate organisation to model themselves on for some of the smaller sporting bodies and clubs.
What are the risks involved for smaller organisations trying to imitate what the AFL has achieved?
GH: Everyone these days is trying to grow quite aggressively and there’s a sense of acute competition between the sports for market share. There’s a desire to expand relentlessly, to find new markets, to exploit new opportunities, and to stretch the business.
Cycling and golf are examples of sports that have had very aggressive expansion plans. They didn’t really have the financial resources to support them and within a couple of years they pushed themselves to the brink. They just didn’t have enough in the kitty. They were dependent on immediate success but there was no real prospect of them succeeding within two years. They really needed to have a 10 year time-frame and they just didn’t have the resources to go with it.
AICD: You touched briefly in the Griffith Review on the role of government funding in sporting organisations. What do you think about the reliance on government funding, and if that skews the governance of sporting organisations?
GH: I think they’re all going to have to come to terms with the idea that government funding is not going to grow significantly. In fact, in real terms, it’s probably been in decline for four or five years. If you haven’t diversified your income base, you’re going to miss out.
There’s just no point in rallying behind [Australian Olympic Committee President] John Coates and expecting him to distribute loaves and fishes. He’s just not going to get them.
The days when the government was just going to be an ATM for sport are behind us.
AICD: Often sporting clubs don’t have the same sort of oversight from their members, as companies do from their shareholders. Does that create problems?
GH: In terms of stakeholders, the people that I’ve spoken to indicated that it’s a much more complicated business than running a corporate. You have multiple overlapping stakeholders who have different degrees of influence.
There are relationships with fans, with participants, with government, with sponsors, with broadcasters, with history and tradition, and with a sense of values that are sometimes almost more binding and onerous than a corporate mission statement.
Any of those stakeholders are apt to make their presence felt whenever they feel as though they’ve been taken for granted. Members can very easily become restless in the face of the lack of success but so can sponsors if they don’t feel as if they’re getting adequate gratification.
AICD: The leadership of a sporting club is often diffuse and overlapping. You have Presidents, CEOs and the board of course. But you also have coaches and senior players who have a lot of influence around a club. Would it help general sporting governance to have clearer definitions of the roles of all those people?
GH: A lot of that is to do with corporate scale. If you’re running a small sporting organisation, the idea that the director supervises and the executive carries out is a bit of a counsel of perfection.
Directors of a small sporting organisation are going to naturally undertake more direct hands-on operational activities than a larger organisation.
But I don’t think that necessarily works for larger sporting organisations and this is complicated further by the fact that most directors are acting in an honorary capacity. In some respects, because they perceive themselves as being there for the right reasons, they get into the situation where they probably think “Well, you know, why should I not enjoy the perquisites of having some sort of influence over selection or recruitment,” or, “Why should I not have some sort of say in how the football department is run?”
The reason that we go into sport, into governance, is because we’re passionate about it and because we feel as though we can make a difference. And often the roles are not particularly well defined. Or they’re defined by the individual, rather than the role.
Gideon Haigh’s landmark essay on the governance of Australian sport is available here.
Gideon will be speaking on the panel ‘NFP: Setting up your board for long-term financial strength’ at the 2017 Australian Governance Summit.
Want to find out more about the Australian Governance Summit? View the 2017 program here.