Feature: Fever Pitch

The complexity of running a sporting business places an even greater emphasis on governance and culture.

Fever Pitch

The complexity of running a sporting business places an even greater emphasis on governance and culture. Alexandra Cain reports.

ports governance has come a long way in Australia, evidenced by the mix of directors who agreed to be interviewed for this story. Of the five directors Company Director spoke to, three were women. A decade ago it’s more than likely everyone in the story would have been male. Directors define a business’s culture, which is why it is so incredibly important the board gets it right.

This shift in Australian sports governance, is in part due to the work undertaken by the Australian Sports Commission (ASC) to encourage the major sports to get their governance right, to ensure community trust is maintained.

Along with that, many sports have also been proactive in transforming their boardrooms.

Sam Mostyn was, until recently, an Australian Football League (AFL) commissioner. She says one of the major challenges facing sports businesses is ensuring the right people are sitting around the boardroom table.

“You need to look beyond people who are passionate supporters to people who have the skills to manage the business, its risks and its governance, which means having a diverse set of skills. Sometimes that means bringing in people who have not played the sport,” she says.

Diversity is an especially important topic for sports businesses, which need to engage not just with their traditional supporters, but also with the many different groups that make up the Australian community. This is the only way they will be able to maintain their fan base into the future. Therefore, Mostyn says it’s essential for every sport’s “shopfront” to be welcoming to everyone.

This involves cultural competency training for staff and leaders, and a genuine determination to encourage many different groups to engage with sport. At a governance level, it’s about actively looking for people with different skill sets to become directors.

For instance, when Mostyn was appointed to the AFL in 2005 the then-chair, Ron Evans, instigated a specific process and appointed a headhunter to look for appropriate women to sit on the board. “It was a deliberate process as it was understood that without a specific mandate to appoint a woman the status quo would remain. This led to further appointments of women to the board as a matter of course,” says Mostyn.

The fact that women were appointed to the board more than a decade ago is one of the reasons why women are so involved with the game now: the 2015 AFL annual report notes female participation has gone from 194,966 in 2014 to 318,000 last year.

Another sports organisation that prioritises good governance is Netball Australia. The organisation’s chair, Anne-Marie Corboy, explains that the board has undergone a governance review over the last few years. Part of that was Corboy’s appointment to the board.

“We’ve now appointed directors, as well as elected directors, based on the skills mix that’s required for the board. It’s also very important for our board to be a high-performance board, so we have external advisers who are working with us on how we can do better. We’re at a very good level and it’s about not being complacent and continuing to be a leader.”

The renewed focus on governance can be seen in the rise of netball in the Australian psyche. Next year, an eight-team competition will be broadcast by the Nine Network in prime time.

At Netball Australia, board tenure is limited to nine years and there are six elected directors and up to two appointed directors on the board, who are selected for their skills. “We’ve got the capacity to change the skills mix on the board. It’s not just a pure election process, there’s also a process that sits behind that to look at the candidates as well.”

Nevertheless, Craig Mitchell, EY’s associate director of its sports, events and venues advisory practice, says it’s important to remember diversity is not just about gender. “There are other aspects of diversity relating to ethnicity, sexual orientation, disability and skill sets. What the sports commission is talking about is having representation of stakeholders of the sport and having that in a way that reflects the sport but doesn’t impede the board’s ability to achieve its objectives.”

He notes the ASC has developed principles around good governance that are in line with the ASX’s corporate governance rules. As a result certain sports, for instance, women’s cricket and women’s football, are starting to enjoy a higher profile. Hopefully down the track this will translate to a greater ability to attract sponsors, fans and media coverage.

ADDRESSING CHALLENGES

David Gallop is the chief executive of the Football Federation of Australia (FFA). He is also a former CEO of the National Rugby League (NRL) and a former secretary of the Rugby League International Federation.

He says achieving the right balance on the board – not just in terms of diversity but on many levels – is the challenge, especially given many sports boards are undergoing a transformation as they reassess the way their organisations are governed.

“You need to take people with you. Sometimes the hard reality of business clashes with an unrealistic desire to get somewhere faster than is possible. This is where decisions have to be made with care,” says Gallop.

Basketball Australia’s CEO Anthony Moore says one of the main challenges of governing a business like his is ensuring there’s genuine alignment of everyone across the business. Moore is a career sports administrator, having previously worked for the ASC, St Kilda and Richmond Football Clubs and Cricket Australia.

“If you’ve got a misalignment between your business units you’re not going to get the optimal result. You’re judged on a weekly basis if you’re in a seasonal sport and you need to make sure all of the parts of the business are in alignment to get that result,” he says.

Moore says achieving that goes back to embedding team-based principles in the business. “It’s about recognising each business unit has a critical role to play and that everyone within the organisation actually understands that. You must act as one organisation as opposed to disparate parts. The role of the CEO, the executive team and the board is to make that happen.”

Basketball Australia is one of seven sports to which the ASC applies its governance principles. When Moore joined the business in 2014, one of his first tasks was to undertake reforms to ensure the organisation met the commission’s guidelines, which in turn allowed it to maintain its funding from the ASC and public trust in the organisation. “But a lot of the heavy lifting on governance reform, as mandated by the sports commission, had already been done prior to my arrival,” he says.

Moore says an advantage is that the board has acknowledged previous governance challenges. “It’s a topic we talk about regularly at board meetings and in our general conversations between executive staff and our board.”

He says accountability and transparency are key to the good governance of the organisation and its new strategic plan will allow it to better achieve these aims and help it to support its healthy culture. For instance, the plan will assist it to clearly communicate expectations about issues such as anti-doping, racial and religious vilification and wagering and betting.

“If you don’t have good governance systems within your sport, you are actually looking at the possibility of significant and material damage to the reputation of your sport. If we can’t be good leaders, how can we demand the same of our athletes?”

A BALANCING ACT

Cricket Australia director Jacquie Hey, the first woman on the board, says one of the challenges many sports face is maintaining passion and tradition, while also looking to the future.

“You have to respect what people are doing in the sport. That’s everyone, from volunteers to kids playing cricket on the local oval, to administrators and umpires and players. Trust is a big part of it. Trust comes when you have good governance, when you’re making sure that you work together for the benefit of the sport, not for the benefit of any particular interest groups,” says Hey, who has broad business experience as a director and CEO.

Cricket Australia introduced a new governance structure three and a half years ago. Previously, the board comprised state representatives, but now it has a fully independent board, with no state ties. “We’re not looking at what’s best for Victoria, or New South Wales, or South Australia; we’re a fully independent board that’s just looking at what’s best for Australian cricket.”

Hey says this simplifies governance. “We’re doing what’s right for the entity and the sport as a whole, not having to look at interest groups or geographical issues in isolation. It also allows us to do things like look across the governance of cricket and say, ‘Where are the best skills and capabilities in Cricket Australia? Let’s use them to help us do the job’.

“It also means we can look at finance across the breadth of the nation of cricket and say, ‘Where is it best that we have our finances and our model working as one?’ When you rise above the federation and do what’s right for the sport across the nation, a whole lot of things become easier. It allows us to generate more money, to be more efficient, and then to start to invest that back into the state and territory associations,” Hey continues.

It means that more money goes into implementing the strategic plan, getting kids playing cricket, encouraging more women to be involved, attracting more volunteers and raising the standard of governance for everyone involved in the sport.

THE SO-WHAT FACTOR

Governance matters in sport, not just at the upper echelons, but also throughout a sporting organisation’s ecosystem.

“If you’re a volunteer spending your Saturdays scoring your son or daughter’s cricket team, you want to know that everybody else who’s involved in the sport is doing it properly and that the money that’s in the sport is being managed properly, and you want to feel proud about what you do,” says Hey.

Get it wrong and the main casualty is trust. “People lose faith in doing what they need to do in the sport. Whether that’s training hard or volunteering or getting their kids out to play on a Saturday or Sunday, you start to lose the gloss, you start to lose the engagement and you start to lose that passion,” she says.

Gallop agrees good governance is fundamental to the prosperity of any sport. “This is the conventional wisdom the ASC identified a decade ago. Football is a good example of a sport that basically collapsed at the national and professional level because of governance deficiencies.

“In 2003, after an ASC-backed inquiry by David Crawford, the sport basically had to start again under Frank Lowy’s leadership. The Crawford report identified that governance failings had made the sport dysfunctional at the professional level. That in turn made it impossible to have the commercial and media partners to fund the sport’s ambitions. The experience of football since has shown pretty clearly why good governance matters,” says Gallop.

The FFA has a particular focus on governance, having just completed several major governance projects.

“We spent a lot of time and effort on a Whole of Football Plan , a 20-year vision for the game. This was about building a unity of purpose across our governance. We have a federated model in which nine state and territory member federations constitute the membership of the FFA company. The 10th member is the collective of the Hyundai A-League clubs, who have been critical investors in the sport,” Gallop explains.

Each member federation has regional zones and associations as its membership, with 2,300 clubs across Australia, affiliated to the zones and associations.

“Getting all these tiers to agree on national objectives is the aim. We spent a year on consultation and drafting plans and ideas before the launch in April last year. It’s been a huge piece of work, but it’s critical. In March this year we released a strategic plan for 2016 to 2019. It’s the first four-year instalment of the 20-year vision, with a major focus on turning our huge base of grassroots participants into fans of our professional game,” says Gallop.

Corboy agrees there are particular challenges leading a federated organisation. “That’s about harnessing the capacity, positive energy and goodwill in state and territory member organisations to work collaboratively to improve the sport overall.”

Although Netball Australia’s role is to set national policies and programs and deliver the national competition, it’s up to the state and territory member organisations to deliver their programs. Thousands of volunteers donate their time to the sport every week and Corboy says the challenge is bringing talent, skill and passion together to work collaboratively for the sport.

When it comes to governing such a large, federated network, as most sports do, Mitchell says everything starts with management and leadership around coaching, facilities, volunteers and culture. “Getting those things right and encouraging the clubs to get those things right, like having a set plan, having board renewal, having diversity on the board, is essential. Encouraging and rewarding those outcomes drives good governance.”

There are also consequences when sports bodies don’t get governance right. Says Mostyn: “There is a risk you will be thrown by unexpected events or that you won’t understand community expectations, which can impact the ability to attract sponsors and supporters.”

Like Gallop, she says sponsors expect sports boards to have the right mix of skills. “They are always interested in the capacity of the senior team to create the right culture.”

It has never been more complex to run a sporting business. But there has been a major push to ensure Australia’s main sports are being properly governed. This is reflected in the incredible support the Australian public has for its favourite sports, which will continue as long as exceptional people, committed to exceptional governance, lead our major sports.

Heeding long-term governance lessons

David Gallop says his biggest governance lesson having run the NRL and the FFA is that a decision made in a boardroom or a management meeting must not only make good business sense and meet strategic objectives, it must be deliverable and workable at the coalface, whether it’s a sporting issue or a regulatory matter.

EFFECTIVE MANAGEMENT

“Running a sport is not a matter of just making decisions and implementing them, in the way an ASX-listed company CEO might do. The stakeholders of any sport have a big say in its success. The mandate of the CEO running a major sport relies heavily on, where possible, finding consensus and mutual interests, but also making hard decisions that won’t please everyone,” says Gallop.

“Sport means a lot to a lot of people so decisions are scrutinised. Having a solid demarcation between the role of the board as guider of policy and full-time management, who implement on a day-to-day basis, is critical to success.”

Gallop notes the arrival of subscription TV in 1995, changed Australian sport forever.

“The tribal and local nature of sports based around traditional clubs was shaken by the realisation that sport was compelling TV content.

“If you track all the major changes in Australian sport over the past 20 years, you’ll see a common factor. Rugby union went from quasi-amateur to professional overnight. Rugby league had a massive split,” he recalls, adding that the expansion of the AFL into the northern states was a project driven and funded by TV revenue.

CHANGING EXPECTATIONS

At the same time, cricket’s five-day test format came under pressure to meet the commercial imperatives of TV schedules, with condensed versions becoming the premium content.

Says Gallop: “All these changes have made sports look long and hard at their reason for being.

“For example, playing professional sport on a Monday night instead of a traditional weekend afternoon does create tension between the community foundations and the commercial imperatives. It’s a huge challenge to balance the competing interests.”

RETHINKING GOVERNANCE

As sport has changed, so too has Gallop’s perception of good governance. “I’ve been fortunate to serve as a CEO in two national bodies during a fascinating time in Australian sport. I’ve only ever known transition and constant change. My perception over the long term is that boardrooms are now filled with professional people with specific areas of expertise, whereas 20 years ago there were plenty of fantastic people who just loved their chosen sport and had come up through the ranks.”

He says the measure of good governance is business acumen and community consultation. “They need to live together. The volunteers at the base of any sport must feel valued and see a pathway for continued involvement in the sport if they are going to stay motivated.”

Gallop acknowledges running a national sport is a tough job, but a privileged one. “You need to listen to your stakeholders and especially the fans. They will tell you very quickly if you have stuffed up. The best governance model won’t help you if your community doesn’t see the logic of your decisions.”