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The last 12 months have seen a continuation of the explosive growth and commercialisation of the sports sector. As sport and business go increasingly hand-in-hand, controversies over governance and accountability of those running sports organisations are increasing. As such, 2018 is likely to see a marked focus on governance in sport both in the UK and internationally.
Recently, sports governing bodies have begun to analyse their governance structures with a view to modernising them. As the market in which they operate changes, so too does the realisation that often the structures that are in place are not fit for purpose. Furthermore, privately held sports organisations are often run without input from the multitude of stakeholders that may hold an interest.
Regulatory, commercial and public pressures are changing the landscape and leading to reform. This article looks at the backdrop of sports governance in the UK, some of the drivers of change and the likely impact in 2018.
As sport becomes increasingly commercialised, the sponsors investing their money and reputation in the sector are becoming more demanding of the organisations they partner with. Sponsors demand greater transparency prior to entering into arrangements and may exercise termination rights in event of high profile governance failures.
Three recent cases in the UK highlight how legal action has been taken in an attempt to remedy purported governance deficiencies in sports organisations:
In October 2016, UK Sport and Sport England published the “Code for Sports Governance”, which creates binding governance requirements for all sports organisations from elite to grass roots, including performance programs for Olympic sports, that want to receive UK Sport or Sport England funding. For bodies receiving funding over multiple years and in excess of £1m, the requirements included the following (non-exhaustive):
During 2017 many organisations took steps to amend constitutions and processes to become ‘code compliant’ ahead of the soft deadline of October 2017. This process was often fraught and involved curtailing the historic power of membership councils. Table Tennis England saw its funding briefly suspended in July when its members rejected the necessary reform package (a decision which was subsequently reversed). 2018 will see the further implementation of the reforms, with many board members being required to step down due to tenure limits expiring and new independent, non-executive director positions being filled.
Governments and national funding bodies from other countries will be watching the impact of the Code with interest as they mull implementing reforms to address perceived governance failings, particularly in relation to safeguarding concerns. International federations may also take the lead in imposing enhanced governance standards on affiliated national associations.
Many sports organisations recognise the reputational and commercial risks where governance concerns arise and are proactively reviewing procedures.
For example, the Football Association in England recently ended its sponsorship arrangement with betting and gaming partner Ladbrokes due to the perceived conflict of interest with the FA’s role as the enforcer of rules prohibiting footballers from gambling. Additionally, in December 2017, World Rugby announced it will undertake a review of its process for awarding World Cup tournaments, after its members rejected the recommendation of an independent evaluation in a secret ballot when awarding the 2023 tournament to France.
The increasing frequency of affected persons challenging decisions of sports bodies (typically through internal appeals procedures which may eventually lead to the Court for Arbitration in Sport) is continuing to influence standards in governance. Requirements of transparency and accountability are becoming embedded in updated policies and procedures.
The UK is at the forefront of debates and action surrounding sport governance. The themes of media interest, continuing concerns and implementation of reforms are reflected internationally. The numerous regulatory and commercial drivers will ensure that governance continues to be a major focus for the sports sector in the 12 months ahead.
Written by Richard Davies, Associate, Charles Russell Speechlys
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