Governance in sports institutions, clubs and competition organisers

Posted in Corporate M&A and securities

There is an increasing trend among funders of elite sports clubs to require them to be reformed as limited companies so that they are no longer unincorporated associations.

This inevitably impacts the way clubs are run by imposing directors’ duties on those who were formerly just “on the committee”.  This imports, as a minimum, the 2006 Companies Act section 172 rules about what directors need to take into account when running what are becoming hybrid businesses. There is strong evidence that businesses that are well organised along model corporate governance lines are more likely to prosper than to fail. On 26 August 2018, the Government published its response to the comments that were received during the Government’s consultation on Insolvency and Corporate Governance that was held earlier this year.   

In practice, the majority of sports clubs competing in major competitions, domestic or international, will be well run as far as its sporting prowess is concerned, but they will need to ensure that the non-sports management embraces good corporate practices as well.  In the age of the Twitter rant, scrutiny of behaviour arrives at unwelcome speed and is difficult to contain, usually disruptive and normally inaccurate. Good governance helps ensure that difficult and unpredictable situations are handled better in a manner likely to withstand uninvited and unwelcome external scrutiny.

Child protection, anti-doping, diversity, data protection (it is surprising how much very personal performance and medical data is held about athletes in elite performance programmes), media, bullying and health and safety policies should already be in place. But, in the present climate of a thirst on social media after the event there is a need to anticipate the impact of the unexpected and respond appropriately. However, a catch all set of policies is impossible to draft. Good governance is a major plank in crafting relevant and effective responses.

Corporate governance good practice provides a route whereby these issues will be kept under appropriate review  to avoid being caught on the hop.

The Financial Reporting Council weighed in over the summer with a new suggested governance code advocating a lighter touch going forward.

Sports clubs are no different in their need to protect the image and integrity of their club and its members, employees and athletes, the well-being of the club, and the interests of all of the stakeholders in the club, by preventing anyone who is subject to unacceptable conduct or criminal behaviour being involved in or influencing the management or administration of a club. Any code, because of the often high profile of an elite spots club ought to set out certain minimum standards as to conduct expected of its officers and committee members (who in law are its directors).  The English Football League has gone to great lengths with its Owners and Directors Test to keep certain individuals out of its competitions; smaller sports institutions and clubs do not have the resources to craft and monitor their members and participants with that level of granularity and commitment.

Because of the high profile of any successful sports institution or club, it is perhaps appropriate to  consider embracing the widely accepted “Standards in Public Life” applicable to politicians and others in public office which are simple in their message and commendable in their brevity. They are a cornerstone for simple and effective governance without the need to regurgitate text books and codes on the subject.  It is suggested that there is a simpler solution.

The language below is adapted from the “standards” to the general needs of any sports institution or club committee, particularly one with a high profile of which others may be envious and which needs to demonstrate leadership on the field of play and in the clubhouse and committee rooms:

  1. Selflessness - Committee members should act solely in terms of the club’s interest.
  2. Integrity - Committee members must avoid placing themselves under any obligation to people or organisations that might try inappropriately to influence them in their work as Committee members. They should not act or take decisions in order to gain financial or other material benefits for themselves, their family, or their friends. They must declare and resolve any interests and relationships.
  3. Objectivity - Committee members must act and take decisions impartially, fairly and on merit, using the best evidence and without discrimination or bias.
  4. Accountability - Committee members are accountable to the members for their decisions and actions and must submit themselves to the scrutiny necessary to ensure this.
  5. Openness - Committee members should act and take decisions in an open and transparent manner. Information should not be withheld from club members unless there are clear and lawful reasons for so doing.
  6. Honesty - Committee members should be truthful.
  7. Leadership - Committee members should exhibit these principles in their own behaviour. They should actively promote and robustly support the principles and be willing to challenge poor behaviour wherever it occurs.

These principles are just as applicable to officers, coaches and other club managers with a say in the day to day management of a club.

Sport even at club level is an emotional activity as its management,  and often highly political: tensions often run high in the committee rooms and the bar. Whether it is selection, competition, performance (more likely underperformance) the commitment involved at all levels is often as high octane as the game.

Adherence to the standards is of potentially huge value in encouraging better behaviour through the pitfalls and peaks and troughs of the performance related sports sector on and off the field of play.

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