News 7th September 2015

FITS Forum: sport and its commercial partners must protect its integrity

Sport and its commercial partners have a major role to play in ensuring the financial integrity of sport, heard delegates attending day two of the Financial Integrity in Sport (FITS) Forum in Geneva on 4 September. This includes building transparent and fair commercial contract structures and managing effective re-investment to ensure that new money goes back into sport.

The second day of the International Centre for the Security of Sport (ICSS) forum kicked off with a panel session about balancing the commercial success of sports with ensuring its global appeal and sustainability. Nic Coward, former General Secretary of the Premier League, stated that sport must “attract talent and create a commercial product”, and that this could happen “so long as sport has an IP framework in place in order to monetise and exploit assets and then reinvest in the talent, and reinvest equitably”.

Coward said that sport is about passion and elite performance. He used the example of the International Association of Athletics Federations (IAAF) Beijing 2015 World Championships, which was successful despite recent questioning of the IAAF’s functions and viability, following media allegations that it did not successfully police against alleged doping. Former Premier League colleague Jane Purdon, now at UK Sport, added that “in order for sport to survive people need to be able to trust it”.

In terms of commercial viability, Markus Stüder, COO of the international basketball federation (FIBA), said that it was crucial for a sport to paint a good picture for sponsors of professionalism and good organisation, as it was suffering from not being an AAA-rated product. He said that in terms of governance structures, there was a need for international unity – an idea that Purdon thought possible. Robert Brophy of World Rugby, which is preparing for the biggest commercial rugby union event in history (the 2015 Rugby World Cup), said that sponsors and broadcasters want to see independence.

Investment in sport

The second panel of the day continued the commercial debate, but this time from the perspective of the sponsors. Chris Rodman of sticker/card collection company Topps Europe, said that sponsors had a role in calling sports to account by ensuring rights were bought and sold in the correct manner using a tender process. He pointed out that unfortunately, this is not the current reality of sports today and from the sponsors’ perspective, there are still a number of leagues and governing bodies failing to operate a tender process.

Jaimie Fuller of sportswear company Skins and political lobby group Change FIFA Now, spoke about alleged corruption in the awarding of commercial rights. He gave the example of FIFA allegedly handing the broadcast rights to the 2026 World Cup to Fox untendered, which he said displayed a lack of transparency. He called on sponsors to take their “duty of care” seriously when considering endorsements. The panellists mentioned that consumers and fans are today playing an ever increasing role in the governance of sport because of technology – they have a very real chance to influence what sponsors do with their money, which could be a catalyst for change.

Sport & business ethics

The third panel discussed the role of ethics in sport. The panel were agreed that sport is closely linked with ethics, and that the concepts of sportsmanship and professionalism were almost synonymous with ethics. However, they agreed that sport would be wise to take care not to scare sponsors away by holding them to unattainable standards in every decision to partner with someone.

Third party ownership

The final panel of the day, on third party ownership (TPO), was sure to divide opinions, and did not fail to live up to expectations. The lively debate featured a panel consisting of Alasdair Bell, General Counsel of UEFA; Sir David Richards, former Chairman of the Premier League and the European Professional Football Leagues body, Daniel Cravo Souza, Senior Partner at Brazilian law firm CPB & Associates and Javier Tebas, President of the Spanish football league (LFP).

Richards presented his view that TPO involved the trafficking of minors and is tantamount to slavery. He claimed to have seen first hand how minors are taken at a young age from their home to a new country, and abandoned if they do not make the grade to compete in professional football. UEFA’s Bell also did not see any benefits to TPO and was of the view that the investors have invented a business model predicated on maximising the trade in players, in which they seek to make a profit.

Bell said it was important to keep in mind whether TPO was of benefit to the player or other stakeholders in football. He concluded that TPO is only of benefit to traders and fund owners, and it is not UEFA’s job in football to protect their business interests; UEFA’s duty is to protect the interests of our clubs and players. “It would help if there was more transparency about the content of these contracts”, said Bell. “TPO investors should publish contracts so that stakeholders in football can decide for themselves whether it benefits the sport”.

However, for Souza, TPO in itself is not a negative thing, it is the in which way it is used that could have negative effects. As an economic right, TPO is used in South America because that part of the world is good at developing players, and there are few other lucrative revenue streams – for example TV rights generate nowhere near the payments that European clubs enjoy. He said it was a “disaster” for FIFA to ban an “economic right” in the ownership of a player.

The LFP’s Tebas said that TPO can often benefit the players and clubs. Rather than introduce an outright ban, UEFA should have regulated its use and introduced conditions against trafficking of minors and fraud, he argued. In his view, UEFA and FIFA did not examine the issue properly, only considering the ‘English’ model with TV rights as the central source of club funding.

Closing remarks

At the opening address to the FITS Forum, Emanuel Macedo, ICSS CEO, argued that sport cannot change its governance to improve financial integrity on its own, but pointed out that “together, we can drive positive change”. Following up on his theme, he said that there was much work to be done by delegates attending the conference, which included major sport governing bodies, broadcasters, sponsors, financial stakeholders and supporters. This work included:

• Pushing leagues and bodies to have good governance structures, fair democratic transparent elections, term limits for all officials, and a clear separation of powers;
• Effectively monitoring and auditing development programmes;
• Ensuring major sports events, TV contracts and commercial deals had clear and transparent bidding processes;
• Implementing an international independent clearing house for sport’s financial transactions;
• Putting a system in place to ensure integrity in club ownership, with all owners properly scrutinised.

“We need to have courage to acknowledge a lot has been done but a lot remains to be done”, said Macedo. “No legitimate league or club should operate free of oversight and regulation. Impossible is nothing if we want it to be nothing, and we the ICSS are ready to work with you in the name of transparency and integrity”.

Macedo informed delegates that ICSS would release a full FITS report soon. You can read a review of Day One of the FITS Forum by clicking here.

 

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