Sport Governance: Compulsory Regulation vs Voluntary Codes of Best Practice?
Posted: Mon, 14 May 2018 09:28
It is widely covered in the mainstream media that some sports organisations and elite athletes have been plagued with financial mismanagement, reputational damage, doping charges, litigation, match fixing allegations and other forms of corruption. This is ultimately a failure of governance standards. As sport grows, governance becomes a greater challenge and needs to be addressed.
Which approach is best to achieve the highest standards of governance? Compulsory regulation or voluntary codes of best practice?
Compulsory regulation enforces minimum standards in governance, addresses tax payers' concerns of the value for money they are receiving and protects shareholders, stakeholders and employees.
A prime example of compulsory regulation is UK Sport and Sport England launching "A Code for Sports Governance" in 2017. This was a new set of guidelines focusing on improving the transparency, accountability and financial integrity of sport and physical activity (PA) organisations in receipt of public funds.
Despite the uncomfortable curve ball for executives and board members from 550 sport and PA organisations having to seek approval from their respective memberships to adopt the required changes (with a few notable close calls) this compulsory regulation compelled higher standards of governance with the caveat of withdrawn funding. Would sports organisations have adopted similar high standards of governance had this negative reinforcement not been introduced?
Additionally, government interventions through inquiries and investigations enable the regulation of market failures, criminal activity or mismanagements of sport. Subsequently, legislation is passed to ensure they are not repeated.
A prime example is the Department for Digital Culture Media and Sport Select Committee announcing an inquiry into sports governance on 11 September 2017. This sought to investigate the duty of care of athletes within sport and PA organisations after allegations of bullying, flaws in the procedures of safeguarding athletes and the protection of whistleblowers. The outcome of this inquiry is to be reported in late 2018 with recommendations into further protections and updating of procedures so they are fit for purpose.
Voluntary codes of best practice
Adopting a voluntary code of best practice (essentially a set of recommended) allows: flexibility for sports organisations to govern themselves in line with their needs and requirements, less bureaucracy, and allows more time to focus on being answerable to its members and key stakeholders. A number of voluntary codes, past and present, include:
Principles of Good Governance written by the Sport and Recreation Alliance comprises of 7 guiding principles which its sport and PA member organisations can sign up to in order to promote high standards of governance.
The Basic Principles of Good Governance is the IOC's ethical and strategic recommendations laid out by congress members to which Olympic governing bodies are expected to abide by.
On Board for Better Governance was Sport England's guidance toolkit for potential recipients of public funding outlining the desired composition and required skills of the board of directors.
No two sports organisations are the same and cannot be painted with the same "governance brush". Smaller sport and PA organisations require flexibility in how they govern and will not have the same requirements of large multi-national governing bodies. For example, an international sports federation will require remuneration, nomination and audit committees as part of its board of directors which a small sports charity will not.
However, is there any need or desire for regulation, codes or even funding to provide gold standard governance? Is best practice for sport and PA organisations to govern themselves solely on a commercial footing. Arguably the highest performing sport and PA organisations are the largest whom fund themselves commercially and are not reliant upon public funds and therefore any regulation.
From 2013-2017 £450m was allocated by Sport England to national governing bodies to increase grassroot sport and PA participation and this has been cut for the 2018-2021 cycle. Several national governing bodies have seen their public funding significantly reduced. This may initially seem a threat to their ability to govern however it could be a blessing in disguise. They have since adapted and recruited commercial, sponsorship and marketing professionals to underpin their new structures in order to generate their own income. Is this the way forward for effective governance?
Peter Fozard is Events Manager at British Universities & Colleges Sport (BUCS)