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Take a fresh approach on sporting goals

Tuesday, September 11, 2018
Things That Matter

The traditional governance structure under which most national governing bodies and Olympic Committees operate aren't standing up to the demands of the contemporary sport.

Sports organisations are for the most part not-for-profit as opposed to being a for-profit business. A for-profit business is created to serve the interests of its shareholders.

As such they operate to maximise shareholder return on investment and most strategic decisions are made with this intent foremost in mind. Shareholders own a for-profit business.

They may not play a major role in the running of a company but are able to vote on corporate matters such as who sits on the board of directors and other significant matters.

A not-for-profit such as a national sports organisation (NSO) serves the interests of stakeholders who may have varying expectations of what benefits they should receive.

No one person or group own a not-for-profit organisation, individuals in a position of power or influence within a sport are temporary stewards or custodians, there to protect the best interest of the sport and pass the baton on to the next generation of leaders and decision makers. In a real sense the concept of membership, rather than ownership is at the root of the sports governance model.

The members of an NSO are not the owners of the governing body in the same way as shareholders own a for-profit company. In essence, all members play a critical role in the development and delivery of sport which is a major difference to shareholders.

All of the money earned or donated to, a not-for-profit is reinvested to pursue the organisation's purpose and the objectives as articulated in the organisation's constitution.

The differences between for-profit and not-for-profit are significant. Adopting best practice methods from the corporate world may very well ignore the nuances of a sports organisation. These nuances ought to be acknowledged when adopting corporate governance best practice. It's important for members to read their sport's constitution.

Problems arise when there is an overlap between management issues and strategic governance. It's not unusual for an NSO's constitution to allow members to vote on matters which should be under the control of management. This hampers the management ability to effectively execute the organisation's strategy.

Given well-publicised controversies, the importance of constitutional review and reform is in many cases an urgent and ongoing priority.


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