The Time For Essential Change is Now

No one knows what the aftermath of the Coronavirus will look like. Only time will tell. However we can all be pretty sure that things will change for a period of time, maybe forever. The planning of some changes need to start now. .

We have witnessed numerous sporting events across the globe cancelled and postponed, including iconic events such as Wimbledon and the Olympic Games.

The Olympic Games have been rescheduled to 2021, and the dates set, the 23rd July – 8th August. Yet despite those dates being announced there are still doubts.

The head of the Tokyo Organising Committee, Toshiro Muto said after these dates had been announced “I don’t think anyone would be able to say if it is going to be possible to get [the pandemic] under control by next July or not, we’re certainly not in a position to give a clear answer.” Another delay for Japan could be catastrophic financially of for the host nation and begs the question can individual cities seriously afford to host the event any longer?

The postponed Games are already said to be costing Japan between USD$2.7Billion – according to the Nikkei – and another estimate of $5.7Billion. In addition Tokyo organizers are having to renegotiate new leases on venues that were planned to host events and maybe find completely different fields of play as the original venues are now not available. They also have to deal with real estate developers who have already sold off thousands of apartments that would have/will be the athletes village.

Local organizers and Japanese government bodies have said that they were spending USD$12.6 billion to host the Olympics in Tokyo. However, in December of last year a national government audit report put costs at USD$28 billion.

The International Olympic Committee (IOC) contributed USD$1.3 billion to help finance the Tokyo Olympics, which in relative terms is a very small fraction of the total cost.

Yet as a result of the Olympic Games the IOC receives a hefty return on investment. The IOC had income of $5.7 billion for the last four-year Olympic cycle (2013 to 2016). Close to three-quarters of this income is said to come from the sale of broadcasting rights, with sponsors contributing an additional 18%.

The delaying of the Olympic Games will have an impact on those projected revenues. Clearly there will be a period of time after the Covid-19 crisis is over when many will opt not to travel. Which will in turn have a huge impact on those attending the Games as fans. It has been reported that the IOC does have reserves of money, one figure reported stating that this sits at around USD2Billion, the IOC also have insured against losses on the Olympic Games. No doubt their insurer is sweating a little at this point in time.

Also sweating will be the International Federations.

The delay has put the spotlight on a number of sports and how they have been run. The spotlight should also be going on the Boards of many of these sports, as it is the Board that is appointed to ensure “the organisation develops and implements strategies and supporting policies to enable it to ful ll the objectives set out in the organisation’s constitution. Commonly the board delegates the day to day operations of the organisation to the management team via the CEO but remains accountable to the members and shareholders for the organisation’s performance.”

Part of that responsibility is “approving the organisation’s budgets and business plans and monitoring major capital expenditures, acquisitions and divestitures, and capital management generally.”

Now few could have seen the Covid – 19 Pandemic coming, although watching various You Tube clips the warning signs were there back at the turn of this century, yet how many sports are in a position to ride this out? How many have the financial reserves to come through this in one piece?

It has already been reported in the British press that the postponement of the Olympic Games has left many sports in financial difficulty. Funding from the central body UK Sport has already been allocated to some organisations who were also reliant on additional funding generated through sponsorship deals. That money has now dried up because of the pandemic.

Australian sport is in a similar position. The Football Federation of Australia was reported at the end of March as having “stood down 70 per cent of its staff in a desperate attempt to stay afloat.” The word is that only six staff are currently working full time at the organisation. This in an organisation that was employing more staff than the world’s Governing body FIFA last year. How can a sport that has the highest number of participants of any team sport in the country, and has received endless funding from Federal and State Governments find itself in such a perilous position? After all the A-League clubs are privately owned. Have there been too many noses in the trough?

There are many who are predicting that of the 33 Sports due to compete at the Tokyo Olympics a minimum of five will struggle to be still solvent by the time the Games do come around in 2021. Can the IOC allow these sports to compete if they are insolvent?

Once again Sports have relied far too heavily on the funding from the IOC, which is supposed to be spent on growing their sport and developing it. Yet the funds have been eaten up by administrative costs. Now, having to wait another 12 months, some it is rumoured are already finding that this is a bridge too far.

It is understood that some sports have already gone begging bowl in hand to the IOC for an advance payment.

The IOC paid USD540million to Federations after the Rio Olympic Games. This money was handed out based on each sports audience and size. Clearly though they do not want to hand out funds prior to a Games they cannot be sure will go ahead with as many events as originally planned. As IOC Member Dick Pound told Inside the Games, “When, as the IOC, you may be asked to ‘share in advance income that, in the end may not be received, it is important not to create an unsustainable ‘entitlement’ relationship.”

He went on to say “there may well be IFs that have allowed themselves to live in a style that is beyond their incomes.” This appears to clearly be the case.

The stakeholders in a number of sports need to be asking questions now as to how their sport finds itself in this situation, and has the Board been asleep at the wheel? The question the general sports fan and players should be asking of their national representatives is why were questions not asked prior to the sport finding itself in this parlous state? Heads must surely roll, but more importantly Board members must be held accountable for what has happened on their watch.

If the international body is facing financial issues imagine the financial situation some of the Olympic sports in the 206 nations expected to attend the games must find themselves in. There is no doubt that many of these will also soon find that they too are insolvent.

Clearly there will not be positions for many staff who have been stood down, when people are allowed to return to work. Yet who is let go needs to be looked very carefully as many of these organisations find themselves in this situation because they have been top heavy in management. Organisations are going to need to be restructured and skilled workers are going to be required to do the work, rather than oversee it.

The various Boards should be using this time to be looking at a way to restructure their organisation and be able to deliver in a more efficient and cost-effective manner to their stakeholders when we come out the other side. They may even wish to look at the number of Board members that they actually have, and whether that is efficient and meets their needs or is indeed also extravagant; as many of these Board members receive a fee for being on the Board. Analysts have said that the most efficient number is seven. How many sit on the Board of your sport?

When it comes to the period Post Covid-19 currently most of the rhetoric in most media outlets is concerned with the elite levels of sport, and having that operational once again. Yet the elite level makes up such a small percentage of those playing sport. Just like the professional players, the average Joe and Jane too also currently being deprived of being able to play; however obviously not deprived of income from the sport.

To put it in perspective UNI World Athletes is a body made up of the various representative bodies from a number of sports. For example the likes of FIFPro (the world footballers’ association), the Federation of International Cricketers’ Associations (“FICA”), the International Rugby Players’ Association (“IRPA”), and many more. Based on those bodies figures they represent a global collective of 85,000 professional athletes. a drop in the ocean of those playing sport globally.

Now anyone who follows sport knows that the ideal situation is that the small percentage at the top of the pyramid are the ones that attract the crowds and the sponsorship and television rights, and that those monies need to be filtered down to the bottom to help fund the next generation coming through. For over a decade in many sports this has not been happening. That money has stayed at the top and the costs have risen to often prohibitive levels at the bottom of the game.

This area must be the focus when the dust settles on the Covid-19 Pandemic. Costs have to be cut in administration and sleeker operations need to be put in place. This will definitely test the calibre of the various CEO and their Boards.

The sports that find a way of subsidising youth sport and their junior programs for the next few years, to enable families to get back on their feet will be the ones that will survive this tough period, and will have a strong foundation on which to build for the future. Those that continue to operate the way that they have in the past with a sole focus on the elite side of their sport will find that if they are not insolvent now they soon will be.

It is time for a shift in attitude, a shift in the way things are done, and it is essential that sports are self-supporting and not reliant on hand outs to survive. Like the clubs within their sport they must learn to live within their means. If that happens, then positives will have come out of what currently appears a negative situation.