Governance in Football Federation of Australia - Case Study Example

FFA Governance Name Institution Date Introduction Sport governance describes a system of directing and managing organizations in order to achieve their objectives. Governance is concerned with the objectives of the organization, procedures and rules to be followed in making organizational decisions. Other governance procedures include performance assessment and monitoring. In sport organizations, governance impacts the accountability, transparency, use of resources, responsibility and activities of the sports organization. Poor governance in sporting organizations is a leading cause of public mistrust of sporting organizations. This case explores governance in Football Federation of Australia (FFA). In particular, the paper addresses the observance of the Australian Sports Commission (ASC) governance principles by the FFA. Secondly, it outlines problems facing the FFA as a result of poor governance and failure to follow the guidelines of the ASC on sport governance. The paper finally provides several recommendations that can solve the problems facing the FFA. The Australian Sport Commission Governance Principles The Australian sports commission (ASC) has set out a number of governance principles to be followed by sports organizations in Australia. According to the ASC (2012), the governance principles are supposed to assist sports’ organizations management boards in: Developing the organization’s strategic direction and goals. In monitoring board performance and ensuring their commitment to the goals and objectives of the organization In complying with legal and regulatory obligations Protecting the interests of members The ASC principles of governance focus on strengthening good decision making and leadership structures within sport organization. ASC hopes the principles can assist in aligning management practices in sport organizations with corporate governance in the profit sectors of the Australian economy. In the view of the ASC (2012), effective governance in sport organization is dependent on observing the following governance principles: Principle 1: Board composition Principle 2: Governance processes Principle 3: Governance systems Principle 4: Performance reporting and monitoring Principle 5: Stakeholder relationship and reporting Principle 6: Ethics and responsibility in decision making. Sports Governance Observer benchmarks Six European universities recently developed a new governance benchmarking tool meant to enhance the governance of international and national sports federations around the world. The new benchmarks focus on four key aspects of sport governance including Democratic processes, transparency and public communication, checks and balances and solidarity. According to, the benchmarks are meant to deal with backroom dealings and corruption in sporting organizations. Governance at the Football Federation Australia Limited The Football Federation Australia Limited was formed in 2004 after the dissolution of the problem plagued National Australian soccer league (NSL). The FFA is mandated with management of football throughout Australia, and is the recognized representative of FIFA in Australia (Macdonald and Ramsay, 2014). The FFA mandate allows the federation to establish football leagues in Australia. The FFA runs the A- league which it established in the 2005/06 season. The A-league consisted of new franchise clubs and some former NSL clubs. Today, the A-league consists of 9 football clubs from Australia and one from New Zealand. Board structure According to principle 1 of the ASC governance principles, a national sporting organization should be run by a board with clearly delineated responsibilities, roles and powers (ASC, 2012). Further, the ASC advises that there should be no overlap of roles of any two members of the board. The ASC further argues that the board structure should facilitate the easy guidance of the organization, allow for monitoring of management performance, and ensure authority is balanced to prevent a single individual from holding unfettered power. Under the FFA Limited constitution, the organization should have between five and nine directors (Macdonald and Ramsay, 2014). Only six of the directors can be elected by the members. After, their election the directors can appoint at most 3 appointed directors. The directors also appoint the organization’s CEO who is also the managing director. The chairman of the directors is elected by the elected directors from among themselves. Elected directors can only hold office to a maximum of two four year terms. In addition, half of the directors must retire at each second general meeting starting with those that have served on the management board the longest. A director who has served the two consecutive terms is ineligible for reelection until two four year terms elapses (Macdonald and Ramsay, 2014). The FFA constitution also prevents people from holding the office of director if they have been employees, state zone committee members or standing committee members of a state Body or the FFA. However, such a person may hold the office of Appointed Director or Managing Director. Election of Board In the FFA voting, there are two classes of members recognized by the constitution. The two classes of members are “Football league members” and “state body members” (Macdonald and Ramsay, 2014). Each of these members has a single vote at the FFA general meeting. The constitution states that the FFA must recognize one state body per state, but, New South Wales is represented by two state bodies. Many of the state bodies are associations incorporated under local incorporation legislation and companies limited by guarantee as set out in the Corporations Act 2001 (cth). Members of the FFA include clubs that participate in Australia’s elite A-league (for men) and the W-league for women (Macdonald and Ramsay, 2014). Voting members of the A-league are nine Australian limited companies and a New Zealand team incorporated under the Companies Act 1993 (NZ). At the FFA general meeting, each member of the FFA has one vote. Resolutions can be passed by 60 per cent vote if the quorum requirement of 170 is fulfilled (Macdonald and Ramsay, 2014). The directors of the FFA limited are under obligation to call a general meeting of members upon a request by members who hold more that 5% of the votes at a General meeting. The constitution does not allow members of the company to vote for the expulsion, admission, relocation or merger of a national league club or a company member. Two members or a member or director are required to nominate a candidate for election to the position of Director. The director must be similarly seconded by two members or a member and director. However, the managing director is may not participate in nominating or seconding members for directorship candidacy. The voting may go up to the third round until the winning candidate receives the needed majority (Macdonald and Ramsay, 2014). In each round, the candidate who received the lowest votes in the previous round is deleted from the list. Since the FFA constitution is does not talk about removal of directors, voluntary winding up, and the amendment of the constitution; this means the guidelines of the Corporation Act (cth) apply to these issues. A director may be removed by a member resolution. Similarly, the constitution can be amended by a member’s resolution also. However, voluntary winding up requires a special resolution of members in order to go through. The FFA has adopted some of the best practices proposed by the ASC governance principle. For example, the majority of members of the board are elected by the members. Secondly, the FFA is an incorporated company as required by the ASC (2012) governance principles part 1. 4. The president/Chairman of the FFA is also selected by the elected members of the board. The FFA and its member have also signed a charter that ensures that the members of the FFA and the organization have common goals. The charter prepared by the FFA was signed in October 2010 and its stated objective was to reinforce the shared direction and independence of FFA members. Principle 2 of the ASC governance principles requires that sport organizations have a clear set of governance processes and policies. It also argues that the processes and policies should reflect best practice in sport governance (ASC, 2012). The board should meet regularly and have the necessary quoram to make decision. The board should also communicate agenda items to directors before the meeting. Finally, the decisions of the board must be timely, clear and accurately recorded and communication made to the stakeholders the body. The FFA board process are in line with Principle 1 as board meetings are held regularly and necessary members have to be present before decisions are made (Macdonald and Ramsay, 2014). The FFA has made very timely decisions regarding some issues faced by Australian soccer. The FFA has on occasions called crises board meetings to address issues like the ban of fans, fans boycott and poor attendance at football matches. Principle 2 is concerned with the Governance system of the sport organization. This principle asserts that the board is ultimately responsible for the success of the organization they run (ASC, 2012). Under principle two, the board is supposed to develop a strategic plan which identifies the organization’s goals, values, and performance management indicators. The principle also requires the organization to have a system for assessing performance and legal compliance by the organization. The 2014/2015 FFA annual report indicates that the FFA has achieved remarkable success in the management of football in Australia. The success cited in the report include Australia’s triumph at the Asian championship, Western Sydney Wanderers crowning as the AFC champions league winners, and the participation of Australia male and female teams in their respective world cups (FFA, 2015B). The FFA has also released a short-term strategic plan for the 2016 season and a long-term strategic plan for the 2016 to 2019 period (FFA, 2016). The 2016-2019 strategic plans focuses on increasing match audiences and offering more entertaining experiences for fans who attend soccer matches in FFA managed leagues. The management team is led by CEO Steve Gallop, but authority is delegated to different positions in the management team (FFA, 2016B). Authority at FFA is delegated as follows: Head of Commercial division, Head of Hyundai A-league, Head of National Performance, Head of International Affairs, Head of events, Head of Community Football and Women’s Football, Head of Corporate Affairs and Communications, Head of Legal, Business Affairs & Intergrity and the Head of Digital and Fan Engagement (FFA, 2016B). Principle 4 of the ASC principle is concerned with the board performance and reporting. The principle calls for a comprehensive system for monitoring and reporting performance (ASC, 2012). Under the principle, directors should make decisions based on accurate and timely financial reports. In addition, the performance of directors should be assessed by the board jointly and separately (ASC, 2012). Furthermore, the organization should have mechanisms to deal with directors who are underperforming. The organization should also provide complete and comprehensive financial accounts to its stakeholders. The FFA issues detailed financial reports at the end of every financial year (FFA, 2015C). The financial reports are available for any person who wishes to view them from the federation’s main website. The 2015 contain comprehensive information regarding the success of the FFA in football management. The report also contains the qualifications and the profiles of the various directors of the FFA, and their roles in the management of Football (FFA, 2015C). It can be concluded that the FFA practices as regard financial and performance reporting are in line with principle 4 of the ASC governance principles. However, the FFA provides little information about performance monitoring and management in the federation. The lack of information indicates that the FFA does not have a strong performance management and monitoring system in place. Principle 5 of the ASC governance principles is concerned with the boards/management relationship and monitoring with stakeholders (ASC, 2012). According to the ASC (2012), the management should consult and involve stakeholders in making decision and developing strategic plans. The model sport organization should also keep its stakeholders well informed in material matters of performance and governance. Unfortunately, the FFA is an example of an organization that engages its stakeholders in its decision making. For example, the members and clubs of the FFA leagues have no say on who can be expelled, added or denied licenses to participate in the FFA’s leagues including the elite A-league. Currently, the FFA is involved in a dispute over the renewal of the license of the Wellington Phoenix. The FFA also failed to provide a satisfying explanation for the failure to win the bid for the 2024 world cup to the government which had funded the bid. Principle 6 of the ASC focuses on Ethical and responsible decision-making in sport organizations. The principle calls for board to promote and actively ensure that ethical behavior is observed in the management of sports. The management or board is also supposed to make sure that the organization’s reputation is protected, managed and enhanced. While the FFA has strived to ensure that it manages football ethically, there are a few cases where the FFA has been accused of unethical conduct. During the bid for the 2024 World Cup, some members of the bidding committee were accused of breaching FIFA’s bidding rules. The FFA was also mentioned in relation to the FIFA bribery scandal which led to the forced resignation of Sepp Blatter, the long serving president of FIFA. The FFA was also accused of putting together a poor bid for the 2024 world cup and in the process wasting a government grant advanced for preparing the bid. Problems facing the FFA One of the biggest problems facing the management of Soccer in Australia is the failure of the sport’s popularity to translate to revenue and attendance for soccer games. Soccer in Australia has failed to attract sponsorship, media attention, marquee players and brings very low revenue compared to other Australian sports (The Conversation, 2012). In many instances, the FFA has had to bail out A-league teams that have run into financial trouble. Many A-league teams complain that they cannot be able to cope with the huge costs of operation in the league where sponsorship is scarce (Dobson, 2010). Many A-league clubs also lack the resources to attract talents required to maintain quality standards in the league. Unfortunately, a large number of A-league clubs continue to report heavy losses year after year. The FFA is also faced by a breakdown in relations with some of the voting members of the company. The feud between the FFA, and club owner Natan Tinkler and Clive Palmer is threatening the attractiveness of the A-league to corporate sponsors and the Media (The Conversation 2012). Tinkler recently announced that the Newcastle Jets plan to return their A-league license. On the other hand, Clive Palmer established an unofficial football organization in protest of the governance style of the FFA. Clive Palmer complaints are targeted at the lack of influence in A-league decision making and the A-League’s business model. Many clubs have also left since the FFA’s inception 7 years ago. According to The Conversation (2012), the A-League has lost teams such as North Queensland Fury, Gold Coast United, the New Zealand Knight and many others may leave depending on how the FFA handles its present problems. The FFA is now faced by the problems that led to the demise of its predecessor, the NSL. 41 teams were involved in the NSL roster, but by 2003, only three teams were part of the NSL competition. Solutions for the Football management Running the A-League as an independent Entity The Crawford report that analyzed the problems that led to the collapse of the NSL suggested that the Elite league and the game should be run by two independent bodies (The Conversation, 2012). Already, the FFA has formed a strategic committee to run the A-league; club owners can have representatives at the committee. However, the league needs to be managed by an independent body where the participating clubs have more say in decision making. One-team-per-city national League Making the elite-league a national level competition has also one of the viable options for the A-league (The Conversation, 2012). Many stakeholders think that a one-team-per-city model would help to raise support for A-league teams. Teams should be based in cities where the population ensures a substantial support base for the team. Fan-based Ownership Giving fans a greater ownership share in their teams will also increase the popularity of soccer in Australia. Dobson (2010) argues that Fan-based model would be the best solutions to the revenue problems facing Australia soccer clubs. The fan-based model has been experimented successfully in Germany. According to Dobson (2010), more than 50 per cent of the shares of German Bundesliga clubs should be owned by their fans. Such a model would enable fans to finance their teams and bail them out in times of financial difficulties. Conclusion The Australian FFA has strived to manage soccer in accordance to the ASC sport governance principles. However, some aspects of the governance of soccer in Australia depart from the sport governance principles suggested by the ASC. The failure to observe these governance principles have seen the FFA face many problems related to the poor management of soccer by the body. Some of the problems include poor media coverage, lack of sponsorship and conflict with club owners concerned over their low level of involvement in FFA decision making. The FFA has also been adversely mentioned in relations to the 2014 world cup bid and the FIFA bribery scandal. However, some of the problems facing the FFA can be resolved by creating a new independent entity to run the elite league, changing the league model to a One-team-per-city format and requiring for substantial fan ownership of football clubs across Australia. References Australian Sports Council, ASC (2012). Sports Governance Principles: March 2012. Dobson, T (2010, November 21). Fan-based ownership a solution for A-League?. Green Left Weekly. Retrieved from: https://www.greenleft.org.au/node/46190#.dpuf Football Federation Australia FFA (2016). FFA release strategic plan for 2016-19: http://www.footballaustralia.com.au/article/ffa-release-strategic-plan-for-2016-19/a7yzs2rm70la1489exvauz23x#sthash.WBEsn72d.dpuf Football Federation Australia FFA (2015C). General Purpose Report (RDR) for the period ended 30 June 2015. Football Federation Australia, FFA (2015B).Leagues and Competition 2014/15 Season Report. Football Federation Australia 2015. Football Federation Australia, FFA (2016B). Who We Are, Retrieved 24 may 2016,http://www.footballaustralia.com.au/about/who-we-are/ds5jvc05q7lt14bzlfqn0qhdi Macdonald, R.D. & Ramsay, I. (2014). Constitutional Voting Rules of Australian National Sporting Organisations: Comparative Analysis and Principles of Constitutional Design. Harvard Journal of Sports & Entertainment Law/, 7 The Conversation (2012). Soccer in Australia: Is history repeating Itself?. The Conversation April 24, Retrieved 24 may 2016, http://theconversation.com/soccer-in-australia-is-history-repeating-itself-6620 Read More