What is sports governance?

Investment for sports has increased significantly through government programs and National Lottery funding, requiring NGBs to develop strategic plans that set out how they would achieve high-level goals. During the funding periods from 1997 to 2009, the strategic priorities were relatively straightforward – increase participation and win medals at European or world levels. Since then, expectations have shifted towards a focus on impact. For example, Swim England’s 2017–21 mission is to create a happier, healthier and more successful nation through swimming.

Such ambitions reflect the increased understanding of the way in which the sports and recreation sector can positively influence many other sectors, including health, education and community cohesion. The concept of societal impact is also of greater importance in the private sector: the FRC report ‘Corporate Culture and the Role of Boards’, published in 2016, states that companies are recognising the value in defining and communicating a broader purpose, beyond profit, which delivers benefits to society as a whole.

There is also good evidence that positive social impacts (also referred to as Corporate Social Responsibility, CSR), create positive impacts on  financial stability of organisations as well.

Think about how your board and executives feel they can have an impact on society and in what ways. Think broadly about wider government objectives of increased health, wellness, safety, social inclusion and how these objectives are changing. You may look to other sports organisations for examples of mission and vision statements but in the end, you need to focus on what impacts your organisation and sport is best suited to address.

Engaging stakeholders means you can demonstrate that you are accountable to your stakeholders such as athletes, participants and members. You should also be prepared to demonstrate how their perspectives influenced and feature in your mission and vision.

To achieve this, the board should discuss a number of considerations, including:

• How can we fully engage with members and participants?
• Can we engage an independent facilitator?
• Can we consult with different stakeholders? How should this be done?
• How can we ensure appropriate mechanisms in place for participants to feed in their thoughts confidentially?
• How can we manage formal communication, engagement with members and social media activity appropriately?

Let’s look at some examples from sports organisations who have engaged in these processes and how they did it.

By July 2016, the mission and strategic goals had been formally adopted and the club was fully engaged in the long-term planning process. The club also witnessed a significant increase in the number of members seeking positions on the new management board and subcommittees.

NGBs seek to develop and publish strategies that will inspire internal and external stakeholders. For example, Welsh Cycling reviewed its strategy after the 2015 Commonwealth Games and to achieve its vision (to inspire Wales to cycle) agreed four high-level aims, as the below shows.

The vision and strategic aims are simply worded and the organisation’s structure reflects these priorities. Each person, whether paid or volunteering, understands how he or she contributes to the strategic aims.

For more on engaging stakeholders, click here.

Explicit role descriptions (for both board and executive/management positions) along with an effective induction should ensure that all board members and staff, regardless of their appointment process, maintain a strategic outlook as befits their role. Establishing a structure that is able to facilitate organisational goals is key for all sports organisations. We focus on this concept next.

The Articles of Association set out how the company is run, governed and owned. They include the responsibilities and powers of the directors and the means by which the members exert control over the board. The Memorandum of Association is a simple statement that the initial subscriber wishes to form a company and agrees to become a member by taking at least one share.

Templates

There are model articles for the three most common types of company: private company limited by shares, private company limited by guarantee and public limited company. These are set out in the Companies House (Model Articles) Regulations 2008 and are available on the Companies House website.

In addition, for charitable companies the Charity Commission has a set of model articles.

The Community Interest Companies Regulator provides model articles for community interest companies.

Constraints and limitations 

The powers and rights of shareholders or members are also enshrined in the articles and cannot exceed those set out in the Companies Act. For example, members have the right to remove directors by passing an ordinary resolution.

The articles will include details of the ways in which certain decisions can be taken by members – for example, by ordinary resolution, special resolution as well as the voting rights associated with such decisions. Some NGBs award greater numbers of votes to clubs with greater numbers of individual members. Others will have full, associate and affiliate members, which might be organisations or individuals, who may or may not be able to vote at general meetings.

The Articles of Association is the governing document and the board must operate within its limitations. As well as the duties and powers of the directors, the articles may also set out how board members are appointed, how meetings will be conducted (including the AGM) and the establishment of governance structures across the organisation.

While model articles are available, sports bodies must take time to prepare a governing document that is relevant to the purpose, size, structure, complexity and capacity of the organisation. Sports organisations can develop an understanding of these aspects of their organisations through the strategic planning process.

For more on Articles of Association, click here.

Rules may be included in a company’s Articles of Association. These will relate to decision-making processes, participation in meetings and the records to be kept. These are formal rules that directors must abide by, and some will reflect statutory duties to the organisation. Rules can also be applied to employees under their contract of employment. Such rules might include office dress codes or requirements to adhere to equality, safeguarding and other policies.

Smaller organisations, such as sports clubs, may establish rules for members beyond those applied on the field of play. Clubs may have rules around attire in the clubhouse or access to parts of the club, such as gym or offices. On joining a club, new members will usually have to acknowledge the rules and their commitment to adherence as part of the membership agreement.

Standing orders define procedures for meetings of the board and, in so far as they are applicable, committees. Standing orders can include:

• Notice period for each meeting and the method of communication to members - electronic format, hard copy and so on.
• Dates and times of meetings.
• Remote attendance and record of attendance.
• Quorum – the number of board or committee members required to be in attendance for decisions to be made.
• Order of business – who shall determine this and how it might be altered.
• Voting, for example, decisions by a majority of votes, by show of hands or secret ballot.
• The role of the chair and, in their absence, chairing of the meeting.
• Rules of debate including the roles of proposers and seconders of motions or resolutions.
• Minutes – their inclusion as an agenda item from a previous meeting and who signs them as a true record - the publication of minutes might also be contained in the standing order.
• Conflicts of interest – declarations in accordance with the organisation’s conflict of interest policy.

You can separate standing orders from articles so that they can be changed without requiring a general meeting and member vote.

Lastly, the constitution of a company is formed by a company’s Articles of Association together with the Memorandum of Association.

Formal and informal rules

Informal rules are also sometimes employed, especially in smaller organisations. For example, in a club environment the club captain may accept responsibility for chairing the executive committee while also being expected to lead all aspects of the playing activities. The former is not always contained in role descriptions but does require large amounts of time, while the latter is perceived as the main responsibility.

In organisations which are funded by Sport England or UK Sport and which are required to comply with Tier 2 or Tier 3 of the Code for Sports Governance, you should be using little informality and move toward identifying where you can improve your governance by creating formal rules where they are lacking.

The Code requires that sports organisations be led by a board which is collectively responsible for the long-term success of the organisation and exclusively vested with the power to lead it. In practice this will mean that while funded organisations may have councils, such groups will not be the primary decision-making body.

As most NGBs are registered as companies, the need to meet legal and funding requirements has driven changes in board appointments. If the board is exclusively responsible for decisions about the long-term future of an organisation, it must be prepared to appoint people with a range of skills and knowledge. Appointments made entirely from within the organisation may limit the diversity and skills needed by the board.

In some sports, an executive committee is appointed with delegated authority from the council to make certain decisions. Examples include the Football Association of Wales (FAW). The FAW Council of 36 is elected by members on a geographical basis and can overrule the executive board established to lead and manage the day-to-day running of the NGB. The council members have the full backing of the wider NGB membership through the election process and in its current form is the primary decision-making body within the sport. As it is a large council, appointing an executive committee (which includes council members) facilitates more efficient decision making.

Smaller organisations, such as clubs, may also have an executive committee as, even though they may be directors of a company, the committee members may be asked to undertake executive functions due to the size and capacity of the organisation. Even if committee members are actively involved at an operational level, they are still bound by their legal duties as directors when acting in that role, for example, at committee meetings.

For more on effective boards, click here.

The governance structure of an organisation must facilitate the effective flow of information in order to make decisions that will promote the long-term success of the organisation. Given the breadth of sporting, business, stakeholder and ethical matters that boards are expected to deal with, additional expertise and capacity can be created by delegating aspects of the business to subcommittees. Such structures do not relieve boards of their overarching duties and responsibilities, but they can provide high-quality management information that supports effective board decision making.

How subcommittees provide scrutiny and support

The board can only create a subcommittee structure if it has the power do so under the articles. Subcommittees can engage experts in areas of strategic importance to the organisation – for example, an NGB may establish subcommittees for the range of sporting disciplines. In snowsports, this might be alpine skiing or snowboarding. Creating subcommittees means that the board itself does not necessarily have to discuss the details of each discipline’s rules or competition schedule; this allows the directors to focus on strategic and business matters.

Subcommittees also offer a scrutiny function in key business areas as the delivery of sporting goals can be monitored more closely than at board level. The Sport Wales Elite Sport Strategy was approved by the board and implementation delegated to Welsh Institute staff. The formation of an Elite Sport Sub-Group (ESSG) included four board members (one of whom was the chair), executive staff from the Institute and independent members with expertise in elite sport. The inclusion of board members ensured there was effective oversight of a key strategy and flow of management information to the board, independent members provided essential expertise and staff members received support and advice at the highest levels for delivery of elite sport goals.

The audit committee should review the organisation’s internal financial controls (that is, the systems established to identify, assess, manage and monitor financial risks) and, unless there is a separate risk committee, the organisation’s internal control and risk management systems.

Advisory groups can be established to provide new perspectives, explore different sporting formats or undertake research. Advisory groups may have few board members, if any at all, and will be made up of predominantly independent individuals sharing their expertise in a designated area. Terms of reference are still important for these groups even if they do not have a scrutiny function, as ultimately, they too must demonstrate added value.

The National Council for Voluntary Organisations’ (NCVO) Good Trustee Guide (Section 4 – board and committee structures) presents simple guidelines for committees and advisory groups, as shown in Table 1 below.

Table 1: Good Trustee Guide – board and committee structures

Board members must remember that although they may delegate authority for certain matters to committees, they cannot delegate responsibility: this remains with the board. Effective reporting and oversight are therefore crucial.

Developing a strategic plan takes time and effort from a wide variety of stakeholders. Good governance provides the structures, tools and formal mechanisms to ensure the plan is implemented consistently and in line with the current and future direction of the organisation. Good governance facilitates your organisation’s achievement of its purpose and vision but it also enables your organisation to recognise where improvements are necessary or where objectives and strategy are not being achieved.

As such, governance should not be seen as onerous, but as an enabler of performance, facilitating the organisation in meeting its purpose and maximising its impact.

In contrast, poor governance, or a lack of accountability, ethical behaviour and clear structures to guide people working within your organisation ensures that your strategic objectives are not achieved and diverts attention and resources away from primary objectives.

An important aspect of good governance is financial responsibility and accountability. It stands to reason then that poor governance can lead to financial instability, loss and ultimately the failure of your organisation.

Poor governance practices will result in restrictions being placed on any public funding available through Sport England and UK Sport. Increasingly, funders from the public, private and voluntary sectors require evidence of sound governance practices.

Reputation is an intangible asset for an organisation; it is hard to establish but very easy to lose. The same can be said for trust – it is slow to gain trust but it can disappear very quickly if an organisation is perceived as incompetent or unethical.

Poor governance means a lack of transparent decision making processes, and can open the way for financial irregularities and/or corruption on and off the field - in part due to a lack of rules, regulations, formal guidance and/or unethical culture. Poor governance shows poor social responsibility.

Untold reputational damage can be caused to an organisation by poor governance practices. This is even more true in the sports sector, where an organisation will undoubtedly be in the public interest and spotlight. Each instance of poor governance practice by an organisation will soon be on social media and each retweet or Facebook view will damage the brand of the organisation. This is one of the most common and serious implications of poor governance.

A sports organisations can face a range of legal challenges as a result of poor governance practices, including:

• Failure to act lawfullay.
• Failure to act in accordance with its own rules.
• Failure to act fairly in a procedural sense.
• Taking into account irrelevant considerations when making a decision.
• Acting contrary to a member’s legitimate expectations.
• Acting in a way that is objectively unreasonable, irrational, arbitrary or capricious.

Protracted legal or criminal proceedings could spell major disaster for an organisation; many sports have now improved their internal disciplinary proceedings and provide an appeals process to an independent specialist tribunal, such as Sports Resolutions UK or the Court of Arbitration for Sport (CAS).

The most important asset for any sport is its people, including athletes, administrators, volunteers and others who give their time and have a passion for the particular sport. There is a delicate balance to be struck to utilise their knowledge and passion, while not allowing them to stymie progression and the evolution of the sport.

If you operate in team sports, you will also want to ensure top-class personnel (such as coaches, physios) do not leave for a rival (unless otherwise agreed), taking their knowledge and skills with them. This may require some legal protection (confidentiality and restrictive covenant clauses, for example) and action to be taken (such as cease and desist letters and then litigation).

Aside from the effect which poor governance can have on an organisation, the strongest consideration must also be given to the impact on the most important constituent of any sport: its people. Any negative impact on an organisation detracts from its ability to provide for its members, participants, staff, volunteers and fans. The most serious governance failings have led to very real and grave implications on a human level.

Despite the success of UK athletes in recent years, given record levels of public funding for sports, a variety of stakeholders have voiced concerns about the decline in sports participation across the UK due to competing attractions and activities for people’s leisure time, as well as the way in which sport is funded by public bodies in times of austerity.

Some complaints raised against the current practices of sports governance include the following.

• Having distinct funding bodies for elite and grass-roots sports has led to a funding gap for sports and athletes who sit between those two levels in the pyramid, which has ultimately led to a lack of joined-up strategic thinking.
• UK Sport’s ‘no compromise’ policy has led to certain sports constantly getting elite funding (such as athletics, rowing and cycling), meaning others do not receive any.
• An over-reliance on the requirement to ‘medal’ at the Olympics/Paralympics to determine funding decisions results in rampant short-termism in governance.
• There is a disparity between the funding for individual sports and team sports as it costs far less to achieve success in the former, at the expense of the many other benefits of team sports.
• Not enough funding is available to participants other than athletes (such as coaches or match officials).