The Business Case for Good Governance in Sport – Michael Pedersen
May 16, 2013
Sport leaders face a critical yet long overdue strategic decision in properly equipping their sports for future development. How they decide to respond to the challenge will determine whether their teams will win or lose the future game. The most progressive secretary-generals, chief executives and chairs of boards have already started modernizing internal, athletic and event governance standards to bring a beautiful game into the future. However, surprisingly many sport leaders have yet to fully appreciate that by continuing to play a game using the governance standards of yesterday will eventually put their teams on the track to foul play in the future.
This second contribution of mine to iSportconnect’s expert column on sport governance offers a strategic perspective on the importance of raising governance standards in sport to a best in practice, leadership level. My third contribution, to be published by mid June, will focus on cases of evolving good practices across the world.
Three strategic reasons for modernizing governance standards
There are three key strategic reasons why modernizing internal, athletic and event governance standards allows sport leaders to develop their sports to their fullest potential. First of all, good governance builds trust by enabling strong relationships with key stakeholders of the game. Second, good governance builds growth by facilitating increased participation and increased revenues. Third, good governance builds performance by attracting and retaining people fit for the game, motivated and supported to perform to their full ability.
Good governance builds trust by enabling strong relationships with key stakeholders of the game
If designed in a tactical way, the process of modernizing governance standards is of as high strategic value to a sport as its specific outcome. First and foremost, by utilizing the richness of expertise and perspective of all key stakeholders of the game, the process equips sport leaders with the ability to develop more robust solutions through sound 360-degree assessments of opportunities and risks than they would be able to on their own. Also, based on high levels of stakeholder engagement, transparency and accountability, the process builds trust and forges strong, lasting and mutually beneficial relationships with all key stakeholders. And, beyond being generally supportive in building performance and growth, strong relationships with key stakeholders build an early-warning system and a reputational fence in the case of a future governance-related crisis hitting a sport.
Good governance builds growth by facilitating increased participation and increased revenues
Sportsmanship and fair play are at the heart of what makes professional athletes and amateurs take pride in practicing a particular sport. The reputation of the game influences their interest in the sport, and affects the fierce and ever-growing competition for peoples’ attention and participation vis-à-vis other sports and other recreational activities. Accordingly, modernizing internal, athletic and event governance standards contributes to maintaining and increasing the participation base of a particular sport. The same applies to the general public’s interest in attending sporting events and following them on TV and in other media.
At the same time, the bigger the participation and fan base of the game, the easier it is to attract beneficial sponsorships and media and broad- casting rights. Furthermore, as sponsors, media and broadcasters expect a positive association with a sport through their investments and by no means want to be associated with a problem, good governance standards provide assurance that adequate measures are in place to safeguard their brands and reputation.
Finally, good governance standards are increasingly a requirement for sport leaders wishing to continue receiving substantial public funding for their sports, especially if they want public funding to further develop the game. Along the same lines, good governance standards comprise the best defense for pre-empting strict and inflexible regulatory oversight and for keeping privileges such as tax exemptions.
Good governance builds performance by attracting and retaining people fit for the game, motivated and supported to perform to their full ability
People fit for the game are not only passionate about the sport they engage in, they also have educational and professional expertise, experience, skills and a network, as well as qualities of integrity. They value doing things well as much as doing them right, and they view good governance standards as the foundation for teaching, motivating and reinforcing behaviors of sportsmanship and fair play. Also, they appreciate that only sports benefiting from good governance can sustainably generate the future revenue base needed to attract and retain the most fit people, by offering competitive compensation and the most supportive environment for growing and performing to their full ability.
Sport leaders face a strategic decision regarding which one of four potential future games they want to play: a beautiful game, a game with blocked potential, a game with wasted opportunity, or foul play (see illustration). The combination of the level of peoples’ fitness for the game and the level of governance standards in the sport forms the foundation for the type of future game. While the combination of people fit for the game and good governance standards creates a beautiful game, the opposite puts a sport on the track to foul play. For the two game scenarios in between, the beauty of the game is hampered. On one hand, the combination of people fit for the game and weak governance standards creates a game with blocked potential. On the other hand, the combination of people unfit for the game and good governance standards creates a game with wasted opportunity.
Lead the change of the game or be forced to adapt
The best professional athletes never stop innovating in their unremitting endeavors to improve. They see opportunities more than risks when taking the game to the next level. Some sport leaders, however, have forgotten the winning attitude of the best professional athletes, and resist modernizing internal, athletic and event governance standards.
Eventually, sport leaders have only two options. Either they disrupt the status quo and benefit from being offensive game changers or they stay put and eventually get disrupted in a damaging way. Sport leaders with a winning attitude opt for the former and lead their sports through tough and courageous change. Beyond ensuring a lasting legacy by being recognized and remembered as the ones bringing a beautiful game into the future, they also personally benefit from reduced risks as a result of properly managing legal liability for potential wrongdoings in their sports.
Michael Pedersen, Founder of M INC., is an internationally recognized expert and leader in good governance, transparency, ethics and integrity.
