G ENERAL LESSONS LEARNED

We have selected ten major lessons from the cases presented above. Those lessons are related to the positioning of governing bodies in situations of conflict with stakeholders of their sports, and will be useful in the formulation of our final recommendations. Some lessons are drawn from multiple cases, others from a single case.

Lesson 1: Governing bodies are in the best position to promote balance among interests of stakeholders and should not abstain from that responsibility.

One of the roles attributed to governing bodies is the role of regulator of the sport. As the regulators, governing bodies are in a privileged position to oversee the interests of stakeholders and to promote balance among them. The case of UCI subtly shows that. While IMG made a move to represent trade teams in front of race organisers, UCI counteracted and created the PCC. While the move of IMG would address the concerns of only a fragment of the sport, the PCC gathered all relevant parties around the table being a much more effective solution to all stakeholders. Something that no individual stakeholder, or external actor would be in position to do.

However sometimes, due to the power structure of the governing body, conflicts of interest may arise as we have seen from the case of the Clube dos Treze and CBF. Since the state federations have a strong representation at the CBF level, the confederation opted to privilege the interests of that stakeholders’ group in detriment of the interest of the clubs, generating imbalance.

Finally, from the case of Formula One we have seen that when the governing body abstains from promoting balance among stakeholders conflicts arise. FIA adopted a negligent position in determining the way revenues would be shared among the actors involved in Formula One. Over the years, the governing body practically withdrew from certain areas of the sport, delivering more and more power to an intermediary body, SLEC, being contented in receiving a share of what the sport generated. FIA was the best positioned body to realise that interests were unbalanced and should have acted proactively to fix the situation before it was too late. In this case we do not intend to criticise the right that the governing body has to delegate the administration of certain areas of the sport to other actors, but the governing body should not abandon the role of regulator, guaranteeing that even in the areas that have been delegated to other actors balance is being promoted.

Lesson 2: Significant conflicts of interest appear when there are significant amounts of money at stake, and when it happens, revenue distribution is a major issue and it should be treated with transparency, fairness and accountability.

It is interesting to notice that although the UCI governs a wide range of activities within cycling, the only area where significant conflicts arose was within the discipline of road cycling, the one discipline that achieved a relevant degree of commercialism. The case of Formula One confirms that. It was not until Formula One achieved a high level of commercialism evidenced by the interest of the media, that new groups of interests, such as the large carmakers, were attracted to the sport creating the set for

the conflict. During the 1970s and 1980s, while the sport was growing, the teams did not have major complaints against the peculiar administrative practices of Bernie Ecclestone.

The case of Formula One also shows that revenue distribution is a major issue in the modern reality of commercialised sports. Stakeholders will usually agree that given the peculiarities already stressed along this paper, revenue sharing is an important tool in the development of the sport. But when revenue sharing is not producing the expected results the ground reason for keeping it disappear.

When Ron Dennis, the head of the McLaren team, complained in 1997 that there was too much money going out of the sport, he showed a first sign of suspicion that the revenue sharing system in place was not reverting in benefits for all participants. The beneficiaries of revenue sharing schemes in sports have to be accountable showing that the use they are making from their shares in the scheme is actually bringing direct or indirect benefits to all stakeholders, otherwise the whole system collapses.

Transparency is also a key concept. The secrecy around the terms of the Concorde agreement in Formula One is not helping to promote trust among all stakeholders involved.

Lesson 3:Involvement of key stakeholders in the decision making process diminishes conflicts and can actually be beneficiary to the sport.

The Clube dos Treze ultimately were heard by the CBF and in consequence the situation of Brazilian club football has turned up with the seeds being laid for a commercially viable league.

The case of professional cycling shows that since the PCC has been created, no major conflicts have plagued the sport. The PCC has the merit of gathering together at the decision making level the main groups of interests with stakes in the sport. When an issue arises it is discussed among the members of the PCC and all points of views are heard and confronted with each other. The final agreement is a common agreement reflecting the group’s view of what is best for the sport. When a decision is reached, it is the decision of the group, and individual stakeholders will be more willing to compromise and make it happen since they share the ownership of the decision. The case shows that when stakeholders are involved at the decision making level, they actually share the ownership of the sport around one common interest, to promote and develop “their” sport.

Lesson 4: Proactive action in involving key stakeholders in the decision making process strengthens the position of the governing body.

This fourth lesson is more subtle and builds on the last one. Not only involving key stakeholders at the decision making level diminishes conflicts as we have seen from the third lesson, but a proactive action of the governing body in doing so actually reinforces the role of the governing body as the supreme institution in the organisation of the sport. Since the decision of creating the PCC was initiated by the UCI in a will of sharing the power in ruling the sport, the stakeholders quickly bought into the idea, showing no resistance to the terms proposed by the UCI. The committee was created within a positive and cooperative atmosphere, which would probably not be the case if it had been created as the result of a long-time animosity between the stakeholders and the governing body. By accepting the delegation of power coming from the governing body, the stakeholders are actually accepting the ascendancy of the governing body over the sport, otherwise it would not have the

legitimacy to share the power. It also strengthens the position of the governing body because since the stakeholders now share the governance of the game, they will have no reason to leave the official framework created by the governing body, as explained by Alan Rumpf from the UCI, so the governing body is less susceptible to the threats of breakaway movements that often come from external groups interested in exploiting short term commercial opportunities.

Lesson 5: By sharing the management of the game with other stakeholder groups, governing bodies allow those groups to develop a more comprehensive and empathetic view of the governance of the game, with positive results for the sport.

From the case of the IOC we have learned that the decision of creating an athletes’ commission has risen the awareness of the athletes on a broad range of issues. In the long run those athletes end up developing an interest for the governance of sport. Once their term is over, they get hired by different sport federations where they use the experience acquired during their time at the IOC, which is beneficial for the sport as a whole.

We can also infer that by having in the PCC, a common forum to discuss the management of cycling, stakeholders have the opportunity to learn from and understand the points of views of other stakeholders and consider them in the decision making process. Without this common forum stakeholders would probably be to busy thinking exclusively on their own interests without considering the impact their interests could have on the activity of other stakeholders.

Lesson 6: The fact that a determined stakeholder group is not sufficiently organised as a lobby group to promote its interests is not a reason not to include this group in the decision making process.

In the case of the IOC, athletes did not have time to organise themselves into a group to voice their interests, but this did not stop the IOC from addressing this group realizing their importance to the Olympic Movement and ultimately incorporating them at the decision-making level, with positive impacts for the sport, as we have seen.

Lesson 7: The perception that the management of the game is not being conducted at an optimal level will eventually lead to the appearance of breakaway movements.

The case of the Clube dos Treze in Brazil showed that there was general dissatisfaction with the way the sport was being governed by the CBF. This was reflected in the evident plunge in the popularity of football, the plummeting average of spectators in stadiums among others. The organisation of competition was chaotic, and Brazilian club football was light years behind the situation in other countries as far as the commercial potential of the game was concerned. Thus the major clubs decided that change had to happen with or without the CBF.

The case of Formula One reinforces that message. FIA adopted an extremely hands-off approach in the governing of the sport leading to anomalies within the structure. This raised the opportunity for a new group to be formed and easily sell the idea of a breakaway movement to the F1 teams.

Lesson 8: Governing bodies should not underestimate the importance of the fans in the process of managing conflicts.

In the case of Clube dos Treze, the lobby group was concerned with not having a say in the regulations of the championship. They threatened to leave the CBF’s umbrella. It was only a short time before the threat was fulfilled that the CBF realised its legitimacy in the eyes of the fans and reacted accordingly.

The case of Formula One shows the awareness of the GPWC about the importance of the fans in giving legitimacy to the breakaway movement. They were willing to offer a special treatment to attract the Ferrari team since they know that that is the team with the largest and most fanatic group of fans.

And if you have the fans, you have everything.

Lesson 9: Both lobby groups and governing bodies are sensitive to the complexity and potentially negative impacts of breakaway movements for the sport and will usually reach conciliatory positions through dialogue.

As mentioned before, given its peculiar characteristics, sports needs an internal regulator to accommodate the interest of all stakeholders involved, and the best institution to assume the role of regulator is the governing body. Neither the clubs in the case of Clube dos Treze nor the carmakers in the case of Formula One have the expertise, the interest or the necessary impartiality to assume the role of the regulator. Thus if the threat of a breakaway movement does follow suit it is very likely that sooner or later a new governing body will be set up to assume the role of the regulator. From the other side, governing bodies know that without the revenues generated by the elite teams, the ones capturing the largest share of supporters they will not be able to successfully carry forward the task of developing the sport. Thus it is generally in the best interest of both the lobby group and the governing body to reach a compromise, being the breakaway the last resort. That is what we have seen from the case of the Clube dos Treze and the CBF in Brazil. The case of Formula One has not yet come to an end but all parties, including the GPWC, express their interest in reaching a compromise within the official framework currently governing the sport.

Lesson 10: A reactive firm position from the Governing Body does not bring the Lobby Group/opposing party closer to negotiation of a solution but rather pushes them away.

As we have seen from the cases of Clube dos Treze and Formula One both governing bodies have threatened the lobby group with retaliatory measures usually meaning that the rebel group would be banned from participating in any competitions or activities organised by the governing body on a wider sense. However such retaliatory behaviour will usually not be effective in keeping the lobby group from carrying on with the breakaway plans as the lobby group showed in both cases for two reasons. First, because the breakaway is usually the last resort, the groups have already calculated the risks and concluded that they will be better off facing the consequences than keeping the status quo. Or secondly, because the groups know that they have good chances of successfully challenging the retaliatory measures in the court of justice who will analyse the proportionality or lack thereof of the retaliatory measures.

5.

SECTION FIVE : A POSSIBLE SOLUTION

Based on our analysis of the current challenges and scenarios facing UEFA and keeping in mind the lessons learned from the examples of conflict management outside European football, we believe it is time for UEFA to take the leadership and implement an unprecedented change in the way football is governed.

In this chapter we will make a recommendation on what we view as a possible solution for the conflicts afflicting European football, and we believe that solution has to consider the sharing of the decision making power in professional football with the major stakeholders involved in the game. We strongly believe that any other alternative not considering the involvement of stakeholders of professional football in the decision making level would be palliative and would not tackle the roots of the problem, leaving football to face the negative consequences presented in section 3.3.