Reference no: EM132994477

MGT3SGV Sport Governance and Strategy - La Trobe University

LEARNING TASK (I.E. WHAT AM I DOING?):

1. Read each case
2. Analyse each case (your analysis should involve the application of relevant learning resources (see below)
3. Answer the case questions provided to create your case study, using learning resources, where relevant.

LEARNING RESOURCES:
• Every case study response that you write should demonstrate your understanding of "conceptual content" - see the assessment criteria on p. 2 below.
• This means that your Case Study answers/analysis should be informed - where relevant - by good quality sport governance learning resources. These include - at a minimum - the following texts:
o Relevant chapters of the Hoye & Cuskelly (2007) textbook - Sport Governance;
o Sport Australia (2020) Governance Principles, or VicSport (2018) Good Governance Toolkit.
• Note: not all answers to your case questions will be informed by these texts, but many will.
• Ask yourself, "How can Hoye & Cuskelly (2007) or Sport Australia (2012) of VicSport (2018) improve my answers?

1. INTRODUCTION TO FINANCIAL STATEMENTS

Case Study - Ball Sports Victoria1 financial performance DUE: FRIDAY 12 NOON WEEK 4 via LMS

Review the Ball Sports Victoria (BSV) financial statements presented at the recent Annual General Meeting. The stages of this case study are:

i. Review each of the three major financial statements - income statement, cash flow statement and balance sheet.
ii. If you were a committee member at BSV, what questions would you have about these statements? What would concern?
iii. Conclusion about Ball Sports Victoria's financial performance.
1. Review each of the three major financial statements :
a. Review of income statement
• Review the trends in revenue, expenses and profits over the past two years.
• Are there any areas of expense or revenue which requires more detailed review or discussion at the next committee meeting?

b. Review of cash flow statement
• Review the cash flows statement. What does this indicate about the sufficiency of operating cash flows?
• Do the cash flows presented in the annual report financials indicate the association is solvent, probably solvent or insolvent? Explain your conclusion.

c. Review of balance sheet
• Review the two year trend in assets liabilities and equity presented in the annual financial report. Within each category, what have been the major causes of these trends?
• What is the most pressing concern for BV and how can the board best address this concern?

2. Questions or matters of concern to you if you were a committee member.
3. Conclusion:
• Focus on the financial statements and ratios to write your conclusion about Ball Sports Victoria's financial performance.
1. Is Ball Sports Victoria solvent?
2. What is your overall conclusion of the financial performance? What would you recommend as action to address any issues?

2. ROLE OF THE DIRECTOR AND BOARD
Case study: Australia Canoeing (AC) Board DUE: FRIDAY 12 NOON WEEK 6 via LMS

The Board of Australian Canoeing Inc (AC) is meeting via teleconference.

Background: AC encompasses all nine disciplines of the sport of canoeing, including the two Olympic disciplines of sprint and slalom. The AC disciplines are: Touring; Canoe Polo; Flatwater Racing (sprint); Canoe Slalom; Freestyle; Wildwater Racing; Sea Kayaking; Canoe Sailing; and Canoe Marathon. Committees exist for each major discipline and are responsible to the Board for administering and fostering the development of that discipline.

Each state has its own Association, which is directly affiliated to AC. State Associations are the only members with the right to vote at General Meetings. Clubs affiliate with their state bodies, and hence are Affiliate Club members to AC.

The AC Board is currently comprised of volunteers as follows:
• Bobby - the President (a Non-Executive Director) elected by the State Associations).
• Khaled, Wayne, Artim and Stacey - Four (4) Non-Executive Directors elected by the State Associations.
• Robin and Ernie - Two (2) Independent Directors who have been appointed by the Board.
• Pauline - One (1) appointed Director who holds the position of chair of the Athletes' Commission.

Traditionally the Non-Executive Directors should have an extensive knowledge of canoeing, and generally will have held positions in State Associations. These Non-Executive Directors must resign their State Association positions once they are elected onto the AC Board.

The Independent Directors may have specific skills in commerce, finance, marketing, law or business generally or such other skills which complement the Board composition, but need not have experience in or exposure to the sport of canoeing. They do not need to be Members of AC.

Board Meeting: Before starting the meeting, one Independent Director, Robin, announced his resignation, effective immediately, as he had been appointed to an overseas role in his outdoor expedition company. The AC Board congratulated Robin and had a long discussion about his exciting new position, which will be based in South America. Robin said he hoped he would be able to attend the Rio 2016 Olympic Games as a spectator at least, but joked that he was happy to represent AC if no one else was available. The President, Bobby, noted that, as of the end of this Board meeting, AC will have a vacancy to be filled.

Bobby formally opened the meeting. After asking for any declarations of potential conflicts of interest, and considering the Minutes of the previous meeting, Bobby asked the AC CEO, Fatima, to provide the Board with a verbal update on AC's governance compliance status. The Australian Sports Commission (ASC) had advised AC some months ago, in accordance with the ASC's Mandatory Governance Principles (2015), and conditional on AC receiving the same level of ASC funding for 2016, that AC must comply with the ASC governance requirements, including progressing its plans to become a company limited by guarantee. Fatima stated that the governance project was going well. Noting Robin's resignation, Fatima also advised that she was working on a Director induction pack, and that once the company process was finalised she would have time to complete it.

As there were no questions arising, Bobby then spoke to the written report on the collated results of the recent Board and senior management skills audit, which had been circulated to the Board at the beginning of the meeting. Based on this information, and without needing to go to a vote, the AC Board approved Bobby's motion stating that the Board's preference is to appoint an Independent Director with legal skills to support the external lawyers who will be contracted to prepare the documentation required for the company process. Wayne, one of the Non-Executive Directors, again suggested that the Board and executive discuss the directors' networks and how these could best be utilised, particularly to assist with recruiting a new Independent Director. Bobby noted that there was insufficient time to address this in the teleconference, but that this should be put on the agenda for the annual face-to-face meeting later in the year.

None of the other Directors had the opportunity to respond before Bobby moved on to the next agenda item about the raffle prizes in fundraising for the u/23 World Cup team. The Board then considered the final agenda item on whether the Queanbeyan Canoe Polo Club could join the ACT Canoe Federation, or whether it was required to affiliate with the NSW Canoe Federation.

Conscious that the AC Board was not compliant with the ASC's mandated gender equity principle of having a minimum of 40% of women on its Board, Wayne suggested under "Other Business" that Fatima could ask the lawyer currently doing the work for AC, Talei, whether she might be interested in applying for the role. Wayne also then moved a motion that the vacant Board position be advertised with Women on Boards and other women's executive search organisations with a specific requirement that the appointed Independent Director have legal skills. The Board passed this motion. Artim noted that this new Director could potentially save AC a large amount in legal fees.

Stacey then suggested that the AC Board refer the Director applications to the joint Rowing Australia and AC Nominations Committee. None of the Board members could recall, and the Terms of Reference were not available as the AC website was down, whether the Nominations Committee was permitted to proactively recruit their own potential applicants for the position. There was general consensus that the Nominations Committee should assess the applicants and make a recommendation to the Board as to their preferred candidate(s) for appointment, rather than making the decision for the Board.

The Nominations Committee consists of:
• Pauline - the Athlete's representative Director.
• Daria - a Rowing Australia Director, who has some experience on recruitment panels as part of her role in the Australian Public Service.
• Matilda - a member of the NSW Business Council.
• Joachim - the President of the Victorian Bar Association.

Pauline however has a leave of absence from the Board, as she is currently in Europe training for the Rio Olympic Games, and will not be back in Australia for some months. Her replacement, the vice chair of the Athletes' Commission, Carlos, is also overseas training, and unavailable to assist the Nominations Committee.

CASE QUESTIONS:
1. What issues of concern can you identify about the conduct of the AC Board meetings?
2. What would you recommend to ensure the Board works more efficiently during meetings?
a. Resignation announcement prior to the Board meeting.

b. Verbal report provided by the CEO.

c. Written report on skills audit provided at the beginning of the meeting.

d. Operational items on the Board agenda (eg. raffle prizes and Club membership).

e. Telephone conferences v face-to-face meetings.

f. Directors given the opportunity to respond.

g. The length of time taken for the meeting.

3. What is the purpose of a Nominations Committee?
a. Are there any issues / conflicts relating to using a joint AC and Rowing Australia Nominations Committee?
b. What recommendations would you make about the Terms of Reference for the joint AC and Rowing Australia Nominations Committee?

4. How would you manage, and then document, any potential conflict of interest and expectation issues surrounding the appointment of an Independent Director with legal skills?

5. What would you include in an induction pack for new Directors?

3. INTRODUCTION TO THE STRATEGIC ROLE OF THE DIRECTOR

Case Study - VicSport

VicSport is the independent (i.e. non-government) member-based organisation representing Victoria's sport and active recreation sector. Its mission is to lead the sport, active recreation and associated health agendas into the future. As Victoria's peak body for sport and active recreation, VicSport represents the needs and concerns of over 170 member groups to Government, associated statutory authorities, relevant business and private enterprises and other stakeholders with an interest in promoting sport and active recreation. VicSport‘s members include: State Sport Associations and active recreation organisations; Regional Sport Assemblies; Local Governments Authorities; university, TAFE and school sport groups; and organisations representing specific sub-groups of the sector such as the Victorian Disability Sport Advisory Council; ACHPER (Vic); and the Australian Drug Foundation. Through a variety of programs, events and services, VicSport supports over 16,000 clubs and associations, and over 1.8 million participants, workers and volunteers in the sport and active recreation sector across Victoria. The activities these organisations offer play a vital role in promoting better physical and mental health outcomes for Victorians, as well as building the capacity of metropolitan and regional communities.
VicSport , like many sport organisations, was heavily dependent upon government funding, and found itself in recent years in a challenging situation. Due to the changing nature of sport and recreation participation and funding in Victoria, VicSport's role had inadvertently and subtlety shifted towards a project-based funding model and was losing recurrent funding to support the ongoing advocacy and state support services role upon which it was founded. Short-term funding focussed the efforts of the VicSport staff and attention of the VicSport CEO on managing these funded projects, and allowed little time to set a clear and independent strategic direction separate to that of the major funding bodies.
In summary, VicSport faced the following challenges:

• Over 80% of revenue from two Government / Statutory Authority bodies, which was predominantly short-term project specific funding.
• Inherent tension in the role of at times needing to advocate for Victorian sport with (and at times against) those funding bodies.
• Small and relatively young and inexperienced staff team.
• Out-dated mission and lack of clarity in strategic direction.
On the positive side however, VicSport had an experienced CEO, a healthy balance sheet with strong financial reserves and a number of high quality programs that were delivered to organisations in the Victorian sport industry.
In 2012, the VicSport AGM saw 50% of the board turnover to new elected directors, an event that was unplanned, however appeared to be an indication from the Victorian sport community that change in the role and direction of VicSport was needed. Using this new board as an opportunity for change, VicSport began a process of strategic review and planning.

The first step of the strategic review and planning process began at the first board meeting of the 2013 board. The new board had quickly identified that the current funding model of VicSport had negatively affected the relationship with the two key funders and had resulted in a focus on project delivery and subsequently a loss of impact in the sport industry as an advocacy and support organisation for Victorian sport. A decision was made by the board to seek external facilitators to assist in the strategic planning process and a strategic planning sub-committee of board members, staff and external stakeholders was formed.
The approach involved significant work up front that established the current position of the organisation, and the environment in which it operates. This included an analysis of key performance metrics, as well as one-on-one interviews and individual preparatory work. This was followed by a series of workshops and meetings that took the planning team through each stage of the strategic thinking and planning process, using the following six steps. Please note, the strategic planning system used by VicSport includes the concept of strategic elephants. A strategic elephant is a strength, weakness, threat or opportunity, or a combination of these, which will affect your organization's performance by more than 30% now, or in the future.

The strategic planning process was designed to assist VicSport in identifying the issues that will have the largest impact on whole-of-organisation performance, develop strategies to address these, and ensure that a process was in place to execute and monitor these strategies.

At the end of the process, VicSport had designed not only a new strategic vision and clear plan for the future, but had also identified an implementation plan to realise this vision and allocated a substantial sum of its reserves towards the achievement of these goals.
CASE QUESTIONS:

1. The catalyst for the strategic planning process for VicSport was a change in membership of 50% of the board due to an election at the AGM. Discuss the role of the director and board in strategic review. What is best practice?
2. VicSport chose to use an external facilitator to assist with the strategic review and planning process. Discuss the advantages and disadvantages of seeking external advice in developing strategy.
3. What are we here for? is one of the most difficult questions a board can ask itself - what key questions should a director and board consider when setting its vision for the future of the organisation?
4. VicSport's strategic planning sub-committee included board, staff and external stakeholders - using the information provided, and your understanding of the sport sector, identify what type of external stakeholders should be invited to participate in this planning process.
5. Identifying an organisation's strengths, weaknesses, opportunities and threats is an essential component of a strategic review. Using the information provided,
undertake a SWOT analysis of VicSport prior to the strategic review.
6. Monitoring performance is the most neglected component of strategic planning.

4. RISK: ISSUES FOR DIRECTORS
Case Study: Essendon Football Club2

On 4 February 2013, the then AFL CEO, Andrew Demetriou, told the Essendon Football Club (FC) Chairman, David Evans, that a major report accusing Essendon of doping was about to be made public. Whether or not the Australian Sports Anti-Doping Authority (ASADA) had already determined to investigate the Essendon FC prior to Essendon CEO, Ian Robson, phoning ASADA with the authority of the Board's Chairman, Evans, to "self report" is immaterial. Following Essendon's press conference of 5 February 20133, where Essendon Senior Coach, James Hird stated: "As a leader of the football department, as the coach, I take full responsibility for what happens in our football department", the role of the Essendon FC Board in (a) preventing and (b) containing risks to the Club came sharply into focus.
With the more column inches in Australia being devoted to the scandal that engulfed the Essendon FC following these allegations than any other issue relating to the economy, national security, humanitarian disasters and international conflict, it is timely to review the governance implications arising from this scenario.
Background: The December 2011 Constitution of the Essendon Football Club indicates that it is a public company limited by guarantee under the Corporations Act.4 Under clause 54, the Board of Directors consists of between nine and ten Directors, constituted by not more than six Elected Directors, and not more than three Appointed Directors and an executive officer, if appointed as a Director under clause 71. Ian Robson was appointed as Managing Director and CEO in 2009.5 The 2012 Annual Report indicates that there were ten directors eligible to attend the 14 meetings held during the financial year.6 The Constitution states that the Board has all powers of the Club, including the power to appoint the CEO and the Senior Coach, and to ratify the Selection Committee. The Assistant Coaches were to be appointed by agreement between the CEO and the Senior Coach.
Facts: The Essendon FC Board made the decision to pre-empt the 7 February 2013 press conference led by Ministers Jason Clare and Kate Lundy.7 At that media event, findings from the Australian Crime Commission "Organised Crime and Drugs in Sport" report following Project Aperio, alleged links between organised crime and doping in sport.8 This was described by one commentator as the ‘blackest day in Australian sport'. No sports or clubs were identified during this press conference.

Shortly after this media conference, the CEO of ASADA and the AFL announced an agreement to conduct a ‘joint investigation' into Essendon's 2011 and 2012 supplement program9, with the Club announcing it would fully co-operate with that investigation.10
CASE QUESTION 1:

Imagine you are an Essendon FC Board member receiving a call from your CEO on 5 February 2013 relating to allegations that a major report accusing the Club of doping is about to be made public. In considering what course of action to take, what types of "risks" can you identify (a) to the club and (b) to yourself personally?

Role of the Board in High Performance

Essendon FC launched its own internal investigation, conducted by Ziggy Switkowski, who released his report, the Switkowski Report, on 6 May, 2013.11 The first of several "key findings" was that the size of contemporary football clubs, including Essendon, led to issues around accountability, not contemplated by the current Constitution and Board structure. In 2013, Essendon FC employed: "Seventy-five people full time across all its functions and another 35 in part time roles. Annual revenues, and costs, surpass[ed] $50 million." Switkowski made the point that: "Where an AFL football department may have had 5 personnel 20 years ago (coach, trainer, physio) and perhaps 10 around 2000, today's AFL club may employ 30-40 people on the football side of the organisation. This requires formal structures and delegated powers, processes and controls and, depending upon the head coach's approach, may limit his close oversight of all matters to do with football."12
Switkowski is assumed to be describing Essendon FC when he observes that: "The organisation of most clubs is often divided into a commercial arm and a football operations arm, with each head generally reporting to the chief executive officer, who in turn reports to the board." The Senior Coach in this case also reported directly to the CEO, rather than to the Head of Football Operations. In Chip Le Grand's book "The Straight Dope", Le Grand claims that: "It wasn't in his [Hird's] job description to hire or manage the fitness and conditioning staff but it was within his power to call them out."13 Le Grand claims that Hird: "shares responsibility for Dean Robinson and Stephen Dank joining the club, [and] he encouraged them to bring a harder-edged, high-performance culture to the Club."14

It is not clear who at Essendon FC hired Robinson, known as ‘The Weapon', in August 2011. Le Grand's book claims that Robinson was: "given a fat salary, broad licence and a clear mandate to make the players bigger and stronger. He was put in charge of all fitness and conditioning, sports science and medical staff. He assumed responsibility for a substantial budget and was given authority to hire the people he deemed necessary to take Essendon from finals aspirants to premiership contenders. One of the first he hired was Stephen Dank."15

Switkowski's report claims that Robinson's program involved: "the rapid diversification into exotic supplements, sharp increase in frequency of injections, the shift to treatment offsite in alternative medicine clinics, emergence of unfamiliar suppliers, marginalisation of traditional medical staff etc [which] combine[d] to create a disturbing picture of a pharmacologically experimental environment never adequately controlled or challenged or documented within the Club in the period under review"16 with some players having received as many as forty needles. Dank reportedly has no formal qualifications, accreditations, and is not registered with any medical or sports science associations. Le Grand claims that Hird: "knew early in the 2012 season that there were problems with Dank and his overuse of injections, that Robinson was clashing with the medical staff, that [Club medical doctor] Bruce Reid didn't like what was going on."17

CASE QUESTION 2:

While the Board appoints the Senior Coach, the Senior Coach reports to the CEO, who then reports to the Board. Le Grand claims that: "As with everyone else in a position of authority at Essendon, he [Hird] could have done more to prevent what happened in 2012, as he has admitted since."
(a) To what extent do you agree with that statement?
(b) Whose responsibility should it have been to check the credentials of staff employed in the sports science team, including Robinson and Dank?
(c) What role does the conflict between the goal of winning premierships and complying with the "rules" play in the culture of the Club and decisions made by the Board?
(d) What role could or should the Board have played to prevent this situation from arising?
Club CEO, Ian Robson, immediately resigned after the release of the Switkowski Report, accepting: "that he was ultimately responsible for the crisis that could lead to doping bans for several Essendon players."18 (Noting that up to that point, no Essendon players have had an anti-doping rule violation finding made against them.19)

CASE QUESTION 3:
Does the CEO bear ultimate responsibility? Could tightening up expenditure approvals through financial delegations; accountability and reporting, have prevented this situation from arising?

Attachment:- Sport Governance and Strategy.rar