David Owen

It has not taken long for the coronavirus pandemic to split Summer Olympic international sports federations (IFs) into two groups: the "haves" and the "have-nots". 

In one cluster are bodies such as the International Handball Federation (IHF) with substantial rainy-day funds, which should help them to navigate the present crisis with less pain and more flexibility than some counterparts in other sports.

At end-2018, the IHF had financial assets of more than CHF130 million (£105 million/$131 million/€121 million); it served notice last month that it would be able to get by without extra financial assistance from the International Olympic Committee (IOC), and said it was not necessary for it to lay off or furlough staff.

In the other cluster are those such as the International Hockey Federation (FIH) whose cushions to protect them from bad times are much less plump.

At the same date, the FIH had current assets of just CHF9.56 million (£7.84 million/$9.75 million/€8.9 million) at its disposal, of which a bit more than CHF5 million (£4.1 million/$5.1 million/€4.65 million) was cash.

The body's senior management is now busily reviewing all budgets and, like other IFs, has made use of a Swiss Government partial unemployment programme to cut its salary bill, in its case by about half for the time being.

A trawl around the sector's financial accounts leads me to conclude that the IFs of quite a few sports on the Tokyo 2020 programme are having to make do with cushions of a scale and plumpness that are closer to the FIH's than the IHF's.

The International Handball Federation's financial position appears to be in good shape  ©Getty Images
The International Handball Federation's financial position appears to be in good shape ©Getty Images

A non-exhaustive list might include: World Archery, whose total assets at that same end-2018 date amounted to CHF7.25 million (£6 million/$7.3 million/€6.8 million) and whose unrestricted funds were put at CHF5.75 million (£4.7 million/$5.8 million/€5.4 million); World Sailing – net assets/accumulated fund at end-2018 of £4.3 million ($5.3 million/€4.9 million); World Taekwondo – total assets at end 2018 of $14.35 million (£11.5 million/€13 million), including $10 million (£8 million/€9.1 million) in "short-term financial instruments" and $2 million (£1.6 million/€1.8 million) in "long-term financial assets"; and the World Rowing Federation (FISA) – total end-2018 assets CHF13.2 million (£10.8 million/$13.3 million/€12.4 million), with the balance sheet showing CHF5 million (£4.1 million/$5 million/€4.7 million) in "permanent reserves".

The list of those with relatively small rainy-day funds, indeed, includes what are widely regarded as some of the best-run Summer Olympic IFs in the business.

It is only because of the dramatically changed circumstances brought about by COVID-19 that a particularly plump protective cushion has come to appear desirable.

Prior to that, as my colleague Michael Pavitt recently observed, we might have been tempted to – and in one or two cases actually did – question whether more funds ought to be released for development and marketing purposes.

Once the immediate crisis is over, it seems to me inevitable that there will ensue a fairly wide-ranging governance debate one of whose topics will be what the optimal size of a rainy-day fund for an IF should be.

This will be all to the good: Olympic sports, obviously, come in all shapes and sizes, but there are enough similarities in the jobs that the various IFs have to do for a set of guidelines as to what constitutes sensible practice, and for that matter a benchmarking tool, to make a lot of sense.

Indeed, on certain key parameters, such as the level of funding that really needs to be stashed away in the vault for a crisis such as this one, I am starting to wonder if there might be a case for going further.

Perhaps the time has come for the IOC, probably via the Association of Summer Olympic International Federations (ASOIF) and its winter sports counterpart the AIOWF, to use the muscle that the high value of Olympic broadcasting rights endows it with to incentivise IFs to adopt what is generally viewed as sensible practice.

If expert consensus held, for example, that an IF's rainy-day fund should be between x and y per cent of annual turnover, perhaps payment of a proportion of any given IF's Olympic Games broadcast dividend could be made contingent on meeting that stipulation.

I think any such range should be set quite wide: generous, well-thought-through development spending, such as the rowing programmes masterminded over many years - with help from Olympic Solidarity - by Thor Nilsen, are plainly to be encouraged when circumstances permit.

Indeed, it is hard to see how the Olympic Games could be truly universal without them.

But if the present crisis has shown anything, and not just in sport, it is that inadequate savings can constrict your freedom of manoeuvre and make you dependent on others.

Such an incentive scheme could also cut both ways, encouraging IFs with excessive cushions to be less conservative.

The International Hockey Federation is currently reviewing its budgets ©Getty Images
The International Hockey Federation is currently reviewing its budgets ©Getty Images

Even today, for example, it still escapes me why the International Skating Union, a body which generated operating income of CHF35.6 million (£29.2 million/$36 million/€33.5 million) in 2018 and ended up with a small near CHF233,000 (£190,000/$235,000/€219,000) loss, feels the need to retain close to CHF280 million (£230 million/$283 million/€263 million) of financial assets.

I also wonder whether the IOC should consider earmarking a portion of the Olympic TV money designated for participating IFs to a capital fund that would be invested in new competitions with the most promising development or youth sport objectives.

I say this because of what appears to be a growing trend for sports bodies to jump into bed with private equity (PE) companies in order to source new capital.

PE's usual motivation is profit, pure and simple, typically in a five-to-10-year time-frame.

While there may be a place for this in the sports industry, I think the sector is crying out for a counterweight to help launch new competitions whose prime aim is not simply to make as much money as possible.

Having said that, it would be difficult from a governance standpoint to keep decisions on which new competitions to fund separate from the age-old system of favour-trading that still seems to underlie so much of what happens in the sports movement.

I have seen it stated recently that French novelist Michel Houellebecq has suggested that the world after lockdown would be the same, just a bit worse.

Sports governance is one small area where, it seems to me, there are grounds for hoping it will get a bit better.