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The Globalisation of Sport

OECD Global Forum

(This article is based on a speech by David Adam from a recent OECD Global Forum on Responsible Business Conduct)

Power Corrupts

“Power tends to corrupt and absolute power corrupts absolutely”. The famous words of Lord Acton still resonate today across many spheres of public life and especially in the the world of sport.

Lord Acton went on to say that “there is no worse heresy than that the office sanctifies the holder of it.” He was talking about Papal infallibility but the same rule holds true for earthly matters and especially for the world of sport and its sometimes strange and unaccountable international governing bodies.

The offices of FIFA and the IOC have come to sanctify their holders. Bizarrely, both democratically elected and non-democratically elected political leaders across the globe court these organisations, conferring on them a kind of infallibility the like of which even the current Pope doesn’t claim.

I experienced a little of this during the London 2012 Games. When the IOC came to town it felt as if this elite group could shut the city down as they travelled around in their official traffic lanes and hopped from one exclusive venue to the next while the ordinary Londoner watched from the sidelines. It was quite extraordinary; some of those democratically elected officials must have been embarrassed at the display of influence over their city, especially as they so regularly protest that there are so many aspects of political execution outside their control. During Games-time such protestations suddenly seemed absurd.

The onlooker cannot help but ask ‘what is this strange circus?’

The Size of the Prize

Power corrupts because human beings are inherently weak and especially so when tempted by such a huge prize. FIFA’s revenues between 2011-14 amounted to $5.7bn. We have already witnessed this phenomenon in banking and financial services where profits and bonuses grew so large that they not only dwarfed economies but also obliterated any chance of reasoned and moral behaviour from those working in the sector.

OECD Panel

Christine Kaufmann, Co-Chair, Advisory Board, Swiss National Contact Point and Professor, Faculty of Law, University of Zurich
Jörg Vollmüller, Head of Commercial, Legal Division, FIFA
David Adam, Founder & Principal, GlobalCities

The Globalisation of Sport

Just as we have witnessed the globalisation of financial transactions in the banking sector, so too are we experiencing the globalisation of sport. Sport is now a global commodity.

This process has at least three defining characteristics:

1. Growing global audiences attracting powerful global brands

Average Television Audience Size

Broadcasting and marketing rights to reach these vast audience numbers make it easier for these bodies to command the attention of major brands. Audience sizes of major sporting events have few comparisons at a domestic level, except perhaps the occasional royal wedding.

2. Emerging economies seeking recognition and political legitimacy

Recent bidders to host major events include Beijing Olympic Games 2008, Delhi Commonwealth Games 2010, FIFA South Africa 2010, FIFA Rio 2014, Rio Olympics 2016, FIFA Moscow 2018, FIFA Qatar 2022. The number of fast-growing economies winning these events is far greater than those more established markets who bid. The events offer an opportunity to say to the world, ‘Hey, we’ve made it’ and to benefit from some of the international pomp and ceremony and minor officialdom which inevitably accompanies these events.

3. Outmoded international systems of governance

FIFA and IOC are just two of many international bodies and civic organisations that were established in a bygone era of strong nation-states with clear purpose and mission. In an era of weak global governance we are reliant on these organisations to self-police. But in an era of transnational corruption that might be asking a lot of some of them and of our antiquated systems of global governance.

The Role of Business - Incentives and Associations

There is obviously a role for the State to better regulate this area, and as we have seen it has taken the US Justice Department to get involved to truly curtail some of FIFA’s excesses. But the State is also slow and often behind the curve; we can’t always wait for it to get involved before we get it right. Good global citizenship requires that business must have a role in creating contemporary global civil society and major sporting events are a good place to begin.

Following the 2002 Olympic Games in Salt Lake City the IOC was effectively morally and financially bankrupt. The then President Juan Antonio Samaranch needed to reform the organisation following a bribery scandal. It was all bad for business: bad for sponsors and bad for the brand. There is a business incentive to ensure that the goodwill of consumers, in the form of their cash and brand loyalty, has not been abused.

Business has long understood this importance of brand and reputation. A lot longer than we might at first assume. Throughout history there are examples of businesses getting together to form associations in order to protect the interest and reputation of their trade. Institutions such as the City of London Corporation were created to manage brand reputation. As early as the 13th century craftsmen and artisans formed guilds to ensure that labour conditions and industry standards were kept. There is profit incentive in people knowing that your product is trustworthy and that it stands for quality, and there’s clearly a case for self-regulation.

In the case of recent sporting corruption, the debacles have tainted many of the big brands closely associated with these sports, and there is a clear opportunity for them now to be leading the way on responsible business conduct.

Beyond Compliance - Leadership from London

Those brands need to be moving beyond compliance. At the 2012 London Olympic Games, the London Organisation Committee of the Olympic Games (LOCOG) pre-empted much media scrutiny by moving beyond the compliance standards that were expected by the governing body. This was particularly the case in relation to sourcing materials and establishing merchandising and marketing revenue streams. At times some people may have felt their approach was overzealous, but they were surrounded by a media keen to trip them up and a sophisticated London audience very unlikely to tolerate merchandise made in sweat shops in Asia.

Against this backdrop of a global economy, a market mechanism capable of sourcing materials from any part of the world and therefore from economies with wildly varying business, employment and regulatory practices, LOCOG felt it was down to them to lead and to move beyond required compliance standards, demanding that many businesses undertook social and environmental audits to the level of global best practice in each sector. There is nothing to stop organisations like FIFA or IOC from setting out their own similar ‘gold standard’ approach to procurement and human right compliance. It could become a condition of host city status and a bold leadership statement.

Profit + Purpose

There is much written in marketing and trend forecasting circles on what motivates the Millennial cohort. Studies showing how much that group of people are seeking meaning from employment, or how they expect the product they buy to adhere to ethical standards. It all adds up to the fact there is an increasing body of evidence that shows that the under 35s, the largest growing group of consumers, thinks that business needs a reset. Business is increasingly expected to move beyond just the profit motive and to create products and services that matter and that have purpose. Who better to lead such a charge than the apparently noble business of sport?

The Rules of the Game

Sporting achievement and sporting endeavour stand for something greater than just our own individual aspiration and desire. The Olympics and World Cup football each hold our collective ideals and dreams and as such both represent the very best of what our aspiration for what responsible business conduct could and should be.

The beauty of sport is that within the game the rules are clear and understood, the rules set a level playing field for competition. Without those rules the competition is nothing and achievement is without merit. The rules of global sporting governance should also live up to the model set out in their ideals. The Olympic motto is ‘Faster, Higher, Stronger’. FIFA’s motto is ‘For the Game, for the World’. With the globalisation of sport, these values are being shared widely across disparate political and cultural practices, giving global audiences a chance to share their own cultural practices which resonate with each other through a shared common narrative.

The Greater Global Practice

The challenge is that we are living through a period of uneven development. Asia is experiencing unprecedented levels of industrialisation and economic development. Political practices often lag behind economic achievement. Therefore when global sporting events bring people together they also bring together contrasting business practices. The challenge is to ensure that those places which aspire to be seen as legitimate and part of the global dialogue adhere to the rules of the game. This applies to all participants as the size of the prize brings with it inherent dangers for all. The power that organisations such as IOC and FIFA wield over host cities could be reflected in host city agreements, for instance, requiring host nations such as Qatar to adhere to international human rights labour standards or to establish ethical sourcing policies.

The rules of global best practice in responsible business conduct should be implemented with a new zeal. Sponsors could lead the way in demanding reform of the governing bodies with whom they do business; it’s good for business and it’s good for culture. It will also mean that sport has a transformational role on the global stage way beyond what is currently expected of it. For those businesses associated with such a movement the benefits are clear as, in the end, sporting events might play a role much more in line with their core philosophy and increasingly in line with the expectations of 21st century citizens.

Posted by David Adam on 15 Jul 2015

 

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