Ten Years of Underperformance – Skill or Will or Something Else?

The decade long erosion of the financial stability of the IOF discussed in the previous post did not come as a result of a sudden event. It was the result of continuing underperformance of the IOF leadership who missed the budget target for 10 years in a row.

This post has turned out to be longer than expected. I had little time to write it, so I could not make it shorter. Here is the summary if you are also pressed on time:

  • The IOF Council has missed the budget target every year since 2009. The target set by themselves, and rubberstamped by the General Assembly without change.  It would take a miracle to achieve the targets for 2017 and 2018. That makes 10 years of missed targets. 10 years of continuous underperformance.
  • It is unlikely that this was due to lack of skills: the leading figures of the IOF during this period (Ake, Brian and Leho) all prided themselves with business background.
  • Looking at recent events one may get a feeling that the IOF leadership just did not care about the budget approved by the GA, hence they could not possibly deliver it:
    • In a letter to member federations about the difficult financial status of the IOF signed by Leho and Tom, the “GA Budget 2017” is different from the 2017 budget published as approved on the IOF website in the minutes of GA 2016.
    • In the same letter they claim that in October 2016, 2 months after presenting the 2017 budget to the GA, they already started to modify it “to get costs in line with expected income”. There was not a hint of an unexpected event that could have modified expected income in the 2 months after the GA. This gives the feeling that the Council presented a 2017 budget to the GA that was not realistic, but the GA approval gave the Council free hand to modify it to their liking.
    • The outcome of budget modification(s) started in October 2016 was not shared with member federations until 14 July 2017, nine days after the  Presidents’ Conference in Tartu. This gives the feeling that the IOF leadership decided to avoid any open discussion about budget modification with the member federations who approve the IOF budget.

Here are the details of the story that may make you wonder how long IOF member federations will put up with being treated like this.

The numbers

The Council missed their own target every year since 2009, for 8 consecutive years. They already conceded that 2017 will be missed (€66,235 surplus was budgeted, but only €9,767 was expected in July 2017). It looks also highly unlikely, that in 2018 the budgeted €169,010 surplus, that is 2.5 times(!) higher than ever achieved in the IOF’s 56 year history, will be delivered. That gives a solid 10 consecutive years of missing the budget as shown on the chart below.

IOF Net income vs budget v2


This level of  underperformance is most remarkable under any circumstances. It is even more remarkable, because
a) the IOF was run by experienced managers according to their CV, and
b) the budget was set by the Council themselves, only rubber stamped by the General Assembly.

Officially it is the General Assembly who sets the budget, but in practice it simply approves the one submitted by the Council. I could not find a case in recent memory when the GA modified the budget. I could not even find a case in recent memory when the GA has even debated a line item. There were some high level remarks now and then, but everything was approved as suggested by the Council. So we are not talking about some stretch targets not being met. No, simply the IOF leadership could not deliver for 10 consecutive years on their own promises made with no external pressure. Remarkable.

Skill or Will?

Seeing this level of underperformance one should ask whether it was due to missing skill or missing will. Could it happen that the leadership of the IOF did not have the basic skills required to prepare and deliver a budget for a quite simple small operation? Or was it due to lack of motivation or intention to deliver on their promises, and follow the budget approved by the General Assembly? Or was there something else behind all this?

Let’s try to find some pointers that may help us decide.

Continue reading “Ten Years of Underperformance – Skill or Will or Something Else?”

How financial stability was lost

Over the past couple of days I managed to reconstruct the process how financial stability of the IOF was lost over the past couple of years. As I discussed in my previous post, IOF finances are on a knife edge. Net cash reserves are close to zero level, and debt has jumped almost ninefold from €29,000 to €252,000 in one year from end 2015 to end 2016.

But that was not always so. A decade ago the IOF had sufficient net cash reserves to cover around half a year’s operations. Since then the combined effect of rising expenses (3 fold in 10 years!) and evaporating reserves (over 80% lost since end 2008!) has resulted in the current situation.

Financial stability has been lost for many years to come. A serious revision of the expense structure and many years of reserve building required to regain the stability the IOF enjoyed a decade ago. But that is unlikely to be delivered by a leadership involved in losing that stability.

The chart below shows how the net cash position of the IOF has decreased close to zero over the past decade due to increased costs and lower reserves. For details see the previous post. It has been adjusted for the revised 2017 forecast. Obviously, the downward revision of expenses by €100,000 was forced due to unachievable revenue targets presented to the General Assembly in August 2016.

IOF Expenses vs net cash v2

This chart shows an optimistic view of the situation. As discussed in the previous post, the actual net cash position was probably less than half of the book value at the end of 2016  due to items that were unlikely to represent cash equivalent value.

Important to note that it took a decade to build up reserves to a level that provide stability (at least half a year of expenses). It is also interesting to note that the decade long erosion of the financial position of the IOF correlates closely with the rise of the position, and thus the influence of the current and previous presidents. That may reduce the likelihood of meaningful short term adjustment of the financial strategy of the IOF.

There are three additional thoughts I would like to share on this topic:

  • the importance of reserves
  • the triple whammy of IOF finances
  • the value of financial stability

Continue reading “How financial stability was lost”

IOF Finances – on a knife edge

In the following couple of posts I have to come back to IOF finances. Over the past two months I talked to several members of the Council. I had to realize that either they did not understand the severity of the financial situation, or did not really appreciate it. “We have lot’s of cash in the bank” and “I am positive that everything will be fine” were the typical replies when we talked about IOF finances.

So let’s have a closer look at the net cash position of the IOF on 31 December 2016, the date of the last audited accounts, as published on the IOF website. Below I’ll try to explain the accounting basics required to interpret the numbers.

There are two key points people concerned about the IOF should understand:

The net cash position of the IOF is practically zero. In simple terms: there is substantial money on the bank account only because there are substantial unpaid invoices.

The IOF has started to accumulate serious debt. Short term debt has jumped almost ninefold from €29,000 to €252,000 in one year from end 2015 to end 2016.

Net cash position shows the real amount of cash reserves assuming that all current invoices are paid (including consumed services not yet invoiced), and all current outstanding receipts are paid (including revenues earned, but not yet invoiced). There are variations to this calculation, due to the sad fact of life that it is more likely that you have to pay for services consumed, than that everybody pays you all the money you expect from them. It is always a question how to find the right balance between the optimistic and the prudent approach. Here we make adjustments only when there is a clear indication that not all the monies may be received.

On the chart below you can see the estimated net cash position of the IOF at the end of year 2016. It shows the accounting book values and it is also adjusted for items that are unlikely to be “cash equivalent” (like inventory and Brazilian debt) and an estimated “membership debt” referred to in Council minutes.

IOF Net cash 2016

Despite the €191,000 in the bank, the net cash position of the IOF was only €37,000. Taking into account adjustments, the actual net cash is estimated at around €16,000.

At €16,000 (or even at €37,000) the IOF has practically no meaningful net cash reserves for its annual budget of €800,000 to €900,000. The budget overrun in early 2017 only for the World Games arena production was at around €20,000!

It should be noted that the revised budget of 2017 will not solve the problem. The new forecast is a profit of just above zero: €10,000. It was reduced from €70,000 planned for 2017 in August 2016. That, even if delivered, will not change principally the difficult financial situation of the IOF.

Below I’ll explain the various items for a better understanding.

Continue reading “IOF Finances – on a knife edge”

IOF Council attitudes – some data

I wrote my last post about the World Game accident in anger. For me it was just another unfortunate outcome of the Olympic and ceremony biased attitudes of the IOF Council I saw over the past six years. Some people less familiar with the workings of the Council – as I was myself before I was requested to join the MTBO Commission – told me that there was no real substance in that post, only emotions.

I fully appreciate that things that are obvious for me about the workings of the Council, may not be obvious for others. So I decided to compile some data to illustrate my point about the things the Council is interested in, and about the ones they are not bothered with. I have to admit, that despite having no high expectations, I was astonished by the results.

The number of Council meetings since 2010 where ceremonies were discussed was almost two times higher than the combined number of meetings where safety, accidents, injuries, athletes health and wellbeing, or competition fairness was mentioned.

This appears to be in stark contrast with the Ethical Principles of the IOF declared in the IOF Code of Ethics:

“In pursuing the sport’s goals, the governance of Orienteering shall be mindful of the physical and psychological wellbeing of its athletes.”

I used the Council meeting minutes as a proxy to the mindfulness of the Council. Few people read them, but they reflect quite well the topics the Council is dealing with. These are fairly detailed accounts of 2 to 3 day long Council meetings. Typically they are 6 to 12 pages long, though there are 4 page and 21 page long ones too. They are available on the IOF website for the periods of July 1996 to August 2003, and January 2010 to present. The ones after January 2010 (#150) are searchable. So I could easily search 36 of them spanning over 7 and a half years till today (#150-185).

Below is the summary of the number of Council minutes that contained certain key words. I counted only the occurrences with substance, as detailed below.

Council meeting minute statistics v2

I think these results speak for themselves to prove that the IOF Council does not appear to be mindful of the physical and psychological wellbeing of its athletes, both in absolute terms, and especially relative to the attention given to protocol, ceremonies, and the Olympic Dream.

See details below:

Continue reading “IOF Council attitudes – some data”

The World Games – what shall we call this?

I am lost for words. I really feel for poor Isia, the first runner of the French team on today’s Sprint Relay. I hope her injuries are not too bad, and she was lucky enough to avoid serious consequences of a situation that could have ended in a very, very bad way.

TWG Sprint Relay - French team

You can watch the video here at 25:50.

200m from the start, 15m from the map start, when everybody is in one bunch with heads down trying to make sense of the map. Barrier, thin grey bollards with sharp edges, concrete flower bed. It is a loose-loose situation in every sense.

The showcase for orienteering, two IOF advisers, LiveOrienteering coverage, full attention of the Leadership, special article from the President on the importance of The World Games on our way to the Olympics.

All the IOF focus – except for basic athletes’ safety.

Orienteering is inherently risky. You cannot make it risk free. Part of the joy is that you take on calculated risk – not only in route choice, but also in personal safety. I know this very well having involved in orienteering for over 35 years, and in MTBO – the riskiest of all disciplines – for over 10 years.

But we should do our best that athletes take on only the risk they want. They should not be exposed to unexpected hazards they are not prepared for. They should be warned, they should be routed around, organisers shall take care of the athletes at all levels. In MTBO we created an online injury database to collect data and experiences, and safety aspects especially around start and finish are regularly revisited with organisers and in Event Adviser clinics.

Here is the point where top management talk matters. Two decades of working with top managers and being in top management myself taught me that it matters much more than people in position imagine.

When all the top management talk is about high flying ambitions, attractiveness, TV production, and dignified ceremonies just like in the Olympics – it focuses the mind of organisers in one way. When there is also talk about athletes’ safety, it helps tremendously to avoid mishaps like the one we saw today.

I hate to write about this today.

The World Games – compromises

Just two quick impressions that may illustrate the compromises imposed by multi-sport events on orienteering.

TV schedule compromise

9:00 CET on Thursday, 27 July, is the start of the Sprint Relay, our most Olympic and TV friendly format that was specifically developed to attract TV viewers from close and afar. It is as short and as dynamic as orienteering gets. It is even mixed gender – everything the International Olympic Committee and TV viewers may want.

The Olympic Channel is an internet TV service operated by the IOC. It is the “official” channel of The World Games. Its Thursday schedule looks like this:

Olympic Channel - 27 July

Obviously, there are always compromises when it comes to showing a multi-sport event. But let’s try to digest: wakeboard semi-finals could beat the most TV friendly of all orienteering finals in a head-to-head clash. Could this be a gentle hint that the IOC thinks that our sport does not fit the Olympic programme? Or is this a special route choice to the peaks of Mount Olympus that only the IOF leadership could spot?

Multi-sport compromise

The arena on New Market Square in Wroclaw was the same for sport climbing and orienteering. Sport climbing was first, so a large screen was placed ideally to show all the action. It remained for orienteering to show the TV stream, including the occasional route choice analysis using the GPS tracks on the map. Right besides the Finish – and the Start.

World Games - Sprint start - screenshot

To make it more interesting, different athletes were entertained/distracted/informed by different pictures from the TV stream. Some saw the map, some others control locations, some others mistakes of earlier runners, or just some less relevant pictures. I am sure it has livened up those slowly ticking seconds of the last minute in the last box.

On our way to the Olympics.

The World Games – way or no way to the Olympics?

It is most interesting that Leho Haldna, the IOF President, felt the need to publish an article that can only be interpreted as an attempt to defend the IOF’s participation on The World Games in the name of the Olympic Dream, and to express his regret that “Unfortunately not all federations and athletes are supporting our common goal”.

Leho’s assertion is that “Our athletes and federations have to realise that the road to the Olympics is via The World Games, and The World Games are the highest level multi-sport event recognised by IOC where orienteering is on the programme.”

Let’s put aside the question whether inclusion in the Olympics would be beneficial to orienteering or not. It is a rather interesting one, but almost never discussed, so we will devote a separate post to that. Here we shall look at the facts regarding the Olympic and World Game programs, whether they support the notion that the road to the Olympics is via The World Games”.

New sports on the permanent Olympic program since 2000

Olympics - permanent sports vs WG

It seems that when IOC officials told Leho that “the World Games is a window for non-Olympic sport federations to present their sport to the IOC and in case the IOC feels the sport will fit into Olympic Games (OG) programme, then there is a chance to be selected for the OG”, they forgot to tell this to the managers of BMX sports and 3-on-3 basketball. They simply managed to get their sports on the permanent Olympic programme.

Continue reading “The World Games – way or no way to the Olympics?”