Profit or Not?

“Marx was right” I was murmuring to myself when I read the Minutes of the 2018 IOF General Assembly. It was Karl Marx who stated in Die Deutsche Ideologie (1845) as part of his criticism of the Hegelian idealism, that Nicht das Bewußtsein bestimmt das Leben, sondern das Leben bestimmt das Bewußtsein.”  That is, “It is not Consciousness that determines Life, but Life determines Consciousness.”

In the Congress binder of the 2018 IOF General Assembly it was shown that the 2016-18 period the IOF made no profit. In the minutes of the GA it was stated that the IOF’s financial status has been stabilised, and after all, the IOF is a non-profit organisation and the goal is not to make significant profit. This appeared to be in stark contrast with the over €300,000 profit plans presented to the GA 2 years earlier in the 2016 Congress binder for the same period by the same leadership, and the statement that the surplus was required to strengthen the IOF’s financial position. Apparently changes in life changed the thinking of the IOF leadership.

The planned and expected profit figures of total profit for the 2016 – 2018 period are shown below. You may find more details in my previous post IOF Financials – the past is dark, the future is unclear.

iof total profit 2016-2018

 

In the Minutes of the 2016 General Assembly under Section 15.2 “Membership fees and budget for the years 2017–2018” it was stated that

Leho Haldna presented Council’s proposal for the budget for the fiscal years 2017 and 2018.

LAT requested information about how the planned surplus in the budget was to be used, and also asked where the proposed increase in development funding was shown in the budget.

TH [Tom Hollowell] responded that the IOF’s capital and reserves should be strengthened and that the surplus was primarily intended for this purpose.

In stark contrast, under Section 10 in the Minutes of the 2018 General Assembly, under “Report by the Council on the activities of the IOF since the last Ordinary General Assembly”, it reads that

President Leho Haldna (LH) presented the report on the activities of the IOF in the period since the previous General Assembly in 2016 […]

The report also included how the IOF’s financial status had been stabilised during the last congress period. LH wished to make the statement that the IOF is a non-profit organisation, and that the goal was not to make significant profit, but that these funds should always be reinvested into the activities of the organisation.

For the uninitiated the above views of the IOF leadership only two years apart may sound like contradictory to each other. For the avoidance of doubt, one may find that the reason for the significant shortfall in the delivered profit was not reinvesting in activities, but the IOF’s inability to deliver the sponsorship and other external income as planned by the IOF leadership. Although there appears to be some inconsistency across various representations of IOF budgets, forecasts and accounts, my best estimate is as follows:

 

iof sponsorship income 2016-18

What is clear, is that in the beginning of 2016 the capital and reserves of the IOF stood at €114,630. In August 2016 the IOF leadership believed that an extra €300,000 addition was required for the capital and reserves of the IOF to ensure stability. After two years there were virtually no funds added to the reserves. Yet, the IOF leadership declared that the IOF’s financial status had been stabilised. Either a financial miracle happened, or Marx was right and changes in life changed the thinking of the IOF leadership.

It is also notable, that the realisation of 2018 that the IOF is a non-profit organisation came only two years after the largest annual profits were planned in the IOF’s history.

Ten years underperformance - Sept 2018

 

What has changed? Apparently, nothing more than Life made the IOF leadership realise that they could not deliver the fantastic profits they dreamt up.

We have to bow to the wisdom of Karl Marx.

The Value of Athletes

I was approached by different athletes suggesting that the picture below would worth a post. It shows the podium of the 2018 World Cup series. If you zoom in, you can see the prize money given by the IOF to the top FootO athletes of 2018. €100 for 6th place overall, €200 for 5th, €300 for 4th and €400 for 3rd. Tove and Karolin were smart enough to cover up the reputation damaging sums of €1000 and €500 given for their outstanding performance through 2018.

world cup podium 2018

It just does not look right. It is simply shameful, as one athlete said. Even no prize money would work better than showing these sums to the world.

For comparison, here are some numbers for the 2019 overall prize pool of three international federations. Interesting to note that all three have increased the sums over their 2018 prize pool.

  • Orienteering (IOF):       €12 thousand
  • Skyrunning (ISF):        €187 thousand
  • Biathlon (IBU):         €7,000 thousand

The prize fund for the FootO World Cup was increased for 2019 from €5000 in 2018, but the IOF contributes only €1,500, that is less than 1% of its external revenues, and around 0.15% of its total budget to the €12,000 prize fund.

Although the IOF earns good money from broadcasting the performance of top orienteers, there is absolutely no visible intention to share the profit with the athletes.

In 2018 100%, in 2019 88% of the prize fund comes from a contribution imposed on the organisers of World Cup races. The organisers have to pay this extra fee over and above of all other IOF imposed costs like the sanction fee, anti-doping fee, TV production costs, and the likes.

The information on the Skyrunning prize fund is a bit patchy. It is unclear how much different sources contribute. What is clear that individual races of the World Series must have at least a €6,000 or a €10,000 prize fund in addition to contributing to the overall prizes. They also have to offer free entry and accommodation to the top 10 runners.  No obligation on live TV, though. A very different approach from another non-Olympic sport. They clearly try to attract the top athletes.

The IBU prize fund of €7million rewards a large number of athletes. IBU pays this over and above the €4 million planned as participation support to athletes. Of course, IBU plays in a different league, but it is remarkable that the €7million represents approximately of 1/4 of their external revenues of TV rights, sponsors and funds from the IOC.

If the IOF would follow an approach similar to IBU, approximately €45,000 to €50,000 would be paid to the athletes based on the planned net proceeds from sponsors, TV rights, Live Orienteering, and IOC contribution. If we consider the event sanction fees as external revenue, like the IOF leadership does, then €100,000 to €110,000 would be the prize fund following IBU’s approach.

What is behind the IOF’s rather different attitude towards sharing the proceeds with the best athletes?

Continue reading “The Value of Athletes”

IOF Financials – the past is dark, the future is unclear

With this post I would like to give the confidence to the representatives of Member Federations before the vote on the 2019-20 budget on the IOF General Assembly next weekend. I know that for people with no finance background it often looks like a daunting task to interpret financial statements and have confidence in their decision. So I would like to assure them that based on the IOF’s track record for the past 10 years, and especially for the past 2 years since the 2016 General Assembly, their vote doesn’t matter.

No matter how Members Federations vote, the IOF Leadership will spend the money the way they want, independent of the GA approved budget.

In this post I will quickly review the past, present and future of IOF finances as presented on recent General Assemblies.

Continued historic underperformance

The publication of the 2017 results and the forecast for the 2018 published in the Congress Binder have confirmed the remarkable feat achieved:

The IOF Leadership has missed the budget target set by themselves for 10 years in a row.

I wrote about this earlier here and here, the numbers published for the 2018 General Assembly just confirmed the expectations.

Ten years underperformance - Sept 2018

Not only the continued underperformance against their own budget targets set by themselves may come close to a Guinness Record, but the results were poor also in absolute terms.

The IOF has lost a total of €114,000 since 2009, and €38,500 since 2013.

Ignoring the approved budget looks like a recently established culture of the IOF Presidents. It started under Åke with unpublished promotions that very likely had budgetary impact, continued by Brian just informing the Council that he decided to overstep the approved budget to fund an exhibition on the SportAccord convention, and continued further by Leho who started to revise the 2017 budget already in October 2016, within two months after its approval (as discussed below).

Complete wipe out of the 2016 GA promises

Leho, as freshly elected President promised a period of plenty on the 2016 General Assembly, with highly profitable years coming starting from 2016. The result resembled the words of Chernomyrdin, the late Russian Prime Minister:

We wanted to do it better, but the outcome was the usual

Results 2016-18

For the avoidance of doubt, the plus zero result (or 0.2% of the promised total profit of the total of three years 2016-18) was not due to spending all the money on development projects. The reason for underperformance were the complete misjudgement of revenues, and overspend on some expenses, like the World Games (€10,000 planned, €29,306 spent in 2017).

Unfortunately, this poor state of IOF financials contributes to the bad feeling that there was an incentive for the IOF leadership to spend monies collected for anti-doping activities of the IOF differently than the original intention.

Continue reading “IOF Financials – the past is dark, the future is unclear”

IOF Anti-Doping activity questions

(This post has been updated with information received from the Portuguese organisers of the 2016 World MTBO Championships. The updates are shown in the text in blue)

I always believed that the anti-doping fight was too important a matter to be left to the anti-doping officers, to paraphrase Clemenceau’s famous assertion that war is too important a matter to be left to the generals.

Yet, I always found it difficult to have a meaningful discussion about it with Brian and the Council when I was the Chair of the MTBO Commission. Their argument was, of course, that anti-doping matters are highly confidential. That is obviously a very relevant point regarding specific tests, but I could never figure out the reason for their reluctance to discuss anti-doping strategy and finance. Were they hiding their lack of understanding and unwillingness to learn about the topic? Or were they simply reluctant to engage in meaningful discussions?

To the deepest regret of most top managers, questions do not disappear just because they do not want to talk about them. This applies also to the IOF’s anti-doping activity, and the more one scratches the surface the more questions pop up. In this post I will share with you some observations that suggests that all is not well. I have more facts about MTBO for the simple reason that I talk to most athletes and organisers in that discipline, but both anecdotal evidence and data available suggests that there are similar questions across all disciplines of the IOF.

Fewer AD tests

There was a sharp drop in the number of AD tests for MTBO athletes commissioned by the IOF. There is no official data available, but MTBO is a  small community (a bit like FootO was in the 80s and 90s), and people talk to each other.

IOF MTBO anti-doping tests - updated

 

Some explanation: OOC stands for out of competition, IC stands for in competition. The peak in 2016 was achieved in a hybrid year of financing when the IOF leadership introduced flat taxes (or “donations”, as they call it), instead of  just surprising the organisers on the event by the number of AD tests to be paid for. The Portuguese World Championship organisers were asked if they wanted to pay the then newly set fee of €4000 according to the new AD financing system, or pay for the tests as requested by the IOF according to the old system. Knowing that typical number of tests requested would  cost less than €4000, the Portuguese elected to pay themselves. They had the pleasure to pay for a record number of 27 AD tests on 18 athletes, far the highest ever requested by the IOF on a single World MTBO Championships. That cost the Portuguese organisers at around €6500, including doctors’ fee. There was a strong feeling that the IOF took advantage of the situation that the Portuguese elected to go by the old system. This feeling of being taken advantage of was strengthened, when both in 2017 and 2018 the IOF paid only for 8 tests (i.e. less then third that of ordered in 2016) on the World MTBO Championships, despite collecting a record amount of €5000 and €5500 from the organisers.

Anecdotal evidence from FootO elite athletes suggests that recently there was also a sharp drop in AD tests on major FootO events.

Unfortunately, the hard facts available also point to the same directions. The number of athletes in the IOF Registered Testing Pool has dropped by over 60% in 2 years. The number of FootO athletes dropped from 8 to 3 between 2016 and 2018. These are the athletes who have to report their whereabouts in WADA’s ADAMS system, that is, these are the athletes who can get an out of competition AD tests ordered by the IOF. You may find the lists of the registered athletes here.

 

IOF registered testing pool

But this is not the end of the story.

Continue reading “IOF Anti-Doping activity questions”

World Orienteering Day – fewer organisers in 2018

This was a busy summer. I had no time to write proper posts. I had to help more than expected to organise the European and World Masters MTBO Championship, went to the World MTBO Championship, and also spent lots of time mapping and then organising the Isle of Man Orienteering Championships (and even done some proper work on the side).

Now it is time to get back to this blog, as there is a long list of topics waiting to be published from concluding the WOD quatrology to a more in-depth look into the history of the IOF Leadership’s Olympic ambitions.

*  –  *  –  *

The announcement on the IOF website on the final numbers of the World Orienteering Day is rather subdued compared to in previous years. Not only the “World record” focused communication is gone, but there was little celebration compared to previous years. For good reasons.

The overblown targets of 500,000 participants on 5000 events in 100 countries set by the IOF leadership were missed by a wide margin from 19% to a whopping 56%. In 2018 over seven days there were even fewer events organised than in 2017 on a single day!

The Council, unsurprisingly, did not flinch in the face of defeat. There is no hint in the Council minutes #189 and #190 that they tried to understand the reasons for missing their own targets by a wide margin, figure out why organisers were not interested in WOD activities, or alter their approach other than setting the 500,000 target now for 2020 in the strategic directions (see the congress binder). As a reminder, “Let’s reach together half a million participants during WOD in 2017!” was the call of Leho for a single day event. We could get nowhere near even over a week in 2018.

One may even get the feeling as if IOF volunteers are expected to behave like Boxer, the  hardworking naive horse, who would never question the direction set by Napoleon, but believes that any problem can be solved if he works harder. In the meantime, the numbers suggest that there is a yawning gap between reality and the ambitions of the IOF leadership.

WOD countries -3

WOD events -3

WOD participants -3

WOD by country

The targets were missed by a wide margin. Even these numbers are hinging primarily on Turkey that delivered almost quarter of all participants, just a little bit less than the next three countries, Norway, Russia and Sweden combined. Unfortunately, Turkey does not have the orienteering traditions that could make these impressive numbers sustainable without strong central will. If Turkish organisers lose interest, WOD numbers will collapse.

Continue reading “World Orienteering Day – fewer organisers in 2018”

IOF’s World Orienteering Day website on the wrong side of the law

A reader of this blog has called my attention that something looks rather odd with the website of the World Orienteering Day (WOD). The volunteers who sign up cannot opt out from being included on mailing lists that are probably marketing oriented. I asked some legal experts of this field, and they confirmed that the WOD website is on the wrong side of the law, at least in Europe.

According to the lawyers with expertise in internet and data protection, the WOD website blatantly violates the Europe level law of GDPR (General Data Protection Regulation on data protection and privacy for all individuals within the EU), coming into effect on 25 May. I dutifully passed this information on the IOF’s President and CEO, since they are the ones responsible for the lawful operations of the IOF.

According to the lawyers, the website also violates current EU guidelines on internet data use, thus chances are that it also violates existing Swedish laws, but they did not have time to dig into that. After all, it does not really matter. The big issue is whether the website complies the law coming into power on 25 May.

The GDPR requires that not only the current WOD website should be changed, but all data collected on the current website in a non-GDPR compliant way should be deleted before 25 May. All names, phone numbers, email addresses should go, unless explicit consent is obtained, one by one, from the volunteers signed up so far.

WOD_consent_form annotated

The current website forces consent from volunteers in a very deceiving way by showing a pre-checked tick box to accept that the user is included on mailing lists for information from the IOF and its partners. The above picture shows the deceiving check box. The little “forbidden” sign at the base of the cursor indicates that the box is frozen. It cannot be unchecked.  In addition, there is nothing to clarify what “relevant information” may mean.

All this does not look like an accidental mistake, but it gives the feeling of a premeditated deception showing the look of a legally compliant request for permission, while it does not give the legally required choice to the user.

This is bad news.

Unfortunately, it is not surprising.

The IOF leadership has a rich track record of doing and tolerating practices that may raise serious questions. I shared some of these stories in earlier posts here and here. Judging by this track record there are no assurances that meaningful action will be taken. Chances are that the IOF leadership will hope to “get away” with it.

That would be worse news.

The IOF may not be in the primary focus of a GDPR audit, but the breach of the law and its apparently intentional nature is rather obvious for people involved in this subject. Although the new GDPR regulation may have been inspired by marketing practices, it is taken very seriously even by charities and voluntary organisations across Europe in their effort to redesign communication with their volunteers. For example, the RNLI, a charity where I am involved as a volunteer crew member, has made it very clear to each and every of its members that compliance with GDPR is taken very seriously across the organisation both in internal and external communications. The RNLI has an almost 200 year long history with a reputation and social respect head and shoulders above all sports organisations.  Yet, they did not try to “get away” with ignoring the law. Maybe, that is one of the reasons why they have a far superior reputation.

The EU has significantly increased the fines on data protection related matters. Violation of the GDPR  carries serious legal, financial and reputational risk. The fines are several magnitude higher than they were previously: up to €20 million if there has been an infringement of the basic principles, including conditions of consent and data subjects’ rights, i.e. the exact situation with the WOD website. Compare this to the so far record fine of £400,000 for data protection violation in the UK. Apparently the regulators across the EU got pissed off by various entities who tried to “get away” with violating the law.

Needless to stay that even 1% of that maximum fine of €20 million could be lethal to the IOF in its current, rather shaky financial condition.

Is it worth the risk?

*   *   *

Below you may read more details on the nature of the WOD website’s violation of the GDPR. A more detailed description of the situation and an assessment whether it was more likely an accidental mistake or a deliberate deception of the user.

Continue reading “IOF’s World Orienteering Day website on the wrong side of the law”

IOF claimed new World Record after failing own aspiration to set one

In my last post about World Orienteering Day I expressed my doubts that anybody outside the IOF is really interested in the World Orienteering Day(s) for achieving another “World Record” of most participants on a multi venue orienteering event.

But let’s assume for a moment that somebody, a potential sponsor, a journalist, or IOC official gets interested in this metric. If they start to scratch the surface of IOF propaganda, they are in for a nasty surprise: the world records claimed are not verified despite the original aspiration of the IOF. In addition, the underlying numbers show failing participation masked by the unbelievably large numbers from Turkey.

The failed aspiration

People interested in offbeat world records traditionally look for the Guinness World Records as guidance. People looking for an independent confirmation of a verified orienteering participation record are in for a surprise:

The verified world record for most participants belong to a 2003 school event by the Swiss Orienteering Association, not to the WOD 2016 or 2017 as claimed by IOF press releases.

WOD - Guiness - full window

(see the above link here)

The IOF was of course aware of this record. In December 2015 it clearly stated that
“In connection with the World Orienteering Day 2016, the IOF has a vision to set a new Guinness World Record. The current record is from the WOC 2003 in Switzerland, when 207,979 young people at 1381 locations ran an orienteering course. “. 

The IOF leadership set out to break the Guinness World Record, but failing it just kept boasting with an “IOF” World Record. Just another example of the IOF propaganda claiming results even when they fail their own aspirations.

WOD IOF World Record

It is unclear if the IOF has actually tried to break the official Guinness World Record, but did not succeed with verification, or did not even try to deliver on its aspiration. But the aspiration was clear – and the IOF failed to achieve it. Yet, the IOF leadership kept talking about new world records both in 2016 and in 2017. Not a very sportsmanly approach, to say the least…

Of course, it is not easy to break a verified world record. Surprisingly, there are rules. Evidence required includes “For a mass participation record we require Stewards to supervise groups of 50 or fewer participants […] You need to upload all Steward Statements as part of your evidence. If your mass participation record involves more than 5,000 people, the counting process must be done by an auditing firm. etc, etc.”

So there could be very good reasons why an event like the WOD, focused more on promotion of the sport, does not attempt to achieve a verified world record. The focus of WOD should be on participation and fun, not on administration.

But then why claim new “world records”? Whom are we kidding?

Unfortunately, verification (or lack of it) is only part of the story.

Continue reading “IOF claimed new World Record after failing own aspiration to set one”