Category: Finance

There was an interesting point in the April 2019 Council Meeting Minutes that may be subject to some interesting discussion this week in Norway during the Foot-O World Championships and the Presidents’ Conference held in conjunction. Pity, that in contrast with previous years, no information is available in advance from the IOF’s relevant web page.

In April the Council has committed a very substantial €50,000 guarantee, or 27%, towards the CHF 200,000 cost of inclusion of Ski-O in the 2021 Winter Universiade in Switzerland. “Council agreed to offer to Swiss Orienteering a guarantee to reserve a maximum amount of 25 000 EUR from the budget in 2020 and 2021 respectively towards the inclusion of Ski Orienteering in WU 2021.” You may find all details the Council Minutes #194 on the IOF web page.

It was refreshing to see a highly unusual deviation from the unanimous voting norm within the Council. The Finnish member “raised concern about funding partner events before improving the IOF’s own event programme and asked that this be noted”. The Norwegian member “felt the amount being committed to this project was too large in relation to meeting the goal in the Strategic Directions and asked that this be noted”.

I believe that there are three questions the Presidents of Member Federations may want to discuss next week:

1. Is there really extra money available for the IOF to spend?
2. Does the Council have the right to introduce a new item to the approved Budget?
3. Is this the most useful way to spend any extra money that may be available?

The short answers detailed below are:

1. It is far from being obvious if the IOF can afford this €50,000 commitment.
2. The Council has no statutory right to modify the 2020 Budget approved by the GA.
3. It would take only €18,000 a year to double the Athletes Prize Money and reduce by a third the IOF tax levied on MTBO organisers, actions that would definitely benefit our sport.

The bonus question remains open: what’s the reason that FISU, the International University Sports Federation, is so close to the heart of the IOF Leadership?

Is there money to spend?

It is far from being obvious that there is money available for the IOF to make these type of commitments.

First, the 2020 Budget approved by the General Assembly does not contain any item remotely similar to this. Even the extra “Budget scenarios” that assume higher sponsor income did not include any discretionary spend for the Council.

Second, in 2016, in a much better financial situation and outlook, the CEO of the IOF clearly stated that “IOF’s capital and reserves should be strengthened and that the surplus was primarily intended for this purpose” [and not for development funding]. You may read details in the 2016 GA minutes. Based on that statement of the IOF CEO, and considering the weaker financial position of the IOF after the major loss in 2016, the profit of 2018 and subsequent years should be used to stabilise the financial position.

It should be also considered that the current IOF leadership in the Financial Year of 2016 only 4 months before year end misjudged the result of the IOF by more €130,000 (the result was €65k loss instead of €67k surplus presented to the GA at the end of August). With this level of uncertainty a large financial cushion looks mandatory in the interest of the sport.

Third, not all the money shown as profit in the IOF statements may be available for spending. Although the 2018 Annual Report shows an impressive surplus of €106,054 for the year, the amount of Trade debtors has also jumped to €70,472. For the ones not familiar with accounting terminology, Trade debtors in essence shows the part of the financial results that was recorded, but cash not yet received. There are no details on the composition of this rather substantial sum, but not all of that money might be recoverable. The IOF has a track record of not being transparent when it comes to dubious debt. The best documented case is the €16,000 Brazilian debt of 2014 that was converted into a “regional development funding” in 2016 – without any transparency by the IOF. The only reason we know of this that the Brazilian Federation was more transparent than the IOF – Acordo IOF CBO – Debt Agreement Original em inglês.

Can the Council modify the Budget?

A financial guarantee is a budget item. According to the Council Minutes #194, as quoted above, the Council offered the financial guarantee of €25,000 from the 2020 Budget. The problem is that there is no expenditure item that could be used for this purposes in the 2020 Budget as approved by the General Assembly, as shown above.

According to the Statutes of the IOF, the approval of the Budget is a task for the General Assembly (Section 7.4). The Council Remit is rather broad, but does not contain any right to modify the approved Budget (Section 8.2).

It is true, that the lack of right did not bother before the IOF leadership in modifying the approved budget. The nicest example was the modification of the 2017 Budget, when a revision of approved 2017 Budget started already in October 2016, two months after its approval.

Yet, this could result in a rather funny situation. Who will pay, if it comes to 2021 and the IOF is not capable – for whatever reason – to stand good for the €50,000 guarantee towards the Swiss organisers?

Will the guarantee be enforceable, if it was made over the budget by ones who had no right to modify the budget?

Is this the best way to spend it?

Every time one makes a financial commitment, it should be asked whether alternative spend of the monies would be more beneficial. In the months before the April Council meeting there were two causes that arguably could be more beneficial to Orienteering as a global sport than supporting the Swiss organisers of the 2021 Winter Universiade.

First, the prize money of athletes. As discussed before in my post on the Value of Athletes, the IOF Leadership shares nothing, or close to nothing, with the athletes of the hundreds of thousands of euros received from selling their performance to sponsors and through various media channels. In 2019, according to the budget above, €0 IOF contribution was planned (€9000 prize money all collected from organisers of World Cup events). According to the Special Rules for World Cup 2019 (already in deviation from the approved budget of 2019) the IOF contributes €1500 to the €12,000 prize money (the rest being collected from the organisers). So €12,000 contribution from the IOF could double the prize money.

Second, the IOF tax levied on MTBO major event organisers. The MTBO Commission asked the Council “that event sanction fees should be variable based upon IOF membership categories, citing that this would help in finding organisers of IOF events, improve quality and global development.” But “Council was not in favour of the proposal. […] The Council discussed other options for finding event organisers in MTBO such as reducing the number of events and/or reducing the program and complexity of current events.”  In short, the Council would rather see a reduction in the number of 3 major competitions for MTBO athletes, than foregoing any part of the €18,000 total sanction fee collected from major MTBO events (€10k from WMTBOC and 2x€4k from World Cup organisers). Even a €6000 lower tax burden would make little change in the IOF budget, but would make substantial difference for MTBO organisers.

As shown below, the combined financial impact of the above two actions supporting many, many athletes would be much lower than the 2x €25,000 the IOF leadership is ready to hand over to the Swiss organisers of the Winter Universiade.

 

Why support the FISU?

The bonus question that remains hanging is about the reason why FISU is closer to the heart of the IOF Leadership than the prize money and meaningful international program for top athletes when it comes to financial support. After all, it could be considered rather surprising that the IOF is more ready to support a partner event than its own athletes and organisers.

For a long time I could not find a reasonable answer until I remembered that in 2017 the President of the IOF had to fly all the way to Taipei to collect a special prize from FISU for the “Best International Sports Federation”.

 

Have the Athletes Commissions or the MTBO Commission ever invited over the President of the IOF to present an Award for the ‘Best International Sport Federation’? I am afraid not.

So they should not be surprised.

I just wanted to provide an update on the mystery of the IOF AD finances based on the information received from the CEO of the IOF that I very much appreciate. This brings us closer to understanding the numbers around the special AD tax levied on athletes and organisers, but it raises quite a few additional questions about the transparency of IOF financials.

According to our correspondence,

“The amount collected is 584 736 SEK and that is exactly what is shown in the Annual Report. 517 433 SEK was used for testing during the year and, as stated below, 67 303 SEK is reserved as pre-paid income to be used in 2019.”

“At year end (2018-12-31) the amount of SEK 67 302,81 was reserved on the balance sheet in account 2900 Accrued costs/pre-paid income, and in doing so the corresponding transaction was made in the anti-doping fund account thereby making income and cost for the year equal.

On 2019-05-01 this pre-paid income was released back to the anti-doping fund account for use in testing to be conducted during 2019.

The above was agreed and approved with the IOF Auditors as the correct way of reserving the money for future use.”

This is illustrated below in euros to correspond with the numbers shown from the 2018 Annual Report in the previous post. This explains why the 2018 AD revenue and cost was set equal at the level of €56,907, although only €50,357 was spent in 2018. There should be also a €6,550 item buried within the €109,213 liabilities to compensate for it. Sadly, no details on this €109,213 liability item is available within the IOF Annual Report.

This is an unusual approach. Without getting deep into accounting, stating a €6,550 cost item in the 2018 accounts that had nothing to do with 2018 (as cost) would be a big no-no in the dozen or so financial regulatory systems my accounting friends and me are familiar with. Accounting for the AD Fund separately as a targeted fund, or declaring a lower income by €6,550 for 2018 (and reserving the rest as pre-paid for 2019) would have been a more standard approach. Sadly, I could not get info from Swedish friends just now, but this is less relevant, as this blog is not about discussing accounting nuances.

There are two interesting points that may be of interest to the readers of this blog:

First, the IOF Annual Reports seem to be very relaxed when it comes to the timing of some line items. Financial professionals with investigative minds would immediately ask if there are any other items on the profit and loss statement of the IOF that contain elements related to other years.

Second, the above confirms that based on the IOF Annual Report orienteering folks cannot understand how the IOF spends this special €60,000 or so Anti-Doping tax collected from athletes and organisers. As a reminder, not only the €30 collected for each “Athletes Licence” goes into this fund, but organisers of major events should also “donate” €500 to €1150 per day. Details of that were shown in my earlier post that raised questions about the IOF’s AD activity (and was  immediately reported to the Ethics Panel by the IOF leadership).

In addition, there is no 2018 Anti Doping report published (as of 6 August 2019), no details published on the use of the special “AD Fund”, and apparently no questions were asked by member Federations sticking to the good old “just pay without questions” attitude.

Athletes and organisers may have to remain satisfied for the time being by just paying whatever the IOF leadership decides in the name of a good cause.

Over the past couple of months there were three apparently contradicting statements made by highly respected bodies of the IOF about the use of Anti-Doping monies in 2018. The audited 2018 Annual Report signed in April 2019 appears to be in contradiction with the Council minutes of January 2019. In return, the statement made by the Ethics Panel in May 2019 appears to be in contradiction with the 2018 Annual Report. The honesty and professionalism of these bodies are unquestionable. The apparent contradictions are part magic, part mystery. The IOF Anti-Doping finances are surrounded by magical mystery.

Apparent contradiction

The following chart shows the essence of the apparent contradictions with the details fleshed out below:

January Council meeting

From Council minutes #193 of 18-19 January 2019

Looks like clear information from an unquestionable source:
a reserve of €5500 of underspent AD monies.

The only minor point that one might add is that 2018 is not the second year of the “AD fund”. It has existed already in 2016, but one should not expect all distant details remembered by IOF Office.

The 2018 Annual Report

The 2018 Annual Report was signed by the Council on 12 April. It was audited by Ernst and Young who have not found any issues.

Looks like clear information from an unquestionable source:
In 2018 the IOF spent all the money, exactly to the euro, that was collected for Anti-Doping.

So the “AD Fund” is shown to have €0 surplus in 2018, and an overspend of €1000 in 2017. Nothing to be reserved. Not shown here, but you may check the 2016 annual report in the 2018 Congress Binder to see that in 2016 the AD Fund income was stated as €39,941, and AD costs as €40,659. An overspend in 2016 too, and thus no reserves to talk about.

It is not specified in the Annual Report what would be categorised as “Targeted funds” under Swedish accounting standards. We may assume from all the IOF communication that the “AD Fund” is a targeted fund, even if a true targeted fund is likely to be detailed within the accounts. The AD Fund is not detailed separately within the IOF accounts.

In any case, no signs of any €5500 reserve, neither here, nor in any other place in the Annual Report. It is a mystery.

Interesting to note that according to the Annual Report the AD costs in 2018 matched the AD Fund income to the euro. This coincidence of income and expense looks like magic, especially considering that according to the Council minutes there was “unfortunate cancelling of some testing at the end of 2018” and a reserve of ca €5500 was created.

The Ethics Panel statement

In their letter dated 24 May the Ethics Panel wrote the following under Section 10:

Looks like clear information from an unquestionable source:
there were monies reserved due to underspent funds, and they were taken into following years Anti-Doping finances.

You may read the whole letter in my previous post about the Ethics Panel investigation based on an IOF report against this blog.

Unquestionable sources

Needless to say, but never hurts to repeat, that this blog keeps all IOF officials and activists in the highest respect they deserve. The integrity and the professional standards of the above sources are unquestionable.

The IOF Council would immediately step up if they would see anything less than appropriate. There should be no doubt about that. Long gone the days of 2013 when the IOF Council sat quietly when they were informed that the then President presented alternative facts about a member federation. Now, equipped with the moral compass of the IOF Code of Ethics, there is no question that the Council would step up and correct immediately all misstated information they may come across.

Ernst and Young, the auditors of the IOF, is one of the largest and most respected professional services firms in the world. Its wikipedia article lists only around two dozen recent accounting and auditing scandals to its name; a rather good performance in its class. One may note that EY, as the auditor of Danske Bank, was reported in April 2019 to the Danish police by Danish authorities for its role in the money laundering case labelled as Estonian Laundromat by Bloomberg. But unfortunate events in distant countries should not carry any implication on the professional standards of EY Sweden.

The Ethics Panel is the Ethics Panel IOF. By definition it is the most ethical, and thus the most unquestionable of all IOF bodies.

Possible solutions

Facing this magical mystery of IOF Anti-Doping finances I talked to some accountants familiar with international finances. Without getting into details of their experiences, let’s say that if there is an accounting trick that they did not see, that probably does not exist.

They came up with a couple of ideas detailed below that might explain the magical mystery of IOF AD finances. It has to be declared here and now that this blog does not support any of their ideas. The ideas of season financial professionals do not assume full integrity of everybody involved in IOF activities. This  might be seen as disrespectful to IOF officials, and this blog cannot possibly support that position.

Creative accounting

One idea mentioned was the introduction of a “balancing item” to the 2018 AD costs. The magical coincidence of AD income and costs could suggest that something similar happened. Accounting for reserves is a pain in the neck, better to be avoided. Allocating an appropriate part of the salary of the AD officer, part of office cost, or even part of the salary of the CEO to AD costs is easy, especially when no in-depth details of the “AD fund” are public. The apparent contradiction between the Ethics Panel statement and the Annual Report was explained with lack of communication around such technical details between the accounting department and top management.

This might sound plausible in some less respectable organisations, but this blog should reject this idea in relation to the IOF. It would imply a level of gaming with accounting figures that must be excluded as an option when it comes to the highly respected operations of the IOF.

Double set of books

An interesting, but nevertheless unacceptable idea was the use of double sets of books (at least for some activities) within the IOF. One for budgetary purposes, the other for practical spending. The apparent contradictions above could be explained by the mixup of the two books: management is aware of the reserves, while for accounting purposes no surplus is shown. The apparent contradiction was suggested to be the result of mixing up references to the two sets of books.

Needless to say, this idea something this blog should not entertain in any way. It is just shown to illustrate what some less respectable organisations known to be doing.

A simple mess

An interesting idea mentioned was that the finances of the IOF could be in a bit of a mess. This could explain any level of contradiction observed. This might be also an appealing explanation for some for its simplicity. It is a basic scientific principle that a simple theory that explains an observation is considered to be more credible than a complicated explanation.

It must be self evident that this blog refuses to grant any credibility to this idea. It might be true that the IOF leadership could not replicate its approved budget in 2017, or that it provided inconsistent and contradictory information on IOF Anti-Doping tests. But any suggestion that would imply that things are not in top notch order within the IOF could be seen again as disrespectful to the IOF leadership, and thus it should be rejected by this blog.

 *   *   *

The magical mystery of IOF Anti-Doping finances remains to be explained. The possible solutions mentioned above were ideas of accounting professionals based on published numbers and statements. I have also asked guidance from the CEO of the IOF and the Ethics Panel on how to resolve the apparent contradictions between their statements and the Annual Report. I will keep the readership of this blog updated with their replies. If you have any suggestions, please let me know via the Contact page of this blog.

“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.

 

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:

 

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.

 

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.

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.

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”

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.

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

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”

(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.

 

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.

 

But this is not the end of the story.

Continue reading “IOF Anti-Doping activity questions”

A case that may both demonstrate the reason for budget overruns and the general lack of controls within the IOF is the story when Brian Porteous, the President at the time, decided (apparently single handedly) to spend money over the anyhow loss making IOF budget on the SportAccord convention in 2013.

Brian decided to ignore the 2013 budget that was approved in July 2012, just 6 months before. A budget that he himself proposed as Vice President at the time of budget preparation.

The Council members, according to the Council minutes, did not blink, as in many other cases when the President made interesting decisions. The member federations had no meaningful mechanism to react.

As a result of the extra €14,100 spent on the SportAccord Convention the budgeted loss  of €52,400 for 2013 has become a loss of €66,600.  There was still some reserves left to spend.

Before we get into details of this story, I think that it would be useful to introduce some theoretical background.

The Agency Problem

The core issue around the IOF is what business literature calls the Agency Problem. This is an unavoidable feature of large organisations where owners  (shareholders, or in our case 70 member federations) entrust an agent (CEO/President, Board/Council) to run the organization on their behalf.  Unavoidably, the two parties will have different interest and the agent will run the organization in a way that is not optimal for the owners. Conflict of interests and moral hazards are frequent problems. The lost value to the owners is called the Agency Cost.

Continue reading “The Agency Problem – Part 1”