Legal Update: The Governance of Sport Bill

The Governance of Sport Bill¹ (the ‘‘Bill’’) - a Private Member’s Bill put forward by Lord Moynihan, the former Olympic Silver Medallist and Chairman of the British Olympic Association - was introduced for debate in the House of Lords on 11 June 2014. It was debated again recently on 4 December with contributions made by figures from the sporting world including Baroness Karren Brady, Baroness Tammi Grey-Thompson and Lord Triesman.

The raison d'être of the Bill is, in the words of Lord Moynihan, to encourage legislative recognition of the notion that the “need for good governance in sport along the lines of that required for FTSE companies is essential if we are to protect the interests of athletes in the future”.² Parallels have been drawn with the Corporate Governance Code and it appears that the Bill’s proponents wish to break the traditional autonomy in the way that sport is run in the UK from governmental and legislative intervention (or at least initiate debate on this subject).

Aside from its fundamental governance goals, one of the key ambitions of the Bill is also to seek to exploit the perceived gains made during the London 2012 Olympic Games and reinforce the renewed enthusiasm for grass-roots sport that they inevitably inspired amongst the general populace.

Key Content

The key propositions of the Bill include:

Accountability

The introduction of regulations relating to governing bodies in sport to ensure the highest standards of governance, accountability and transparency, particularly those governing bodies which are in receipt of direct or indirect public funding. These bodies would be subject to corporate governance obligations and, in particular, tighter supervision regarding their approach to sensitive issues such as disability and discrimination. Governance is construed broadly as including rules relating to: an appropriate constitution; fair representation by stakeholder groups; proper election processes; and the meeting of modern standards of corporate governance. However, the specificity of sporting activities and rules is recognised and not intended to be subject to regulation;

Transparency

Specific obligations imposed on governing bodies in pursuance of high governance standards, such as: making decisions of governing bodies subject to the same standard of review as judicial review of public body decisions; a requirement for executive boards to have balanced representation from their sport; a requirement to publish detailed financial statements, board members’ remuneration details and an annual sports plan; and an obligation to ensure best international practice is followed to reduce injury risks.

Cheating

Amending the Gambling Act 2005³ in order to specify more clearly the types of conduct which constitute “cheating at gambling” and increase the maximum tariff on conviction from two years to ten years. This is targeted at addressing match-fixing, bribery and corruption in sport.

Sports Betting

Making it an offence for anyone to provide a betting service on a sporting event unless they hold a valid sporting event betting licence for such event.

Advertising

Empowering the Secretary of State for Culture, Media and Sport to make regulations about advertising in relation to sports governing bodies and in the vicinity of sports events. This appears to envision the implementation of statutory protection for rights holder/event specific intellectual property against ambush marketing in a similar form to the advertising legislation implemented for London 2012.

Visas

The establishment of a visa ‘credit’ system for major sports in which a fixed number of visas for overseas players would be allocated to their various leagues and competitions. These visas could then be traded by clubs for financial consideration. The ultimate aim of this scheme would be to indirectly financially reward those clubs that chose to develop their own talent rather than import it from overseas.

Contracts

Limitations on the ability of athletes aged under 18 to enter, or be entered into, legally binding commercial contracts. This is undoubtedly to combat a growing fear that some individuals are being bound to restrictive agreements, entered into before they were in a position to make objective financial decisions or realise their full earning capacity.

Sport 2022

The merger of UK Sport⁴ and Sport England⁵ into a single entity known as “Sport 2022”.

Anti-Doping

The introduction of new anti-doping provisions applicable to athletes participating in sport in the UK and their entourage, which would make intentional doping and abetting doping a criminal offence. Parliament would carry out an annual review of the performance of WADA with particular scrutiny to its “whereabouts rule” for compliance with European law (it appears that the Bill’s proponents consider this rule overly intrusive and restrictive).

Private Members’ Clubs

Unincorporated private members’ clubs would be given limited liability provided that they publish financial statements and use the word “Members’ Club” or “M.C.” at the end of their name.

Boycotts

Boycotts of sporting events would be invalid unless (i) a full consultation of relevant governing bodies and athletes has been undertaken in advance, (ii) a majority of affected athletes support the boycott and (iii) the boycott complies with statutory rules and provisions, meets the requirements of competition law and is otherwise in accordance with law.

Agents

Greater regulation for sports agents, including: a requirement for sports agents to disclose to athletes in advancing of contracting with them the full financial benefits which the agent will achieve from the contract; an obligation for agents to produce an annual financial report to athletes; an obligation for agents to disclose conflicts of interest; and a right for athletes to terminate an agency contract for breach of the above requirements.

International Duty

The introduction of regulations requiring the payment of compensation to clubs who are forced to release athletes to play for national sports team under mandatory sports rules.

Physical Education

A new requirement that two annual reports be presented to Parliament by the Secretary of State for Health, one displaying how obesity is to be tackled and participation in physical activity improved, and the other setting out the state of physical education facilities in England and Wales and how access to those the facilities might be enhanced.

Independent Schools

A stipulation that all independent schools enjoying charitable status annually demonstrate to the Charity Commission how they have made their facilities and coaching apparatus available to their local community. This will have an impact on any consideration by the Charity Commission regarding whether the school continues to provide the public benefit required to qualify as a charity under the Charities Act 2011.

Comment

It is important to note that the limited time available before next year’s General Election will mean that it is unlikely that the Bill will ever take full statutory form. This is acknowledged by Lord Moynihan. It is rather intended as a catalyst to spark debate within the political sphere and, more importantly, the sporting world itself on the issues addressed. The layout of the Bill itself is indicative of this reality, more closely resembling a compilation of action points and how they might be achieved, than a bona fide attempt at legislation.

The action points compiled are evidently wide-ranging and will divide opinion. Insofar as the Bill seeks increased government and statutory regulation of sports governance, it is questionable whether the suggested measures add significantly to the current practices followed by major sports governing bodies in the UK in terms of good governance and the Bill’s proponents may have underestimated (or simply chosen to overlook in order to bring pressure to bear on key targets) the rigour and seriousness with which sports governance is taken by the bodies. It is also immediately apparent that many sports already address some of the points raised in a manner tailored for that sport and its participants – for example, compensation for national team player release, regulation of agents and overseas players.

Those with a sports law background will be interested to note the limited recognition of the specificity of sport in setting its own sporting rules. This specificity is narrowly framed and the Bill invites the prospect of closer review and intervention in governing body decisions. Many will be of the view that this is not a welcome prospect. English judges have considered the circumstances in which they should intervene in the regulatory decisions of sports governing bodies on many occasions and have shown reluctance to do so, deferring to the expertise of sports themselves to make decisions which affect them. This does not mean that governing bodies have carte blanche to act irrationally or rank unfairly, nor does it make decision making a closed shop, as it is already well established that regulatory decisions are subject to the equivalent of a public law standard of review⁶ (which begs the question why we need a legislative provision to perfect already good case law). The benefits of any change to this delicate balance must be carefully considered.

It will be interesting to observe the debate that develops as a result of the Bill. Lord Moynihan envisages that the Bill will eventually form part of what he terms ‘Sport 2022’, a vision that sees the realisation of many of the seminal objectives of the Bill by 2022 through a combination of legislation and the adoption of quasi-voluntary schemes and principles to which sporting bodies and regulators adhere. We will release further updates as this progresses.

Jon Walters will be speaking at the LawInSport Conference on the 26 February 2015. To find out more and to book your place click here.

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