Football and Bad Governance

Share

The governance model practiced by the PSL and its professional teams in both the ABSA Premiership and GladAfrica Championship cannot continue on this fateful path.

A point in evidence, is the recent takeover bids doing the rounds in the media of possible sales of Bloemfontein Celtic, Highlands Park, Black Leopards and Bidvest Wits.

It must be noted that, there is absolutely nothing sinister in one buying a franchise or a football team.

There are exceptional and insightful case studies of successful models of football takeovers, Chelsea FC ( Roman Abramovich), Manchester City (Sheikh Mansour), Cape Town City (John Comitis) and Mamelodi Sundowns (Patrice Motsepe), just to highlight a few. But, it is definitely wrong, if the process of buying a soccer team descend into an annual disease (or a pandemic) that affects the leagues image, players sustainability, loyal communities and good governance best practices.

For the last 5 seasons in the PSL history, the buying and selling spectacle has unfortunately paraded itself, different club businesses have closed, players have had to relocate, communities deprived of their sole sporting pride and reliable business for football vendors closing.

FARPost‘s Investigative Unit, looks at the contributing governance factors to this annual buying or selling or takeover pandemic.

a. PSL Governance blueprint

The PSL leadership has a legal obligation to provide prudent governance infrastructure for its members, and a mandatory oversight role to ensure good governance practice and compliance, remain within their capable jurisdiction.

But why has the PSL failed to provide the necessary governance blueprint to clubs, in terms of how they have to conduct themselves and their businesses?

Why has the league failed to apply or maybe enforce at least some of the King’s Code of Governance applicable to South Africa, as a member state within the Commonwealth community where the code applies?

If clubs were to observe a minimum of the recommendations from the King’s Code (see below) a lot of this repugnant mess would have been absent.

• Boards and directors
•Accounting and auditing
•Risk management
•Compliance and stakeholder reporting

The governance of corporations can be on a statutory basis, or as a code of principles and practices, or a combination of the two. This statutory regime is known as ‘comply or else’ and in other words, there are legal sanctions for non-compliance (King’s Code,1994).

Though in retrospect, how will this principle be enforced when the PSL itself has an acting CEO for almost 5 years?

b. SAFA in ICU

An Intensive Care Unit (ICU) is a designated area of a hospital facility that is dedicated to the care of patients who are seriously ill (MedicineNet.com)

South African Football Association (SAFA) has firmly entrenched its sick status, given the marauding shenanigans that have clouded our media spaces during the Coronavirus outbreak.

The association has the moral and legal powers to administer the game of football, and encourage a strong working relationship with its associated members, including the PSL. In short, a symbiotic relationship must exist between the FA and the league, but the FA must lead and not compete with its affiliate.

However, an explosive 71-page document titled Governance Challenges at Safa, which was sent to all members of Safa’s national executive committee in May 2019 by former CEO Dennis Mumble, claiming that the association allegedly “worked against the interests” of its other special member – the PSL – in the protracted eligibility saga of former Ajax Cape Town striker Tendai Ndoro, which had threatened to delay the kick-off of the 2018/19 season, reveals a shocking state of chronic malaise within the FA.

If the FA is indulging itself in petty and useless fracas, how will they stand up and lead? Who will provide the enviable role of superior oversight to the associate members? Is the PSL completely autonomous so as to be immune to the FA input?

But then again, SAFA has had 3 CEOs in the last 5 years, a case of rotten from the very top, a clear confirmation of its ICU status.

c. Ownership model (tenders v corporates)

According to Reuters, the Chinese electronics retailer Suning Commerce Group Co Ltd bought nearly 70% of Inter Milan for 270 million euros ($307 million) in 2016 in what was the highest-profile takeover of a European team by a Chinese firm.

Furthermore, part of City Football Group (CFG), majority owned by Sheikh Mansour bin Zayed Al Nahyan, with Chinese investors led by media and entertainment group CMC Inc holding around 12% and U.S. private equity film Silver Lake just over 10%.

With the Abu Dhabi United Group, the investment vehicle owned by Sheikh Mansour, retained majority ownership after Silver Lake agreed in November to pay $500 million for its stake, making CFG the world’s most valuable soccer group with a $4.8 billion price tag (reuters.com).This signifies the extent of the investment trajectory and the serious players (investors) within the Europe football business.

At home, the landscape is completely different and shocking, in 2014 Jimmy Augousti sold Celtic for R45m to a tenderpreneur, Max Tshabalala.

Fast forward to 2018, Tshabalala apparently told the players during the meeting that he was hit hard in the pocket (2016-2017) and had to spend R21-million from his own money after the main sponsors, MTN, pulled out of their contract with Celtic (SowetanLive, 2018).The pertinent question here is, what was Tshabalala doing in the business of football?

In the same year, a myriad of challenges were hastily outlined by the then ‘Siwelele’ coach, Steve Komphela, “In his resignation letter (that leaked spectacularly to the public) the coach complained about the poor state of the training grounds, players on strike due to non-payment of salaries and bonuses, lack of training equipment, his own contractual needs allegedly not being met, poor communication from owners, bad hotel choices, that he had to pay certain expenses, including petrol from his own pocket, and that there was chaos around missed flights and travel arrangements.

How did the PSL leadership grant Tshabalala the go-ahead to own Celtic? Besides the financial compliance, did the PSL do any intensive risk assessment and management? Does the PSL receive audited financial statements from its 32 clubs? Is there a compliance and risk management unit within the PSL?

In the current football atmosphere, European clubs are bought by serious corporates, while in the PSL tenderpreneurs and stokvel-like consortiums with the shortest shell life are in full pursuit of the takeover of clubs, what a shameful pandemic.

d. Zero transparency

According to the BBC News Website, the UEFA Financial Fair Play Regulations (FFP) were established to prevent professional football clubs spending more than they earn in the pursuit of success and in doing so getting into financial problems which might threaten their long-term survival.They were agreed to in principle in September 2009 by the Financial Control Panel of football’s governing body in Europe (Union of European Football Associations – UEFA).

If UEFA and its member associations, known for their extraordinary and incredible financial muscle, agreed to this critical intervention 11 years ago, what stops both the FA and PSL to follow suit? What is the PSL and its members hiding from the public? Who is benefitting from this blatant and unscrupulous behaviour of non-disclosure?

The history of non-disclosure of players salaries, selling of players and sponsorship deals in PSL, corrodes the diligent work of the King’s Code and continue to paint the game of football as a strong haven for mafias with little disregard of corporate governance.

An audited balance sheet means, for example, the auditor has double-checked the information. If you report (X amount) in the inventory as an asset, the auditor may inspect the inventory, or all items over a certain value, to confirm its existence. The auditor also looks at your internal controls.

The transparency principle within an audited financial statement will assist not only the clubs and players, but the players union in their serious quest to protect the game and its workforce (the players).

By FARPost’s Investigative Unit

Leave a Reply

Your email address will not be published. Required fields are marked *

shares