Our club: the Board, corporate structure and governance

[bloodspirit]

One thing I forgot to mention in the intro to this thread is that, even if and when the club transitions to ownership by the members, the AFL still has us completely stitched up. Our constitution is subordinate to our 'licence agreement' with the AFL and the constitution can't be changed after the transition without the AFL's say so.

52. AFL Licence
52.1 To the extent of any inconsistency between the constitution and the Licence Agreement between the Club and the AFL and any replacement agreement, the terms of the Licence Agreement prevail.
52.2 On and from the Transition Date, no amendment may be made to this constitution unless the amendment has been approved by the AFL. Each resolution seeking such an amendment will by virtue of this clause be conditional on the amendment the subject of the resolution being approved by the AFL.

This, apparently, turns out to be the cost of being bailed out by the AFL in 1993. Or part of it anyway.

I presume that GWS and the Gold Coast have similar terms in their constitutions. But I wonder if the AFL has succeeded in getting something like this into the constitutions of all the clubs? I have written to a couple of the clubs and asked about their constitutions. I'll keep you posted.

[Ruck'n'Roll]

License agreements are incredibly powerful things bloodspirit.
In 1981, after a lot of publicity and uproar, the management of the put the proposed move to Sydney to the members. By that stage the KSAS crew had got organised and the club membership voted against the move to Sydney.
The VFL used the licence agreement then in place to force the Swans to move north be refusing to allow them to play anywhere else.

[bloodspirit]

License agreements are incredibly powerful things bloodspirit.
In 1981, after a lot of publicity and uproar, the management of the put the proposed move to Sydney to the members. By that stage the KSAS crew had got organised and the club membership voted against the move to Sydney.
The VFL used the licence agreement then in place to force the Swans to move north be refusing to allow them to play anywhere else.

I have some understanding that in order to run a successful league, and to be able to guarantee business partners (like tv) that they will get what they are promised, the AFL may need or want powerful, binding agreements in place so they can deliver. But having those licence agreements inserted into and overriding our very Constitution seems a bourne too far. Let alone forcing that upon us when we are on our knees and effectively have no say in the matter.

I'm sure the AFL has powerful licence agreements with all the clubs but I wonder how many of them have them written into their Constitution, and more embedded there than any other term of the Constitution?

[Nico]

Caroline Wilson wrote "Sydney . . . . is in reality owned by the AFL" on October 25th 2012, at the time that comment was raised on RWO but without much interest - I think we were too busy arguing about Kurt Tippett to give it much consideration Swans chat Tippett!! - Page 150

Or still celebrating.

[Ruck'n'Roll]

Or still celebrating.

The recruitment of "Dirty Kurt" cast a bit of a shadow over my post 2012 celebrations - and that's just a a recollection.
I am not trying to elicit responses from any RWOers willing to argue what a successful purchase he was.

[bloodspirit]

I have looked at the other clubs websites and briefly reviewed their respective club constitutions where possible. Adelaide, Brisbane, Carlton, Essendon, Hawthorn, North Melbourne, Richmond, Bulldogs and we have posted our constitutions. Most of the others do better than us in so much as they have pages with 'Club Documents' and include other stuff like financial reports, members charters, voting rules etc whereas we have our Constitution all on its own obscurely down the bottom of the page. Nevertheless credit to our club for at least posting the document.

Collingwood, Geelong, Gold Coast, GWS, Melbourne, Port, Saints, West Coast do not make their constitutions easily available.

Adelaide FC - AFL is a member; ordinary paid up members can vote for, and stand as, Elected Directors; members can call general meetings, there is no quorum at any meeting unless the AFL is present (via delegate), all members have equal votes, the AFL appoints all but two directors: https://resources.afc.com.au/aflc-ad...inalafc-1-.pdf. Overall this doesn't put AFC supporters in much better of a position than us because they are still largely controlled by the AFL.

Brisbane FC - all members have one vote, all members can vote for and stand as Directors, 5% of the membership can convene a meeting, quorum at a meeting is any 3 full members, all Directors are elected by the membership except the Board can then appoint up to 4 more directors who have special expertise that the Board thinks it needs: https://resources.lions.com.au/aflc-...nstitution.pdf.

Carlton FC - only ordinary members can attend and vote for Directors, 100 ordinary members can convene a meeting, quorum is 200 members at general meetings and 25 members at AGMs, all votes count equally, only people who have been ordinary members can be elected Directors : https://resources.carltonfc.com.au/a...nstitution.pdf. Unlike the other Constitutions, Carlton's expressly says they exist to benefit supporters and give them hope of success (as opposed to merely having a duty to promote the game and playing of AFL as ours and most of the others seem to). They also have among their objectives promoting and supporting worthwhile causes, promoting health and fitness to the community, pursuing premierships and success, environmental sustainability and awareness. The Club is into Gaming. Very democratic! AFL has no particular sway.

Essendon FC - all Eligible Members can attend and vote at general meetings and each vote counts equally, there are 6 Directors elected by the members and 4 Directors appointed by the Board (all Directors must be club members), the AFL has the power to appoint someone to administer the club subject to the terms and conditions of the AFL licence: https://s.afl.com.au/staticfile/AFL%...nstitution.pdf. The club is into Liquor and Gaming.

Hawthorn FC - Ordinary members can vote and all members can attend meetings, 100 voting members are a quorum, all votes count equally, there are 5-9 directors and the elected directors can appoint additional directors up to the maximum number, subject to the terms and conditions of the licence agreement the AFL can appoint an administrator, any merger has to be approved by 75%+ of vote at general meeting : https://s.afl.com.au/staticfile/AFL%...6582305v1).PDF. They are into Gaming and Liquor. They have an impressive, relatively comprehensive list of club staff (titles and names) on their website.

North Melbourne - only Voting Members (i.e. Ordinary members) vote but all members can attend, all votes are equal, 20 voting members for a quorum, all Directors must be members, all Directors are elected except additional Directors can be appointed temporarily up to a maximum number : https://resources.nmfc.com.au/aflc-n...nstitution.pdf. They have provisions related to Liquor and Gaming.

Richmond FC - ordinary members can vote, nobody can have more than one vote, 100 ordinary members is quorum at AGM, 6 Elected Directors and 3 Appointed Directors : https://resources.richmondfc.com.au/...nstitution.pdf. They are into Gaming.

Western Bulldogs/Footscray (their official name) - 50 Voting Members is a quorum, 5% of membership can convene a meeting, all members have one vote, decisions taken by simple majority of members, Constitution can only be amended with the consent of the AFL, Constitution is subject to terms of the football licence (like us), 6 Elected Directors and up to 3 Additional Directors, members can vote to replace a Director : https://resources.westernbulldogs.co...L-23-01-18.pdf.


Summary

In short, of the clubs with publicly available constitution, we seem to be the most controlled by the AFL. Of those clubs we are the only one that has the AFL as its sole member. Adelaide FC is second-worst off - the AFL appoints most of their directors and therefore appears to de facto control the club. Numerous clubs are not controlled by the AFL at all. Only one other club's Constitution is subordinate to the terms of its AFL Licence (Footscray). Carlton is the only club which has a Constitution which has among its objectives promoting the success of the Club. Mostly the Constitutions just require the club to promote the AFL and the game by playing in competitions. Some of the other clubs have much greater levels of transparency on their websites including posting Annual Financial reports, Charters and other relevant governance documents. Nearly half the clubs have less transparency than we do in so much as they do not make their constitutions available at all. Overall, I think I would prefer to have Carlton's Constitution the most.

[chammond]

Numerous clubs are not controlled by the AFL at all.

Not really. All the clubs are controlled by the AFL to the extent that, as businesses, they are guaranteed by the AFL. Without that guarantee, and the related distributions that keep most of the clubs afloat, it's doubtful that any rational person would do business with an AFL club. The actual structure of club control reflects the club's background. Former VFL clubs tend to be an incorporated association (or similar) owned by the membership. Nth Melb changed their structure to allow a private corporate ownership, which didn't really work. Expansion clubs have all got AFL control (to a greater or lesser extent) written into their licences. The Swans were dead in the water in 1992, and the other clubs would only (by a majority of one!) continue to carry them if the AFL had total control. Without the AFL control and guarantees, we'd be lucky to have a 5 or 6 national club competition.
I'm surprised that you are surprised by all this . . . . it's old news, and has been discussed to death on RWO over the past 17 years. Unless you have to be as old as me to remember it?

[bloodspirit]

Not really. All the clubs are controlled by the AFL to the extent that, as businesses, they are guaranteed by the AFL. Without that guarantee, and the related distributions that keep most of the clubs afloat, it's doubtful that any rational person would do business with an AFL club. The actual structure of club control reflects the club's background. Former VFL clubs tend to be an incorporated association (or similar) owned by the membership. Nth Melb changed their structure to allow a private corporate ownership, which didn't really work. Expansion clubs have all got AFL control (to a greater or lesser extent) written into their licences. The Swans were dead in the water in 1992, and the other clubs would only (by a majority of one!) continue to carry them if the AFL had total control. Without the AFL control and guarantees, we'd be lucky to have a 5 or 6 national club competition.
I'm surprised that you are surprised by all this . . . . it's old news, and has been discussed to death on RWO over the past 17 years. Unless you have to be as old as me to remember it?

Before my time. Nor am I the only person who is surprised.

I meant controlled by the AFL formally and legally. It's odd how much it varies club to club, even if it is explained by history. I would prefer to have a greater degree of independence from the AFL, as some other clubs do. It's significant enough for Caroline Wilson to have remarked upon it.

Just the same, you make some excellent points.

But you haven't explained why it is envisaged that the ownership of the club be passed back to the members not why that hasn't happened. Are you able to? I'd be most interested if you can shed some light on it.

[bloodspirit]

I can't seem to find a definite answer to the current ownership of the Swans. Can anyone tell me if point me in the right direction?

They are a membership based sporting club.....no one 'owns' them.

Great work by Bloodspirit in shining some light on this issue. I queried ownership under the Swans Personnel thread back in December, but received only one brief response that indicated membership ownership.

I was interested because my memory was that AFL owned the Swans and had seen nothing to the contrary. That also meant that the financial consequences of management decisions were underwritten by the AFL, and thus arguably less accountability.

In the short term under the present ownership there appears opportunity for this forum to nominate candidates for the two Elected Director positions. This would hopefully lead to greater transparency for all members and supporters.

Thanks, Ocker. Yes, it turns out the situation isn't quite what stevo or I had thought although I had never thought about it.

Yes, it is open to people that the Board deems members to nominate others for the Elected Director position (before the next AGM) - so RWO posters who are members can nominate someone we think is suitable and then, if there is a contest, there will be an *actual election* where members can vote. It's unclear whether one of those positions is currently vacant. Leo Barry has just replaced Rob Pascoe in one of these positions. But I think Brad Seymour may have vacated the second one and not yet been replaced. I actually emailed the club a week ago to ask about this and have heard nothing back.

[barry]

I think the AFL has excessive control at board, constitution and license level. The AFL built in these tight controls for the AFL's benefit only. It kicked off during the code-wars and super-league break away NRL comp.

The primary purpose of these controls are to protect the AFL from a break-away rival competition. None of the existing clubs can start a breakaway comp.
It has very little to do with financial stability.

The AFL has stacked the deck, such that the clubs need the AFL to exist.
Whereas it should be that the AFL needs the clubs to exist and they choose to stay together because its mutually beneficial rather than being forced to contractually.

[bloodspirit]

Yeah, but, loosely speaking at least, we are stakeholders in the AFL too (both us fans and the Swans). And, so far as I'm aware (I haven't checked) they aren't out to make a profit, only to grow the game and benefit the clubs and fans. (Although perhaps sometimes they just think about growth for growth's sake without pausing to wonder what it adds. Also, no doubt egos get in the way and they may lose sight of their loftier objectives and just come to seek power.)

I take your point about the AFL wanting to nip any breakaways in the bud. And why shouldn't we have the option of breaking away to join a different comp if they are not doing a good job? I would also point out that contracts are agreements voluntarily entered into between the parties to the contract precisely because it is believed that the arrangements will be mutually beneficial. However, I raise a bit more of an eyebrow when the contract is entered into and one of the parties are on their knees with no negotating power (as we probably were in 1993).

And who controls the AFL? Who are its members/shareholders? Are the clubs? I don't know but that's a question for another day.

[chammond]

This kind of situation is very much “be careful what you wish for”. There is a long history of member-controlled sports clubs going bad over member disagreements, usually resulting in the players not getting paid - this still happens all the time in the “traditional” soccer world. And sports clubs are notoriously bad at running sports leagues, which is why the Fed govt intervened to set up the FFA, and the Vic govt set up the AFL Commission.
No matter what ownership structure the Swans have, self-control would always be illusory because the Commission controls the TV rights and the major sponsors. Sydney would quickly go broke if it had to self-fund.
Personally I’m in favour of the current Board structure, but I can see a strong argument for having a simple minority of directors being elected by, and representing, the Swans members. That would give the members a voice without alienating the AFL Commission.

[chammond]

Regarding the contract situation, the coercion rules don’t apply when one of the parties is bankrupt. Without Commission intervention, the Swans would have been into the “can’t pay the players” scenario, and Carlton would have taken over the club virtually for nothing. If you’re not sure how that works, research the history of the Fitzroy FC.
The AFL commission is “owned” by the clubs, and it’s decision-making can be influenced by club lobbies. That’s why the Melbourne Mafia manages to persuade the AFL to penalise Sydney and Brisbane, and why the SA and WA clubs generally never cause trouble - Vic clubs are in the majority. The balancing item is that the Commission has a duty of care to all of the Clubs, and could get sued if it showed too much bias.

[bloodspirit]

This kind of situation is very much “be careful what you wish for”. There is a long history of member-controlled sports clubs going bad over member disagreements, usually resulting in the players not getting paid - this still happens all the time in the “traditional” soccer world. And sports clubs are notoriously bad at running sports leagues, which is why the Fed govt intervened to set up the FFA, and the Vic govt set up the AFL Commission.
No matter what ownership structure the Swans have, self-control would always be illusory because the Commission controls the TV rights and the major sponsors. Sydney would quickly go broke if it had to self-fund.
Personally I’m in favour of the current Board structure, but I can see a strong argument for having a simple minority of directors being elected by, and representing, the Swans members. That would give the members a voice without alienating the AFL Commission.

Excellent comment. Thanks. Not sure if I entirely agree. But I learned something and my point of view shifted a little.

[Doctor J.]

This is all good discussion, but the AFL in reality has total control of all 18 clubs via the licence agreement. The licence agreement covers all things such as colours, name, merchandise, logo, theme song and basically where and when you will play your games. So what a club has in its constitution matters for nothing if the AFL Licence agreement trumps it, which it does. Which is why there will never be a breakaway from the AFL because the AFL owns all the tangible rights to the clubs. If the "big 4" Vic clubs decided to break away and create another league, what would it mean Lets use Richmond as an example. They could not play games in another league as Richmond or the Tigers or wear yellow and black or use the club song or sell merchandise declaring themselves as 2019 premiers, or sell any merchandise that links themselves to the Richmond identity. In essence they would be playing in another league under a new name with a new identity, all the "traditions" built up over many years would remain the property of the AFL. No club wants to risk that.