Do leaders of sport’s not-for-profit organisations justify their superstar salaries?
A shade under $250,000 is not a bad way to be compensated for ‘volunteering’ in one of sport’s most desired jobs.
Last month, IOC (International Olympic International) president Thomas Bach had his pay-packet revealed by the IOC’s Ethics Commission for the first time in Olympic history ‘with a view to ensuring total transparency’ for the future. It also said Executive Board members and commission heads receive $900 per day to cover expenses, while regular IOC members get $450 a day.
It was a PR masterstroke by the wealthy Olympic Family in the character of Bach’s Agenda 2020 reform movement and was welcomed by all corners of the sports industry.
Well, perhaps not all, as the pressure is now on many of Bach’s peers to follow suit, especially his friend sitting in FIFA headquarters a couple of hours’ drive up Switzerland’s E25. Sepp Blatter’s annual salary is a state secret, but reported to be anything between $1 million and $5 million a year. Or more. Nobody knows.
Across the Atlantic, even Blatter looks like he could be being short-changed when it comes to his pay-packet when it is compared to Roger Goodell, commissioner of the NFL – another not-for-profit organisation.
Last year, it was revealed via the NFL’s tax returns that Goodell took home a $44 million annual salary, and has accrued approximately $123 million in his first seven years as commissioner. Only five of the NFL’s current superstars, including Tom Brady, could match that earning rate.
FINA, the Switzerland-based International Swimming Federation, quickly followed in the IOC’s footsteps by stating its top officials, including the president, take no salary. Officials do, however, receive $400 per day when travelling on business, while travel expenses are also covered. It added that FINA currently employs 32 people, 11 of which work part-time.
Sports governing bodies across the world are ever-increasingly being run like businesses – seen by nearly everyone in the industry as a good thing – but given they don’t make a profit, and reinvest all surpluses back into the sport, is it fair and moral for their leaders to be receiving similar salaries to CEOs of blue-chip businesses?
And should other international federations follow the IOC’s and FINA’s lead? We asked four experts:
Simon Kuper: Co-author, Soccernomics
In European sport, it is unjustified for these people to earn a lot of money.
The tradition in Europe is that clubs and national federations are not money-making organisations; they always work to reinvest profits for the good of the game – well that’s what most of them say. If it’s for the good of the game, why do you need to earn millions? I see absolutely no justification for that.
In Soccernomics [Kuper’s book co-written by sports academic Stefan Szymanski] we showed there was a correlation between the level of success and the amount spent on player salaries in the English Premier League. The performance of footballers is quite easy to measure because you have results that we can all judge openly.
It’s not the same when it comes to the leader of a sports organisation. Manchester United has 38 games in a Premier League season that are watched by hundreds of millions of people around the world. These fans can then decide if the players or coaches are doing well because there is an enormous amount of information in the public domain.
Do we know the work that a CEO of an international federation is doing? No, because nearly all the business is taking place behind-closed-doors. It’s similar to the situation we have seen with bankers, who earn lots of money while their employers go bust.
The footballer and manager position is very rare in that it they are almost totally transparent in their performance. That does not apply to sports executives. And though transparency is good, it is not enough. If Sepp Blatter publishes his salary and its $15 million a year including all the perks, that would be transparent, but I’m sure we would think it is too much.
The solution is having a measure of public control. We are the people, we are the fans that own sport, and these CEOs just administrate it for us.
Will Lloyd – CEO, GlobalSportsJobs
You pay the market rate for top talent. If that’s hundreds of thousands of dollars a year, then fine. If that is $44 million a year, then that is also fine.
Fundamentally, sports federations need to compete in the open market to attract the best possible candidates. Federations then need to be answerable to their boards, who will measure their salary against KPIs and board objectives.
Obviously, there will be discrepancies between what some not-for-profit organisations can pay their CEOs, and subsequently they have to operate within the confines of what they can afford. However, we have to remember that we are talking about running high-performance, highly-efficient sporting organisations.
To achieve objectives, you need the best person you can attract, and that requires skilled individuals. The sooner people recognise that international federations in particular need to behave like highly-efficient organisations, the sooner they will start to accept the rates that their CEOs are being paid.
I don’t think there would be any harm in more organisations being transparent about what they pay their chief executives. At the end of the day it is a public body, run with public money, and it should be shared.
Also, people shouldn’t have to feel ashamed of earning a lot of money. Look at what has happened over the past 20 years: in the 1990s job vacancies in the sports industry used to total about five on the back of SportBusiness International, and now we have around 350 posted on our website every month.
That’s led to greater transparency as everyone wants to know if sport can provide the market rate, whether that is at CEO level or middle management.
We are getting closer to parity with other industries and that means we are attracting the sort of talent sport needs to progress.
Ashling O'Connor – Head of the Media, Communication & Entertainment Practice, The Inzito Partnership
First and foremost, people should be paid what they are worth.
Whether the leaders of sport should or should not earn more than the superstars they promote is irrelevant. The question is, are they good for the money? It is a collective judgement.
Most fans would say no. They watch the FIFA World Cup for Messi and Ronaldo not because Sepp Blatter is rather adept at distributing grants to far-flung reaches of the developing world. The resilient Swiss would counter that it’s no easy job running an organisation of 209 competing national associations.
The main issue here is transparency. The IOC is absolutely right – not before time – to publish the sums it pays its president and members, who are essentially volunteers. As elected leader, Thomas Bach’s inflation-linked compensation of $244,000 is not wholly unreasonable. You can sit on the board of a global bank and get paid double to do far less work and arguably for less good.
Of course, we can’t make a judgement about Blatter’s worth because FIFA doesn’t disclose how much he is paid. It should. Either he’s worth it, or he has something to hide. The target of the greatest ire, however, is NFL commissioner Roger Goodell, who last year earned about $44 million, which is double that of the highest paid NFL player. The 32 team owners approved his remuneration; if they were unhappy with the job he was doing, presumably they wouldn’t have.
With Goodell, I return to whether he is worth it. I think Tim Cook is much better value for money. His $65.2 million compensation package last year was 0.2 per cent of Apple’s profit, as defined under the Bloomberg Pay Index, or 0.04 per cent of its $183 billion revenues. Goodell’s pay is 0.4 per cent of the NFL’s $10 billion revenues. And there are no profits.
Michael Downey – CEO, LTA (Lawn Tennis Association)
I don’t have an easy answer to this question. For me and my current position, the answer is I am paid whatever I am paid: that was the decision of the chairman and the board. I am here to do a job, and if I don’t get the job done for the amount I am paid, there will be some repercussions around that.
When I was hired by the LTA, the first question to my boss from a journalist at the UK press conference was: ‘Why did you have to go to Canada to hire this guy?’
The second question was: ‘What are you paying him?’
The third question was: ‘Does he get a bonus?’
And the fourth question was: ‘Why does he deserve a bonus?’
This was all before we got to any questions about tennis. When I took the job, the chairman told me that we’re going to be completely transparent with everyone and tell them exactly how much I am being compensated, ‘because they’re going to ask’.
When I went back to Canada they were amazed that people knew about [how much I am being paid]. I just said that was the way things were going in sport now, and it is better to be transparent, because if you’re not, people immediately think you’ve got something hide.
I did not come to the LTA for a holiday, I gave up a hell of a lot to leave Canada to work here; I have two sons back home but they encouraged me to chase my dream and work here. I’m here to do a job and I know how hard I work. I’m going to give it my best run, and people are going to judge me. That’s the nature of sport.
Sport tends to be in the newspapers and you cannot hide away from this sort of story. All I can say is I am here to do the best job I can.