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Olympic revenue reliant World Sailing furloughs staff and makes pay cuts

Dutch team celebrates at 2018 ISAF Sailing World Championships in Aarhus, Denmark (Photo by Richard Langdon/Getty Images)

World Sailing, the sport’s world governing body, has taken action to offset the effect of the Covid-19 pandemic and uncertainty over Olympics revenues, furloughing the majority of its staff and recommending 20-per-cent pay cuts for higher earners.

The London-based federation said that “almost all” staff would be placed on furlough – a process in which employees take a leave of absence but remain on the books – from April 15 to at least May 6.

Kim Andersen, the World Sailing president, said: “The United Kingdom Government has made available a generous financial support scheme which can be accessed by World Sailing (UK) Limited (the company which employs the World Sailing staff) to support salary costs during the crisis. Like many organisations within the UK, the board has decided to take advantage of this scheme in order to ensure the long-term financial viability of World Sailing.”

The board is to consider an extension to the furlough period beyond May 6, while a limited number of senior managers will remain at work. World Sailing is to fund the salary shortfall not covered by the government furlough scheme.

Andersen continued: “In addition to this measure, the board has requested that World Sailing staff earning more than a certain amount take a 20-per-cent pay reduction until the end of the year (or earlier if possible).

“This requires the individual agreement of the staff and we have been consulting with the staff on the viability of this proposal. Overall, the board continues to have frequent discussions with our partners concerning the impact of the postponement of the Olympic Games in order to ensure our financial health is as stable as possible.”

World Sailing was already facing cash-fall shortages this year before its Olympic revenues were due to kick in and turned to a temporary overdraft facility. The situation has been exacerbated by the postponement of events caused by the coronavirus shutdown and doubts over whether international federations will be able to receive Olympic funding in advance of the rescheduled 2021 Games to ease the financial pressure.

Like many other international federations, World Sailing is reliant upon Olympic revenues.

According to figures presented by World Sailing in November, the federation was due to receive £12.24m (€14m/$15.3m) in Olympic income in the second half of 2020. This equated to 77.4 per cent of the £15.81m in projected 2020 income (before the Covid-19 pandemic took hold).

At the time, World Sailing forecast employment costs of £2m in 2020.

It is normal practice for the international federation to report deficits in non-Olympic years as funding during an Olympic year helps to fund its programme in the subsequent years. World Sailing had forecast an overall deficit of £2.29m in 2019 (before foreign currency fluctuation and taxation), which follows on from a £4.66m deficit in 2018.

The International Olympic Committee distributes revenue to international federations in different tiers based on their audience and size.

Asked at the start of the month if advance payments could be made to smaller federations who rely on the Olympic money, Kit McConnell, the IOC’s sports director, said that talks were ongoing about any support the IOC can provide but it was “too early to speculate”.

He said: “We’re very conscious of the impact of coronavirus across the world of sport. We know that the federations have lost a number of events this season. The revenues not only from this season but potentially for the next calendar year will be impacted as well. We’ve heard that and had that discussion with the federations already.”

World Sailing said in November that the temporary overdraft facility would be secured against the assets of World Sailing Investment Trust and was necessary because of lower-than-expected sponsorship revenues (from 2017 to 2020) and non-recurring investment costs of £1.7m.

These costs comprised £1.1m – including capital expenditure – associated with moving World Sailing’s headquarters from Southampton to London, a “digital re-platforming” spend of £300,000 and the same spend again on governance reforms.