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Andersen Interviewed: Financial concerns just "click media"

by Richard Gladwell, Sail-World.com/nz 26 Oct 00:29 PDT 26 October 2018
US Crew - Womens 470 - Day 4 2016 Olympic Regatta, Brazil © Richard Gladwell

Sail-World.com's New Zealand Editor, Richard Gladwell, interviewed the President of World Sailing, Kim Andersen (DEN) covering a number of issues ahead of the world governing body's Annual Conference starting this weekend.

This third part of the interview piece covers the International Olympic Committee's "dictates" which have been used to drive big changes in the 2024b Olympic Sailing event slate. To read Part 1 covering Anti-Trust and Olympic class Selection click here and for Part 2 on the Gender Equality and the 2024 Olympic Events click here

Expect World Sailing's finances to come under closer than usual scrutiny at the Annual Conference in Sarasota.

Some, mostly those who have previously been involved at senior levels in World Sailing and its predecessors, were concerned at the World Sailing financial statements tabled at the 2017 Annual Conference in Puerto Vallarta, Mexico.

Twelve months on, the issues are sure to be questioned in the Council Meeting when the latest Financials get presented.

The backdrop is that World Sailing receives USD$15.3million from the International Olympic Committee after each Summer Olympics. The dividend is paid to all sports, but not all sports receive the same amount. Sailing is in the band that is fifth on a six-band scale and gets the same level of dividend as Equestrian, Handball, Hockey, Canoeing, Fencing, Taekwondo, Triathlon and Wrestling. Below are Modern Pentathlon, Golf and Rugby Sevens who each receive USD$13million. A total of USD$550million is distributed to the 28 sports of the Summer Olympics.

This income is used to help fund World Sailing over the next quadrennial (four years) along with other income being affiliation fees from Member National Authorities, International Class Associations, and Sponsorship.

The concerns following the presentation of the 2017 Financial statements were that because of a combination of factors - being a shift of premises from Southampton to London (the fourth most expensive city for office rental in the world); shortfall and delay in new sponsorships being realised; and the termination of a major sponsorship by Gazprom (a Russian government-owned petroleum, natural gas and petrochemical corporate); along with the usual issues with staff numbers, salaries and other expenses.

It is understood that in recent months there have been some budget adjustments.

To date, World Sailing has not pushed back publicly on these claims and assertions, and President Kim Andersen was asked to give his overview of World Sailing's financial situation.

"I think there has been a lot of talk. Unfortunately, it has been very, very bad talk and bad for World Sailing. It is totally flawed and based on all the wrong reasons.

"That is what is going on in the "click media" as I call it. There are things which are simply wrong, and you can see that the people who are writing it don't understand financials at all.

"That is really a scam for the sport.

"We have the money from the Olympics every four years, and then we are adding contribution money on top of that over a four period.

"We are using the money for improving Sailing and the sport generally. Every year of the quadrennium there is a negative figure on the bottom line, which is not the same as a loss - it is an expenditure.

"The budget approved in 2016 for the coming quadrennial was based on a lot of new commercial activities and an existing sponsor agreement [Gazprom]. That existing sponsor agreement was substantial and has come to a [premature] stop.

"Although they (the Council) were very happy with seeing that we could get major sponsors on board like Rolex and Volvo and SAP - which has a lot of value - they could see that program was running slower than anticipated when they approved the budget in 2016."

"It is a real concern when you approve something in 2016, and it is not materialising as fast, and some of your assumptions are simply falling away."

"I don't know if you can feel how it is to become a President and then barely four months into your Presidency that you realise that a major sponsor which the present Board has been working with, is suddenly gone for a lot of different reasons. Basically that the sponsor contact was not that deeply rooted in the company and there was a change in management who made a different decision.

"But we came to good [termination] terms with Gazprom and got half of the money, and they applied the termination clause in the contract. We lost only half of what we were looking at to be a loss, and we were quite happy.

New Tier 1 sponsor to be announced

Andersen says there is a miscommunication that World Sailing's only source of income is the IOC dividend. To date, World Sailing has run a zero-based financial budget which starts each Olympic quadrennial.

"This system of going from zero to zero every four years and being highly dependent on Olympic money, is not the way to do it.

"I think we need to have the commercial platforms to balance the Olympic money. Every time we start a new quad there should always be sponsors on board, so we are not starting from scratch and building up.

"Right now we have Tier 1 sponsors SAP, Volvo and Rolex.

"We want to introduce a new major sponsor in November. That is not something we have left to spring on the November Conference, but is because the sponsor has an annual meeting at the time of the Conference, and they want to introduce this sponsorship at their annual conference.

"So I can only say as a Board and an Executive, World Sailing has never been in a situation where we are getting so many major sponsors and high profile sponsors."

"Yes, the delay is causing a problem with the Budget, which is why we have adjusted the Budget."

"But on the other side, the delay is now a positive as some of these sponsors are now carrying over into the next quadrennial, and that does what I want to see which is to create a foundation going forward.

Costly move to London?

Kim Anderson was questioned as to the additional cost of World Sailing's offices leaving Southampton and moving to London?

"I don't know," is the immediate response.

"When I was elected I guess the majority of the Council wanted us to move to Lausanne. So we evaluated London, Southampton, Barcelona, Lausanne and I think Valencia was on the short list. We had issues with cost on many of the places. We also had issues with accessibility and flying in and out.

"When we were in Southampton as an International Federation we spoke very few languages. Now we speak 10-12 languages in the office," he notes.

"We evaluated all these places, and London was a good option. yes, it is much, much more expensive than where we were in Southampton, but looking for the new lease for Southampton that was also going to be a substantial increase."

Andersen says that if the office was to move, then there were always going to be increased staff costs, including terminating their contracts if they didn't wish to move.

"But that is the same cost wherever you go," he points out. "It doesn't matter if you are going to London or Lausanne. Coming out of this, London was the best option for an international organisation that is easily accessible."

"After moving to London, we found that many of the federations based in Lausanne are meeting in London because London has an airport that is by far one of the best stops that you can have. You can get the Heathrow Express, come out of Paddington Station, walk across the road and you are in the World Sailing offices.

"Many of the other federations say we have done really well and don't understand why we are criticised. The move to London was not something that was only directed by the Executive [employed staff]. It was a clear evaluation process that was made by the Board.

One of Sir Peter Blake's questions on every item of expenditure in an America's Cup campaign was to "how does this make the boat go faster?" The President was asked how the move to London made World Sailing's boat go faster?

"I think we have had a major lift-off in the Technical department since the move to London", he replies. "When I went to the World Cup regattas in Palma and also [the combined class world championships] in Aarhus. I met with coaches, sailors and with team leaders saying that the technical department and the technical job done there [in London] is excellent.

"I think we have gained a lot of competencies, and also the ability to communicate and understand different cultures and languages.

"But it all takes time, but we are getting there. By doing all this, I hope we are getting a more international office and understanding our MNA's [member national Authorities] and sailors in a different way than we have done in the past, which has been very much from a UK perspective."

Asked when the money was going to run out, Andersen responded: "I hope the money was going to run out in 2020. That is how the budget was set up."

He was asked whether there would be a financial surplus in 2020?

"As I said before the budget runs from 2016 to 2020, and you are spending every year. The expenditure we are having in 2020 is covered by the funding that we are getting."

"Again that is why we have adjusted the budget which was also made clear to the Council to get the right balance, that is the responsibility of the Board. There are many good business people who know the figures inside out," Andersen pointed out.

Paralympic rejection still perplexing

In mid-September, the sailing world was surprised to learn that ParaSailing would once again be excluded from the Paralympics, having been initially dropped after the 2016 regatta, due to minimum regatta entry numbers not being attained, and participation distribution. There were also some governance issues.

In the intervening four years, World Sailing and the Member National Authorities along with the Parasailing Associations appeared to put in a major effort to rebuild the sport and achieve compliance with the requirements of the International Paralympic Committee.

"The [current] situation is that World Sailing has received the Evaluation Report which is confidential," Andersen told Sail-World.

"We have looked at it and sent the Paralympic organisation a lot of questions, as we don't agree with the way they have evaluated. Several of the parameters in there are not evaluated, and some of them have been misunderstood. We have sent back to the IPC organisation to check. We are not in the Paralympics, so how can they evaluate us as being lower than what we are now?" he asked.

"We had 37 countries in Kiel [2017 Worlds]and 39 in Sheboygan [2018 Worlds held a week after the IPC announcement of continued exclusion from the 2024 Paralympics] - so we should be far ahead of the 32 minimum countries required by IPC. This is what we think the Paralympic Assoc has got wrong."

"When we look at Sailing for Governance and Doping we are in the top quadrennial of the Summer Olympic nations - so why are we only getting an average score in there and not a high score?"

"Those are the questions we have challenged the IPC with and we are awaiting the answers."

The 2017 ParaSailing Worlds were held as part of Kiel Week, where the IPC could have felt that the World Championship could have lost visibility as a world championship and the pinnacle event of ParaSailing.

"I disagree," Andersen says of the loss of visibility. "We think being in Kiel week should evaluate high as they can see we integrated parasailing as part of many of our events and we are not keeping parasailing to one side."

"The IPC can see that since we were kicked out of the Paralympics we have gone totally the other way and integrated parasailing with all other levels of Sailing, and it is now a very natural part of our sport.

"So I don't think that is where the problem is. I am also 100% convinced that we have applied all the right rules in our assessment. I am very very sure that when they (IPC) are looking at it that we should be a qualified member of the Paralympics. At the same time, there is another process running looking at cost, and looking at nations that should be part of Parasailing.

"We may have been caught in between," Andersen surmised.

"But I can say that all the benchmarks we have had for getting reinstated, we have fulfilled. That is my frustration that I don't know what really happened yet. We have the Evaluation Report, and that has been challenged. We will have to see what they come back with, but the frustration is still very high."

Andersen would not say what the outcome could be if the International Paralympic Committee conceded that they had made an error in their evaluation. And in particular, if Parasailing could be reinstated for Paris2024. However, he did reveal that ParaSailing had been excused early in the process.

"At a Board and the Executive level, we are still challenging the Evaluation. And being left out so early in the process is definitely wrong, compared to the Evaluation I have been seeing.

"Having said that there may be other parameters of which I don't have knowledge at present, and which may be pushing Parasailing to be not included. But we are still trying to get it included."

"I can only say that I think we have been misjudged. And of course, if we have been misjudged, then we should be given another chance."

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