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International Classes excluded from World Sailing's closed Mid-Year Meeting

by Richard Gladwell/ 24 Jun 2020 02:37 PDT 24 June 2020
The meeting of World Sailing;s Council at the Mid-Year Meeting in London, Great Britain on Sunday 19 May © Daniel Smith

Beleaguered World Sailing has held its Mid-Year Meeting with a restricted audience and has held the meeting using video technology for the first time.

Before the meeting, a Council member and Chairman of the Classes Committee, Markus Schwendtner circulated a letter calling for the meeting to be open to observers.

The meeting would usually be held in the UK and considers leftover issues from the previous Annual Conference, and Annual General Meeting, along with any urgent matters which require an interim decision ahead of the Annual Conference, due to be held in Abu Dhabi in November.

Neither meeting will take place at a physical venue, and both will be conducted electronically, with electronic voting.

The open letter penned by Markus Schwendtner is as follows:

Dear Kim, dear members of the Board, dear colleagues,

I would like to express my disappointment that the World Sailing Council "Midyear meeting "is happening behind closed doors.

I have raised the question why World Sailing Classes are not able to attend or at least listen in at every "townhall" meeting. After all, World Sailing Classes are paying members just like MNAs, and share the same interest as all other members – the best of the sport.

I am also sure that many World Sailing Committee members would have liked to attend and being informed "first hand " about what is happening with our fantastic sport. Instead, all this information and discussion between the Board, Council, committee chairs and MNA presidents is happening behind closed doors.

You have chosen Bluejeans events for today's call – a software that allows up to 50.000 attendees to at least listen to what you have to tell the world of sailing. We are not asking to speak and discuss – same as in a "in person "meeting this is reserved for the members of Council (and MNA presidents in this case). What we are asking for is to be able to listen, and to be informed first hand, the same way we would be if we would meet in person.

The technology is there. I kindly ask you to reconsider.

Kind regards,

Markus Schwendtner Council Member World Sailing Classes Committee Chair

The President of World Sailing responded:

Thank you for the email.

As you will be aware as a Council Member, part of the meeting is to discuss confidential financial information which has been sent to you. This information cannot – at the moment - be disclosed outside of the Board and Council due to legal contracts we have signed.

This is only a short-term situation – I fully expect to be able to share the information with all our Members, including the Classes, shortly. I know a number of Classes may wish to attend the meeting and this is why World Sailing has a Classes representative, chosen by the Classes themselves, on Council.

The Board is balancing the need to be open and transparent with Council with the need to keep the confidence of those we enter into agreements with. This is why we are not having a fully open meeting today – if we were to have a fully open meeting, then we could not share the confidential information with Council Members, and I do not want this. I prefer to be able to share it with Council. This is the only reason why it is not fully open.

However – we intend to publish the recording of this call online after the meeting with any references to confidential information taken out. So all stakeholders should be able to listen to it. And very soon I expect to be able to share more information with all our stakeholders – so a bit of patience and everyone will be fully informed.

The move for the meeting to be open has been supported by several class associations, representing the sailors directly affected by World Sailing decisions and actions.

The World body has not publicly published any agenda or submissions on its website as is standard practice. Papers have been circulated to Council members and attendees, and one can understand why the panjandrums of World Sailing would prefer the Mid-Year Meeting to be held in closed session. A redacted version of the proceedings will be provided at some time in the future. Whether that has any credibility remains to be seen.

World Sailing's financials are running in red ink, following the postponement of the 2020 Olympic Regatta and an expected payment from the International Olympic Committee as a dividend from the sale of TV rights and other revenue sources for the Olympic Regatta.

The finances of the World body are now heavily predicated on the Tokyo 2020 Olympics being staged in 2021, and for the payout to be at least at the £12million level of 2016. Not clear is how much the IOC will have to contribute to the cost of the restaged Olympics, along with the Japanese event organisers, and the impact this financial transaction will have on the Tokyo 2020 dividend payment to the International Federations.

The World Sailing finances are also dependant on the resumption of international sailing in 2021, and being able to charge six-figure sanctioning fees for major events.

Neither scenario has a reasonable degree of certainty, and World Sailing's borrow and hope strategy now at its nadir.

The cancellation after one year of a four-year sponsorship by Russian petrochemical company Gazprom did cause some financial embarrassment for the Board who nevertheless went ahead and signed a ten-year contract for premises in London's Paddington district at the cost of £300,000 per year. The November 2019 meetings were told that the lease contract would have to be paid out for ten years if the decision was made to vacate ahead of the lease-end.

World Sailing are occupying an expensive echo-chamber, in upmarket Paddington, with no real way out unless the land-lord wishes to be accommodating, or a sub-tenant can be found in a market awash with redundancy and downsizing.

Claims made by World Sailing that they had little option but to vacate the Southampton premises have been widely discredited, and Ariadne House is still vacant, three years after World Sailing's exit. The rent is listed at £68,000 negotiable.

World Sailing has been thrown a lifeline by the International Olympic Committee, but this USD3.2million payment is only a loan and will need to be repaid, hopefully from the proceeds of Tokyo 2020. Other borrowings have been leveraged against the World Sailing Trust with reserve funds of less than £3million (pre-COVID) - sufficient for one year of expenses at the current rate of cash burn.

No other International Federation has announced a payment from the IOC's reserve fund of €900,000. Senior IOC Members have expressed their dismay at the degree of dependency by IF's on the Olympic dividend - which is to be used for the development of the sport and Olympic talent, and not to offset an IF's administration overheads. The IOC will be careful to ensure that it does not "reward" spendthrift International Federations ahead of those Boards who have exercised proper management over their income and expenditure and have lived within their financial means.

While COVID19 has sharpened the focus on World Sailing's financial issues, the situation has been building for several years, not assisted by a shortfall on sponsorship of £5million over the past three years.

Many of the current staff have been furloughed, have taken salary reductions, and World Sailing is in receipt of substantial wage subsidies from the UK Government. In short, World Sailing occupies premises that are well in excess of its requirements, and which are located in one of the most expensive business districts in the world. The Board have signed off on a string of business decisions which have proven to be less than prudent. A Governance Review commissioned by the Board cost £300,000 and failed by a significant margin to gain the necessary support to replace the existing governance process. An IT project costing the same £300,000 was also commissioned by the Board and it is now on ice.

A total of £1.7million was expended on "non-recurring items" according to information provided at the 2019 Annual General Meeting and Conference.

At the beginning of the term of the current Board and President, World Sailing had £600,000 cash surplus, a £12million dividend from the 2016 Olympics, which has all gone and with the organisation last November predicted to be in a £1.3million deficit in two months in August 2020, and before the financial effect of COVID came into play. That is a change in financial position over the current quadrennium, of £14million and was pre-COVID19 expenses. There are no tangible residual assets which can be offset against that expenditure, which appears to have been spent entirely on consumption.

Yet to be confirmed is the status of the Events proposed for the 2024 Olympics, given that 50% of the events have been slated to change, and four of the ten classes chosen have not yet held a world championship. That is yet another hospital pass for the incoming President and Board.

Elections for a new Board and President are to be held in late 2020, by an electronic vote, instead of the planned meeting in Abu Dhabi. Several strong candidates are expected to be nominated, and the incumbent President will be challenged by at least one strong candidate, with a strong background in class and sailing administration coupled with a diverse business background.

A new CEO has been appointed. He comes from a strong marine and sporting industry background, including events, and is highly rated within his extensive peer group.

Whether he has the ability to steer a heavily indebted World Sailing out of stormy red seas and into calmer and blacker waters, remains to be seen.

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