World Sailing wants IOC assurance that Tokyo2020 will proceed as planned
by Richard Gladwell/Sail-World.com/nz 16 May 2021 02:39 PDT
16 May 2021
Hempel World Cup Series Enoshima © Jesus Renedo / Sailing Energy / World Sailing
World Sailing's tenuous financial situation, and heavy reliance on its International Olympic Committee dividend was revealed at the Mid-Year Council meeting on Friday, by its CEO David Graham and elaborated in financial and audit reports filed on its website.
The extent of that reliance is such that World Sailing's Audit Committee have recommended that the the Board delay approval of the Consolidated Annual Financial Statements until it receives confirmation from the International Olympic Committee that Tokyo2020 will proceed, or until a time when the Games are 100% certain to proceed.
World Sailing has written to the IOC seeking such an assurance, but at the time of the Council Meeting no confirmation of Tokyo2020 proceeding had been received.
The authorative online publication . Inside the Games picked up the comment from World Sailing's Audit Committee report and commented: insidethegames has contacted the IOC to ask whether it intends to provide the confirmation World Sailing has requested and if its failure to do so until now denotes any uncertainty on its part that the event will be able to proceed as rescheduled.
World Sailing's Quarterly Cashflow forecast until December 31, 2022 shows a cash income amount of UKP13.4million in Q4 of 2021 with an additional UKP3.1million in Q1 of 2022. This is in line with a previous expectation of UKP12.24million Olympic dividend.
The report from World Sailing's audit committee states: "The principal matter raised by the Independent auditor [Haysmacintrye] was the going concern review including evidence and confirmation of the International Olympic Committee’s(“the IOC’s”) continued support of World Sailing through this period of uncertainty. The IOC has been contacted to provide assurance that Tokyo 2020 (“the Games”) will go ahead and accordingly continued support of World Sailing will be forthcoming. At the time of writing this report however this confirmation has yet to be received and in order to eliminate any risk of reference of a material uncertainty (with regard to going concern) in the Annual Financial Statements, this Committee’s recommendation to the Board is to delay approval of the Consolidated Annual Financial Statements until such confirmation is received or to a time when the Games are 100% certain to proceed."
David Graham, World Sailing's chief executive, told the Council that the governing body would likely have gone into liquidation without financial assistance - thought to consist of a $3.1 million (£2.2 million/€2.6 million) loan - provided by the IOC following the coronavirus-enforced postponement of the Tokyo Olympics.
The Loan from the IOC will be deducted from any dividend payment to World Sailing from Tokyo 2020. It comes from a €900million contingency fund held by the IOC in the event of serious TV and rights revenue shortfall. Prior to the COVID pandemic, IOC was projecting a total of €4.5billion from TV rights from the 2018 Winter Olympics and 2020 Summer Olympics.
In a verbal report, CEO David Graham told the World Sailing Council Meeting, that "World Sailing, as an entity, has many problems which need solving."
"The Board and the Senior Management team has taken a step back and looked at the organisation with a critical eye.
"It's clear that we need reform in many areas that are in disorder."
He continued, listing several bullet points of "disorder".
"That the federation is effectively in negative equity and without the financial assistance of the IOC we would have gone into liquidation."
"The majority of the federation's resources are spent on administration, headcount, office space and only a fraction on the promotion and development of the sport
"We are heavily reliant on the IOC dividend, which is about 50% of our income, which in turn makes us unhealthily subordinate to them. In my opinion far too much emphasis is put on the Olympics at the expense of other elements of our sport, and this unhealthy emphasis is not actually reaping rewards. Since Beijing, the IOC have reduced their overall athlete quota by 4% and in the same time sailing's athlete quota is reduced by about 17.5%. As you know we are in the middle of another real risk, right now," he added - reference to the International Olympic Committee's rejection of the Mixed Offshore Keelboat event for the 2024 Olympic regatta, and a request of World Sailing for alternative events - which had to meet several criteria set by the IOC.
Earlier in his address to the Council, President Quanhai Li (CHN), who was elected only six months ago, said the first priority of the new Board was "to solve our financial situation... and achieve a balance of income and expenditure."
The objective for World Sailing is to achieve sustainable financial stability by Paris 2024.