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Thread: Our club: the Board, corporate structure and governance

  1. #1

    Our club: the Board, corporate structure and governance

    Yes, the title is dry. The reality a little less so, at least for those with a modicum of appetite for thinking about power within the club.

    Who owns and runs the Swans? After attending the AGM last week, I was inspired to skim the Club's Constitution, which may be found here: https://resources.sydneyswans.com.au...Swans_2019.pdf. The key discovery I made relates to who owns and runs the club. Who is the club accountable to? Who elects the Board and how? What does the Board do?

    I was kind of aware we weren't a member owned club. And I seem to recall we have been owned privately in the past. The name Edelsten comes to mind. Also some consortium? This is another part of our history since coming to Sydney that I am pretty vague on (although I did at one time read In the Blood which covered some of the history). The answer in terms of who owns and runs our club is.... the AFL. According to the club Constitution 10.1(a) the AFL is the only member of our club!

    The whole of our Constitution has been drafted on the premise that for a 'Transition' period, the AFL runs the show with the apparent intention that the membership subsequently be transferred to a much wider membership (which includes Life Members, Ordinary Members, Junior Members, Non-Voting Members, Deemed Members etc.) on a 'Transition Date'. The Transitional arrangements are meant to continue "until such time as the Board determines there is no longer a need for a Transitional Member, the AFL approves the Board’s determination and arrangements are put in place for there to be Members in accordance with clause 10.2 ". The funny thing is that the Board has never so determined. This appears all to have been put in place in 2005 and, as best I can tell, there are no plans to transition the club towards out of the transitional arrangements and towards a broader membership. If there were another AGM next week, this is the first thing I'd be asking about. Maybe one of you knows more about this?

    Who can be on the Board? Despite the AFL being the "only" member of the Club, only ordinary or life members of the club can be appointed or elected non-executive Directors: 27.6. This is because the Board can recognise "classes of persons" as members for the purposes of electing Directors.

    The Board has to have between 5 and 9 non-executive Directors (although this number can be increased with the AFL's approval). Of these two will be 'elected Directors': 27.1.

    How do you get to be a Director? Non-executive directors (other than 'Elected Directors') are appointed by a simple majority of the Board: 28.5.

    What about 'Elected Directors'? Anyone recognised by the Board as a member can stand to be an Elected Director: 29.2. To stand you have to be nominated by two other people recognised as a members in the 'Election Book' (which is posted somewhere "conspicuous" within the club for a period commencing at least 28 days before the AGM and concluding at least 21 days before the AGM) and then sign to indicate your acceptance of that nomination in the Election Book within the same period. If this happens, and I'm guessing it never has (please correct me if I'm wrong - I don't really know), then there is an actual ballot process, following a first past the post system, in which all people recognised as members are eligible to vote. In practice I suspect the Board decide who they want the new Elected Director to be, they write the person's name in the Election book and, because nobody else is nominated, then the nominee is "deemed to be duly elected without the need for the ballot process: 29.4.

    For every vote apart from ballots to elect Directors, the AFL's is the only vote that counts: 11.1. So, for example, if the members want to call a Board meeting, prior to the 'Transition Date', the AFL's is the only vote counted: 14.2.

    Also, at every general (or Board?) meeting, the AFL must be present (typically by proxy e.g. by our Company Secretary/CFO) or else there is not a quorum and no business may be transacted: 18.1.

    Incidentally, the Board appoints the Senior Coach (i.e. John Longmire) and the Senior Manager Football (i.e. Charlie Gardiner): 51.1. The Senior Coach and the CEO (Tom Harley) by agreement appoint the assistant coaches: 51.2.


    *****



    I guess I have a few things to say about this, apart from the fact that it is news to me:

    1. It seems weird to have our club controlled by the AFL.

    From time to time the interests of our club, and of other clubs, differ from those of the AFL. From time to time the clubs, collectively, or one club individually, may have a dispute with the AFL or have a reason to be dissatisfied with the AFL. In the case of our club, because our club effectively is the AFL, this would create what I think might fairly be described as a 'conflict of interest'. In the case of our club, if such a conflict arises, it's unclear what we can do. From time to time (e.g. when COLA was withdrawn, when we got the trading ban, when we got shafted in the 2016 granny) people call on our club to stand up to the AFL, even take them the AFL to court. The governance structure may explain why this doesn't happen. Sometimes, amidst the hatred for Eddie Maguire, RWO posters will sigh, somewhat wistfully, and say that at least he stands up for Collingwood FC. Well perhaps that's because Collingwood FC have a proper membership and are not controlled by the AFL? (I haven't checked - do they?)

    2. If this was all envisaged as a Transitional arrangement, why haven't we transitioned? What are we waiting for? Are there any plans for the transition ever to happen? If not, why not? Just guessing, maybe we can more readily rely on the AFL to bail us out if we get into financial strife? Or maybe it's more AFL driven and it suits them to be able to control the key club(s) in expansion markets?

    3. Who does the Board answer to? The AFL? It would seem so. If so, how often do they report? What do they tell them?


    Does anyone else find this interesting/newsworthy/alarming or have any reaction to this? I would love to understand it better.
    Last edited by bloodspirit; 2nd March 2020 at 05:58 PM.

  2. #2
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    Quote Originally Posted by bloodspirit View Post
    Yes, the title is dry. The reality a little less so, at least for those with a modicum of appetite for thinking about power within the club.

    Who owns and runs the Swans? After attending the AGM last week, I was inspired to skim the Club's Constitution, which may be found here: https://resources.sydneyswans.com.au...Swans_2019.pdf. The key discovery I made relates to who owns and runs the club. Who is the club accountable to? Who elects the Board and how? What does the Board do?

    I was kind of aware we weren't a member owned club. And I seem to recall we have been owned privately in the past. The name Edelsten comes to mind. Also some consortium? This is another part of our history since coming to Sydney that I am pretty vague on (although I did at one time read In the Blood which covered some of the history). The answer in terms of who owns and runs our club is.... the AFL. According to the club Constitution 10.1(a) the AFL is the only member of our club!

    The whole of our Constitution has been drafted on the premise that for a 'Transition' period, the AFL runs the show with the apparent intention that the membership subsequently be transferred to a much wider membership (which includes Life Members, Ordinary Members, Junior Members, Non-Voting Members, Deemed Members etc.) on a 'Transition Date'. The Transitional arrangements are meant to continue "until such time as the Board determines there is no longer a need for a Transitional Member, the AFL approves the Board’s determination and arrangements are put in place for there to be Members in accordance with clause 10.2 ". The funny thing is that the Board has never so determined. This appears all to have been put in place in 2005 and, as best I can tell, there are no plans to transition the club towards out of the transitional arrangements and towards a broader membership. If there were another AGM next week, this is the first thing I'd be asking about. Maybe one of you knows more about this?

    Who can be on the Board? Despite the AFL being the "only" member of the Club, only ordinary or life members of the club can be appointed or elected non-executive Directors: 27.6. This is because the Board can recognise "classes of persons" as members for the purposes of electing Directors.

    The Board has to have between 5 and 9 non-executive Directors (although this number can be increased with the AFL's approval). Of these two will be 'elected Directors': 27.1.

    How do you get to be a Director? Non-executive directors (other than 'Elected Directors') are appointed by a simple majority of the Board: 28.5.

    What about 'Elected Directors'? Anyone recognised by the Board as a member can stand to be an Elected Director: 29.2. To stand you have to be nominated by two other people recognised as a members in the 'Election Book' (which is posted somewhere "conspicuous" within the club for a period commencing at least 28 days before the AGM and concluding at least 21 days before the AGM) and then sign to indicate your acceptance of that nomination in the Election Book within the same period. If this happens, and I'm guessing it never has (please correct me if I'm wrong - I don't really know), then there is an actual ballot process, following a first past the post system, in which all people recognised as members are eligible to vote. In practice I suspect the Board decide who they want the new Elected Director to be, they write the person's name in the Election book and, because nobody else is nominated, then the nominee is "deemed to be duly elected without the need for the ballot process: 29.4.

    For every vote apart from ballots to elect Directors, the AFL's is the only vote that counts: 11.1. So, for example, if the members want to call a Board meeting, prior to the 'Transition Date', the AFL's is the only vote counted: 14.2.

    Also, at every general (or Board?) meeting, the AFL must be present (typically by proxy e.g. by our Company Secretary/CFO) or else there is not a quorum and no business may be transacted: 18.1.

    Incidentally, the Board appoints the Senior Coach (i.e. John Longmire) and the Senior Manager Football (i.e. Charlie Gardiner): 51.1. The Senior Coach and the CEO (Tom Harley) by agreement appoint the assistant coaches: 51.2.


    *****



    I guess I have a few things to say about this, apart from the fact that it is news to me:

    1. It seems weird to have our club controlled by the AFL.

    From time to time the interests of our club, and of other clubs, differ from those of the AFL. From time to time the clubs, collectively, or one club individually, may have a dispute with the AFL or have a reason to be dissatisfied with the AFL. In the case of our club, because our club effectively is the AFL, this would create what I think might fairly be described as a 'conflict of interest'. In the case of our club, if such a conflict arises, it's unclear what we can do. From time to time (e.g. when COLA was withdrawn, when we got the trading ban, when we got shafted in the 2016 granny) people call on our club to stand up to the AFL, even take them the AFL to court. The governance structure may explain why this doesn't happen. Sometimes, amidst the hatred for Eddie Maguire, RWO posters will sigh, somewhat wistfully, and say that at least he stands up for Collingwood FC. Well perhaps that's because Collingwood FC have a proper membership and are not controlled by the AFL? (I haven't checked - do they?)

    2. If this was all envisaged as a Transitional arrangement, why haven't we transitioned? What are we waiting for? Are there any plans for the transition ever to happen? If not, why not? Just guessing, maybe we can more readily rely on the AFL to bail us out if we get into financial strife? Or maybe it's more AFL driven and it suits them to be able to control the key club(s) in expansion markets?

    3. Who does the Board answer to? The AFL? It would seem so. If so, how often do they report? What do they tell them?


    Does anyone else find this interesting/newsworthy/alarming or have any reaction to this? I would love to understand it better.
    They are all fair questions that may have simple answers. I have no real experience or expertise in this area and welcome comments from those who do. Very long transition period! Seems peculiar.

  3. #3
    I'd be interested to know the contitutions of all the other clubs, and how many variations there are.
    I would say the new clubs like GWS and Gold Coast are probably very similar. And maybe the Lions as well, unless they have a set transitional date.
    But what about clubs like Port or Freo. We should be more similar to them.

  4. #4
    Very surprised to hear we're still an AFL controlled club! I have a vague recollection after the Edelsten and then the Mike Willesee consortium (30 years ago), that we were transitioning back to a member based club. The AFL had then abandoned any future private ownership ventures after what happened also at the Brisbane Bears with Skase & co.

  5. #5
    I found this archived article from the Swans website which may shed some further light on the situation: History - SYDNEYSWANS.com.au. The article, which appears to date from about 2013, reviews the history of the club. Getting to the period in the 1990s after the private ownership of the Club by, first, Edelsten and, then, a group that included John Geraghty, Mike Willesee and Basil Sellers it states:

    Lack of footballing success and financial instability continued to dog the Club, however, and on 1st September 1992 the owners of the Swans told the AFL that unless the Club was restructured it could not continue. A crucial AFL meeting on October 14th granted the Swans seven days to produce a plan for survival - a merger with North Melbourne being one of the options proposed by the AFL.
    It was a momentous meeting on October 21st 1992. At 7.33pm, the Club’s survival was ensured when the other clubs voted that the AFL should waive the Swans’ outstanding license fee (almost $2 million), provide working capital to the club for three years, and award priority draft choices. AFL intervention was launched emphatically early in the following season when the team’s losing streak extended to eighteen successive defeats and coach Gary Buckenara was replaced by Brett Scott as caretaker coach. On May 4th, the AFL Commission led by Ross Oakley resolved that the Swans would revert to a traditional member-based system rather than continuing with private ownership, that AFL Executive Commissioner Alan Schwab would be appointed Executive Chairman of the Club, and that Ron Barassi would be appointed coach until the end of 1995.
    On June 27th 1993, in Barassi’s seventh match as coach, Sydney broke its 26 game losing streak with a 40 point victory over the more favoured Melbourne. It seemed that the team and the Club had survived its lowest point.
    The Club began to achive off-field stability, as the transition period moved to the administration under Richard Colless, the foundation chairman of the West Coast Eagles, who from 1993 to 1995 recruited the nucleus of the current Board of Directors, and remains Chairman today.


    From this I take that the explanation for the current structure/governance dates from this period, which is considerably longer ago than 2005 - i.e. more like around 1993. So, if we've been in this 'transitional phase' for nearly 27 years and counting, when, if ever, is it envisaged that it might come to an end. Is the any reason for us to wish for it to come to an end? Are we better off having it this way? Does the AFL this way have a greater investment in our success? Are there other benefits?

    I tend to think the AFL will be invested in our success either way and that we have more independence and autonomy in a healthy way if we do transition to becoming a proper, member-owned and controlled club. It would also help me feel that we are more authentic club - not a creature of the AFL like GWS and GC. Given the steady administration of the club over a long period, surely the conditions are ready. Our membership and sponsorship situations are, I suspect, at all-time highs. We have had a long period of on-field success. We have a good and stable coaching situation. We are setting up a new long-term base at the Royal Hall of Industries. We've entered into a 30 year agreement with the SCG. What more could be asked?

    If I get a chance I will look at what the situation is with some of the other clubs, perhaps including those you have named, barry. Hoping for contributions from others that know anything about the situation or who have any opinions.

    The only thing I see going the other way is that we have just made a small operating loss and this year's financial outlook is clouded (for everyone, in footy and out) by the coronavirus epidemic.

  6. #6
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    Quote Originally Posted by bloodspirit View Post
    I found this archived article from the Swans website which may shed some further light on the situation: History - SYDNEYSWANS.com.au. The article, which appears to date from about 2013, reviews the history of the club. Getting to the period in the 1990s after the private ownership of the Club by, first, Edelsten and, then, a group that included John Geraghty, Mike Willesee and Basil Sellers it states:

    Lack of footballing success and financial instability continued to dog the Club, however, and on 1st September 1992 the owners of the Swans told the AFL that unless the Club was restructured it could not continue. A crucial AFL meeting on October 14th granted the Swans seven days to produce a plan for survival - a merger with North Melbourne being one of the options proposed by the AFL.
    It was a momentous meeting on October 21st 1992. At 7.33pm, the Club’s survival was ensured when the other clubs voted that the AFL should waive the Swans’ outstanding license fee (almost $2 million), provide working capital to the club for three years, and award priority draft choices. AFL intervention was launched emphatically early in the following season when the team’s losing streak extended to eighteen successive defeats and coach Gary Buckenara was replaced by Brett Scott as caretaker coach. On May 4th, the AFL Commission led by Ross Oakley resolved that the Swans would revert to a traditional member-based system rather than continuing with private ownership, that AFL Executive Commissioner Alan Schwab would be appointed Executive Chairman of the Club, and that Ron Barassi would be appointed coach until the end of 1995.
    On June 27th 1993, in Barassi’s seventh match as coach, Sydney broke its 26 game losing streak with a 40 point victory over the more favoured Melbourne. It seemed that the team and the Club had survived its lowest point.
    The Club began to achive off-field stability, as the transition period moved to the administration under Richard Colless, the foundation chairman of the West Coast Eagles, who from 1993 to 1995 recruited the nucleus of the current Board of Directors, and remains Chairman today.


    From this I take that the explanation for the current structure/governance dates from this period, which is considerably longer ago than 2005 - i.e. more like around 1993. So, if we've been in this 'transitional phase' for nearly 27 years and counting, when, if ever, is it envisaged that it might come to an end. Is the any reason for us to wish for it to come to an end? Are we better off having it this way? Does the AFL this way have a greater investment in our success? Are there other benefits?

    I tend to think the AFL will be invested in our success either way and that we have more independence and autonomy in a healthy way if we do transition to becoming a proper, member-owned and controlled club. It would also help me feel that we are more authentic club - not a creature of the AFL like GWS and GC. Given the steady administration of the club over a long period, surely the conditions are ready. Our membership and sponsorship situations are, I suspect, at all-time highs. We have had a long period of on-field success. We have a good and stable coaching situation. We are setting up a new long-term base at the Royal Hall of Industries. We've entered into a 30 year agreement with the SCG. What more could be asked?

    If I get a chance I will look at what the situation is with some of the other clubs, perhaps including those you have named, barry. Hoping for contributions from others that know anything about the situation or who have any opinions.

    The only thing I see going the other way is that we have just made a small operating loss and this year's financial outlook is clouded (for everyone, in footy and out) by the coronavirus epidemic.
    Is it possible that the club remains in the transitional period and under the authority of the AFL because of a fear of a drop off of support in the event of a lengthy period without success. Maybe some understandable mental scar tissue stemming from its first ten years in Sydney. Just asking.

  7. #7
    Yeah, very possible. I don't have a better explanation. I'm surprised nobody here knows anything.

    Is the situation a bit of a surprise to everyone, like it is to me (and KSAS), or have some of you known all along?

  8. #8
    This is an article that contains some quotes from Richard Colless around the time of his retirement from the board: Retiring Colless signs off on another healthy profit for Swans. In it he says a couple of interesting things. First he speaks of "the club’s continuing focus on ensuring its football operations are fully resourced, providing the team with the best opportunity to consistently play finals and hence challenge for the AFL premiership and be seen as a leading and respected entity in the competition" which gives some indication of the Board's focus, at least during his time. The second interesting thing is quite strange. The article concludes with this quote: “Finally, I want to stress that ownership of this great club remains in the hands of our members and supporters who, unlike shareholders in public companies, basically invest emotion, passion and time which is the foundation upon which our culture is built.” What the heck does that mean? He seems to be literally wrong and so he must have been speaking figuratively or metaphorically. No wonder we have been confused, that's quite misleading.
    Last edited by bloodspirit; 3rd March 2020 at 02:57 PM.

  9. #9
    Quote Originally Posted by bloodspirit View Post
    This is an article that contains some quotes from Richard Colless around the time of his retirement from the board: Retiring Colless signs off on another healthy profit for Swans. In it he says a couple of interesting things. First he speaks of "the club’s continuing focus on ensuring its football operations are fully resourced, providing the team with the best opportunity to consistently play finals and hence challenge for the AFL premiership and be seen as a leading and respected entity in the competition" which gives some indication of the Board's focus, at least during his time. The second interesting is quite curious. The article concludes with this quote: “Finally, I want to stress that ownership of this great club remains in the hands of our members and supporters who, unlike shareholders in public companies, basically invest emotion, passion and time which is the foundation upon which our culture is built.” What the heck does that mean? He seems to be literally wrong and so he must have been speaking figuratively or metaphorically. No wonder we have been confused, that's quite misleading.
    He probably means "spiritual ownership" which is really quite misleading from a board member.

  10. #10
    Collingwood FC, Fremantle FC and Port Adelaide FC don't have their constitution readily available online that I can see.

    Brisbane's is available along with all its annual reports and with its Members and Supporters Charter. They have by far a higher level of transparency. Here is a link to their Constitution: https://resources.lions.com.au/aflc-...nstitution.pdf. Their club is owned and run by the membership. 5% of the membership can requisition the Board to convene a meeting and then the full members can vote.

  11. #11
    Ego alta, ergo ictus Ruck'n'Roll's Avatar
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    Quote Originally Posted by bloodspirit View Post
    Yeah, very possible. I don't have a better explanation. I'm surprised nobody here knows anything.
    Is the situation a bit of a surprise to everyone, like it is to me (and KSAS), or have some of you known all along?
    Caroline Wilson wrote "Sydney . . . . is in reality owned by the AFL" on October 25th 2012, at the time that comment was raised on RWO but without much interest - I think we were too busy arguing about Kurt Tippett to give it much consideration Swans chat Tippett!! - Page 150
    The Tom Papley Backpack $39.99 from the RWO merchandise tab - if only!

  12. #12
    Quote Originally Posted by bloodspirit View Post
    Yeah, very possible. I don't have a better explanation. I'm surprised nobody here knows anything.

    Is the situation a bit of a surprise to everyone, like it is to me (and KSAS), or have some of you known all along?
    bloodspirit, Thanks for raising this. I had no idea that the club was AFL-owned. My gut reaction is to dislike this reality, and to think that - as you suggested in another, earlier post - it has the potential to give rise to situations of conflict of interest. I will be interested in whatever your or others' further researches bring to light.

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