The Times They Are A-Changin' - Blending the Three Models of Sport

At a recent event organised by Charles Russell Speechlys, together with the Arab Lawyers Association, an expert panel drawn from the sports, legal and investment community, featuring Keir Gordon, Kelly Simmons OBE, Louise Savage and Michael Broughton, debated what was the optimum model for team, individual, men’s and women’s sport. The debate took place against a backdrop of unprecedented disruption across the sports sector, with the landscape rapidly transforming. This transformation is driven by a range of factors. Not least, an upsurge in overseas investment in clubs and events, the prospect of increasing government intervention, a growing number of competition law challenges, alongside an urgent push for new regulatory models and sustainable commercial structures.

These developments have resulted in instability, stakeholder tensions and the quest for innovative solutions becoming key features of the new sports economy.

The Three Models of Sport

In parallel with this transformation, a compelling battle for supremacy has been taking place over the last decade between advocates of the European, US and Centralised models of sport. These three models, and the very different sporting, financial, control, heritage, and economic priorities they embody, are seldom mentioned in the day-to-day narrative/media coverage of sport. Dig a little deeper, however, and they help to inform where the tensions and fault lines across the sporting world exist. Areas such as:

1. Promotion/relegation v Closed leagues
2. Cost controls v Uncapped spending
3. Government regulation/supervision and control v Free market/private regulatory body oversight
4. Profit/entertainment v Sporting success/winning trophies
5. Unlimited investment v Restrictions on scale/forms of investment and control of teams
6. Free market for playing talent/international transfer system v Distribution of playing talent mechanisms such as drafts
7. Portability of teams/fixtures v Fixed geographical locations

A Further Twist in the Tale

Despite the contrasting approaches to these core sporting policies adopted by each of the models, there is increasing cross-over between them as the sports market matures, globalises, and administrators come to terms with competition from the wider entertainment industry. The recently reported acquisition by US investment fund, the Harburg Group, of Saudi Pro League football team, Al Kholood Club, is merely the latest twist.

There is no doubt that investors, commercial partners, and new entrants to the world of sport are looking to identify new revenue streams, grow franchise values and monetise global fan bases. However, identifying the best structure to balance such financial aspirations with maintaining the essence and traditions of competitive sport is challenging.

The Debate on the Models

Following a fascinating discussion on the attributes of the three models of sport, the overall conclusion reached was that there could not be one winner. Rather, it was necessary to identify a sports/event-specific approach, borrowing complementary elements of each model depending on the unique characteristics, heritage and future objectives of the sport/event concerned. It was also observed that agility was an important dimension in the overall approach to creating successful sports structures. This requires preparedness to develop and transition competition frameworks utilising the features of different models depending on evolving sporting, financial, entertainment or investment needs. Investors in the room echoed this, commenting on the attractiveness of sports assets that prioritise innovation and demonstrate adaptability to meet the evolving demands of their fan base.

Some things were, however, seen as non-negotiable by all the experts in the room. Competitive balance/uncertainty of outcome must be maintained, whether by cost controls, talent distribution arrangements or other solidarity mechanisms. Moreover, the applicable overarching legal framework must allow the introduction and enforcement of effective regulation without fear of competition law or other challenges to regulators. In this regard, it was acknowledged that targeted exemptions from certain laws should be available to those sports entities who adopted exemplary governance standards and entered appropriate collective bargaining arrangements (CBAs) with relevant stakeholders, including players. In particular, fixed-term CBAs were seen as highly beneficial to providing stability and certainty for all participants, including investors and commercial/broadcast partners. Crucially, such arrangements should also ensure that the welfare of players and athletes remains a central consideration, safeguarding their interests alongside the broader objectives of sport.

Mix and Match

So, there we have it. There is no one dominant global model emerging. In today’s complex sports arena, an appropriately blended approach is the answer to those seeking the optimum organisational framework for their sport or event. Perhaps we should not be surprised by this outcome. After all, the European Super League breakaway initiative represented the Americanisation of the European Model with its closed league and guaranteed participation for founder members, elevating club values and profit. The recent privatisation of three Saudi football teams represents the Americanisation of the Centralised Model with a focus on private ownership/returns rather than direct government control. The decision by the National Women’s Soccer League (NWSL) to adopt free agency and drop the player draft represents the Europeanisation of the US model, fitting with a global market for the top female players. Contrastingly, in the UK, the new Football Regulator arguably represents a more Centralised government-led approach to the hitherto private regulation of sport under the European Model.

In sport it is clear …The Times They Are A-Changin’.