APFCA makes submission to FIFA/AFC delegation

Sydney, 21 February 2018

The APFCA members today met with the FIFA/AFC delegation overseeing the formation of the Congress Review Working Group for FFA.

Speaking after the meeting, Greg Griffin, Chairman of APFCA, said:

“The APFCA delegation felt the meeting was extremely positive and productive and look forward to contributing to the joint stakeholder meeting to be held tomorrow.”

He added: “We remain committed to the successful completion of this process.”

An outline of the APFCA submission made to the FIFA/AFC delegation is as follows:

This document provides feedback in order to help define the terms of reference of the proposed Congress Review Working Group (CRWG) – which includes its:

  1. Objective
  2. Composition
  3. Mandate
  4. Timeline.

Before dealing with each of those matters separately there are three important general points we wish to make that are relevant to this process:

  • The FFA governance reform “process” has given rise to an unprecedented discovery on the part of APFCA – and that of other stakeholders – as to exactly how bereft of good governance the Australian game is. We remain firmly rooted in the era of FIFA 1.0 with no obvious pathway at present to FIFA 2.0.
  • As you will be aware, early in 2016 FIFA together with the AFC rightly intensified pressure on the Board and Administration of Football Federation Australia (FFA) to finally provide the governance reform that had been demanded by FIFA for the preceding seven years. Almost two years later, we, as the professional clubs of Australia find ourselves in the invidious position of being a de facto disenfranchised football family stakeholder whilst at the same time being the single largest financial contributor to Australian football.
  • The guiding principles for the FIFA 2.0 vision are Transparency, Accountability, Inclusivity and Cooperation. We believe that these should be the guiding principles of the CRWG and the recommendations it makes.
  1. Objective

We believe that the Objective of the CRWG must be to:

a) Create complete alignment of Football Federation Australia Governance with FIFA statutes.

b) Make recommendations for the alignment of FFA with relevant Governance Best Practices

The focus of Australian governance reform since April 2016 has been the Congress. Whilst the Congress matter sits at the heart of the issues affecting FFA poor governance, the focus solely on it as an issue has been to the detriment of linked and equally relevant governance matters. Put simply, the focus solely on Congress has created an artificial impediment to the much-needed broader governance reform of the FFA.

In effect there are a raft of inter-related governance matters that make the FFA fundamentally flawed as a Member Association. We believe these issues must be considered by the Working Group in order to quickly remove the impasse among stakeholders that currently exists.

i. Organisational Type and Structure:

It is important to note that there is a fundamental issue with the FFA’s membership of FIFA. Article 11 of the FIFA Statutes requires FIFA Members to be Associations. The Football Federation of Australia is not an Association. Rather, it is an unlisted public company, limited by guarantee, a legal status that sees it at odds with FIFA Member Association structures around the World.

Because of this anomaly we have seen Australian Corporations Law used repeatedly by the FFA Board and Executive as the rationale to avoid the implementation of the FIFA required Congress model and to deliver complete alignment with FIFA Statutes.

c) We would request that the terms of reference of the working Group include the consideration of how to best align FFA with Article 11 of the FIFA Statutes.

ii. Consideration of the Requirement of an “Independent” FFA Board

The important context to the matters highlighted in point 1.i is the issue that The APFCA has already raised with FIFA and AFC representatives as to its concerns regarding the asserted independence of the FFA Board. This assertion of independence is made consistently by the FFA Board and its Administration – a position the Clubs simply do not accept.

The concerns of the Clubs have been summarily dismissed by FFA Chairman, Mr. Steven Lowy on behalf of the FFA Board. APFCA remains deeply troubled by the real and perceived conflicts in the decision making processes of the current Board which continues to make decisions to the significant financial detriment of the A-League Clubs and to the operation of the A League itself.

In line with Mr. Steven Lowy’s request of the 20th of July, APFCA provided particularised details of its concerns. The APFCA document dealt with thirteen (13) pertinent issues. We contend that the FFA Board operates as an uncontrolled stand-alone entity and in its own interests. The facts speak to this, with only 12 new FFA board members being elected in the last 14 years and each of them candidates nominated by the Board itself and elected unopposed by an historically compliant and the mainly financially dependent body of Member Federation States.

Underlying this situation is the fundamental issue as to whether the FFA Board should be independent? Or whether it should assume a representative function balanced by a representative congress and representative standing committees. The FFA Board has defended its need to be independent – without demonstrating any material advantage to that so-called independence. At the same time, it has consumed powers normally associated with Member Association Congresses in other countries. We believe that:

d) The Terms of Reference of the CRWG should include:

  • The function and mandate of the FFA Board
  • Whether the FFA Board should be independent or representative and how the ideal model relates to the rest of the Australian Football ecosystem and its key stakeholders.

iii. Congress Membership

The Congress matter has been the sole focus of Australian Governance Reform conversations for the last 16 months with no material progress. We believe that the conversation should now be broader in order to give stakeholders confidence of the wider checks and balances consistent with FIFA Statute Article 15j – “legislative bodies must be constituted in accordance with the principles of representative democracy and taking into account the importance of gender equality in football”.

Regrettably, given the nature of the FFA Board’s actions over the last 16 months – and the fundamental governance flaws of its attempted Congress solutions – the only conclusion that can be drawn is that the FFA Board remains solely focused on maintaining itself as the dominant “stakeholder” in the function of the FFA Congress and as such maintaining its ability to determine the ultimate composition of its own membership. This is clearly entirely inconsistent with the requirements of FIFA Statute Article 15j.

Article 15j has been the guiding principle of APFCA in our engagement and it has seen us stand firm with the PFA on three threshold issues:

  • The Professional game must have representation commensurate with the contribution it makes to the Australian Football eco-system.
  • No single stakeholder should ever again hold a majority equal to, or greater than the prescribed majority required to elect Board Directors (currently 60% of the eligible voting Congress).
  • That any solution must recognize the importance of gender equality in football in a meaningful way.

We believe that the broadening of Governance discussions to encompass the fundamental and inter-related issues facing the FFA will necessarily contribute to the removal of the impasse currently in place.

e) The Terms of Reference of the CRWG should include Congress Membership as part of the broader required governance reform captured in the other recommendations of this submission.

iv. Legal Framework for the Professional Game

As stated APFCA believes that the FFA should be fully aligned with FIFA Statutes. There is no such alignment at present. The extent to which the lack of FFA alignment with FIFA statutes has material impact on professional football stakeholders needs to be better understood and rectified as part of this process. There are clear symptoms of a potential impending catastrophic collapse of the Professional game in Australia and these can be directly linked to the governance issue at hand.

As part of the Working Group objectives we are requesting a review of the contractual obligations imposed upon Clubs and players by virtue of three crucial documents that are inherently in opposition to FIFA Statutes. Those documents are:

  • The Club Participation Agreement (CPA) first executed in November 2004 by the then 8 constituent member Clubs of the A-League – of which several have subsequently become bankrupt and no longer exist.
  • The Standard Player Agreement
  • The Collective Bargaining Agreement (CBA), which the Clubs are not a party to but are bound to by virtue of the CPA, a document all Clubs were obliged to execute by the FFA without any right to demand amendments to or the deletion of clauses they found unacceptable in the document. This in itself produces financial liabilities for clubs with no recourse.

We accept that such consideration will naturally flow into consideration of the structural relationship between the professional game with the Member Association organization and we would welcome that consideration to the extent that it informs the requirement of objective 1.i. We are not advocating consideration of the detailed economic relationship, only the model as it relates to governance principles. We would therefore request:

f) A review of the compliance with FIFA Statutes of the contractual obligations currently imposed upon Clubs and players and consideration of recommendations for the principles of future governance of the Professional game.

v. Financial Transparency

Linked to Point 1.i above, is the lack of financial transparency of the FFA. The APFCA membership request that financial reporting be part of the Working Group Terms of reference. The financial statements published by the FFA are General Purpose Financial Statements (GPFRs) in accordance with Australian Accounting Standards – Reduced Disclosure Requirements (RDRs) (RDR Financial Statements).

RDR Financial Statements meet the recognition and measurement criteria of the Australian Accounting Standards; however, they are permitted significantly reduced disclosures requirements when compared to the requirements of all accounting standards.

As a result of its corporate structure, The FFA Constitution does not require compliance with Australian Auditing Standards. It merely states that financial statements must include: a statement of financial performance; a statement of financial position; a statement of cash flows; and notes to each of those statements. The FFA Constitution also states that the revenue and expenses of FFA must ‘be managed in accordance with generally accepted accounting principles’ and ‘in accordance with the Corporations Act’. The FFA Constitution does not require that the financial statements be prepared in accordance with IFRS.

The FFA Directors have the option to prepare full GPFRs, which would provide more disclosure than is currently provided in the financial statements. This would provide information useful and relevant to the users of the financial statements; in particular the Congress of the FFA and the Australian Football Family. The fact that they do not speaks volumes to the motivations and modus operandi of this FFA Board.

After two years of pressure the APFCA members were finally provided with a current one page “attribution” Profit and Loss for the A-League. This is the extent of the disclosure the Clubs have been given. The FFA is unable or unwilling to provide further financial statements. A simple benchmarking of line items against other global Leagues begs many questions.

After having to resort to threatening legal action on several occasions to be entitled to exercise our legal right to inspect and examine the FFA books and records, Greg Griffin, as the sole “A-League Representative” Member of the FFA congress, has been granted access to financial information covering the last three years. That process is still underway and has taken more than seven months to date. One area that he has not been granted any access to are the accounts around the bid for the 2022 World Cup.

The Garcia report and associated FIFA investigations are unequivocal in portraying the negative implications of the Australian bid for the 2022 World Cup. It is troubling to the APFCA that two senior executives involved in that bid remain integral to the matters outlined in this letter and that the current FFA Chairman, who was significantly involved in that bid, restricts access to the relevant records.

It is important to record that on the 26th of July, 2017 the FFA Board cancelled all exploratory discussions on the migration of the A-League to an Independent Model as a result of our push for more financial transparency. Precisely the kind of financial transparency that is essential as the basis for a meaningful discussion about an independent professional League. On the financial reporting evidence alone, it is hard to argue with the assertion that Australia remains firmly rooted in the era of FIFA 1.0.

g) We would request that the terms of reference of the CRWG include the consideration of alignment with best practice Member Association financial reporting.

vi. FFA Compliance Specifically With Article 15.d of the FIFA Statutes

Article 15.d of the FIFA Statutes creates the obligation for all Member Associations to have independent arbitration processes. Our experience is Australia does not meet that obligation.

The Professional game in Australia lives under a regime which provides no FIFA compliant or meaningful Appeal Process. Put simply, the Dispute Resolution process contained in the FFA Rules and Regulations is itself not compliant with FIFA Rules.

As you are aware, in addition to the obligations of Article 15.d, Article 59.3 of the FIFA Statutes (and equivalent in AFC Statutes) requires all disputes between FFA and its constituents (or among constituents themselves) to be resolved in one of two forms of ‘independent’ arbitration – either:

  • The Court of Arbitration for Sport
  • And ‘independent and duly constituted’ arbitration tribunal

The FFA Regulations create what it describes as an Independent Tribunal but which falls significantly short of a Tribunal that can possibly be regarded as meeting the FIFA test of what constitutes independence. It is nothing more than a further internal FFA Body that hears Appeals from decisions from the FFA appointed Arbitrator. Furthermore, the test to be granted leave to even Appeal is so incredibly difficult that it renders leave being given almost impossible. It actually requires as a prerequisite for being permitted to Appeal that the Appellant meet what is known in common law countries as the “Wednesbury Test” which means you can only succeed as an Appellant if you can show that no reasonable Tribunal could have reached the decision that is the subject of the Appeal.

h) We request that the terms of reference of the CRWG include consideration of FFA compliance with Article 15.d of the FIFA Statutes. 

2. Composition

Our assertion that the FFA Board is operating as a stand-alone entity and in its own interests is extremely relevant to the consideration of the composition of the CRWG. The FFA Board’s actions over the last 16 months, and the fundamental governance flaws within its attempted solutions to this crisis, further underscore our submission that the FFA Board remains solely focused on maintaining itself as the dominant “stakeholder” in the function of the FFA Congress. As such maintaining its ability to determine the ultimate composition of its own membership.

Inconsistent with the requirements of FIFA Statute Article 15j this behaviour, as a stand-alone issue, should be of great concern to FIFA given the issues identified already in this submission.

Given the very clear and firm guidance provided to the FFA by the FIFA Secretary General in relation to the consequences of its failure to meet either of the March 31st deadline or the November 30th deadline, it beggars belief that we are now facing a third extension of this phase of the congress reform process whilst the FFA Board retains its mandate. The oppressed and underrepresented stakeholders of the Australian game are surely justified in feeling badly let down.

Our view is:

i. That the FFA Board has effectively disqualified itself from participation in the CRWG.

ii. The CRWG should be made up of representatives of the originally FIFA identified stakeholders – Member Federations, APFCA and the PFA – operating without the impediment of interference of the FFA Board and Executive.

iii. We believe the ideal Membership or the CRWG is:

a) Three Member Federations

b) Two A-League Clubs

c) One PFA Representative

d) This would see a committee evenly balance between the Professional and Amateur games.

iv. Consultation with the AAFC, PRFA and Coaches Australia needs to be        incorporated within the process. This recognizes the importance of these nascent Special Interest Groups and also that there is already some representation overlap through Member Federation and FFA Standing Committees.

v. The CRWG should be chaired by an independent Chairperson of suitable legal and procedural expertise who would have a casting vote.

vi. The CRWG should be supported by FIFA and AFC legal resources, along with an Australian commercial legal service in order to ensure that relevant recommendations of the CRWG are captured with optimal constitutional draft amendments.

  1. Mandate

Assuming that the CRWG:

  • Is formed in the representative manner described above;
  • Is predicated on constant referral and renewal of mandate by the constituent members with their respective membership;
  • Has meaningful consultation with other stakeholders built into its processes;

i. We believe that the CRWG should be mandated to create conclusive outcomes for simple ratification by the existing Congress. 

4. Timeline

For the professional game the consequences of the continuance of the status quo are dire. All critical commercial metrics associated with the professional game are in decline and our ability to arrest that trend is completely blocked by the Congress Issue.

Professional Clubs stand on the brink of joining the nine club administrations that have already become insolvent in the first 14 years of the A-League. The combined losses for the A-League clubs in the 14 years the competition has been run by the FFA amount to approximately A$300m. There would be no professional game in Australia but for the funding of the sport in Australia by the Clubs. Were the professional game to collapse due to the issues it faces that would be catastrophic for the game here.

ii. As a consequence of the real and current threat to our game, we believe that the timeline for the CRWG process should be as short as possible without compromising its efficacy. We believe that this process should be completed no later than June 1st 2018.

The APFCA membership have put their faith for the last 16 months in the FIFA/AFC process in the belief that it would produce the promised reform that would enable a positive chain-reaction of further reform for the Australian game. In reality, the only thing that has changed in those 16 months is a closer bond between the APFCA Membership and Professional Footballers Australia (PFA) – borne out of our common ambition to see the professional game contribute meaningfully to the Australian football ecosystem.

We remain committed to finding consensus among the Australian Football Family in order to overcome the fundamental governance flaws of the FFA. To achieve this the artificial and undemocratic impediments that have stood in the way of the process to date must be removed and the FIFA identified stakeholders, who have to date been disintermediated, be re-empowered and re-mandated.