SPORTS INVESTMENT INSIGHTS
Trends in Corporate Governance: Implications for Sports Organisations
The “gold standard” for corporate governance is not a static concept but evolves over time in response to the modern challenges faced by organisations. As a result, industry codes, guidelines and standards are periodically amended to reflect best-practice. Recent examples include updates to:
- Corporate Governance Code: Companies with a premium listing on the London Stock Exchange are subject to the UK Corporate Governance Code (the Code), which sets out standards of good practice on (i) board leadership and company purpose; (ii) division of responsibilities; (iii) composition, succession and evaluation; (iv) audit, risk and internal control; and (v) remuneration. Companies that are subject to the Code are required either to comply with its provisions or explain why they have not been able to. The Code was updated in 2024 (the 24 Code) and the majority of provisions took effect from 1 January 2025.
- Walker Guidelines: The aim of the Walker Guidelines for Disclosure and Transparency in Private Equity (the Walker Guidelines) (published by the Private Equity Reporting Group (PERG)) is to ensure that reporting by large UK private equity-backed companies is in line with reporting by similar sized UK listed companies. Similar to the Code, compliance is on a comply or explain basis with the information published on the company’s website or in its annual report and accounts. In December 2024, PERG published an updated set of Walker Guidelines. These will first be reported on by PERG in December 2026 to cover companies within scope for the 2025 calendar year.
This article explores these latest developments in corporate governance, their implications for organisations operating in the sports industry and sets out some key recommendations for organisations in adopting best-practice governance standards in the current landscape.
According to S&P, governance relates to “the factors of decision making” and includes the “distribution of rights and responsibilities in different participations in corporations, including the board of directors, managers, shareholders and stakeholders”.
Corporate Governance in Sport
Corporate governance promotes integrity, transparency and accountability to an organisation’s stakeholders, all of which are crucial to the success and sustainability of a sports organisation. Unlike other sectors, the world of sport has a unique set of stakeholders, ranging from fans, commercial partners, participants, investors and public authorities, and this stakeholder web is only increasing in complexity as the industry grows. In addition, sport attracts significant scrutiny from the press and wider public resulting in a high-level of focus on organisational decision-making and behaviour. Therefore, the role of corporate governance is particularly important in the sector.
Governance is not a new concept in the sports sector. In 2016, UK Sport and Sport England published its Code for Sports Governance, which sets out the governance requirements for organisations who receive funding from UK Sport and/or Sport England. These standards were informed to a degree by best practices in the wider corporate sector. As such, while sports organisations are unique in their objectives and diverse array of stakeholders, developments in the broader corporate governance space are relevant as they may be indicative of changes in industry best-practice. As revenues increase in the sports sector, we would expect a higher degree of crossover from the traditional corporate world into the industry.
This closer connection with practices in the corporate sector may in part be explained by the identity of investors who are now deploying capital in the sector. According to a report published by CityAM, the number of sports acquisitions by private equity firms doubled between the calendar years of 2023 and 2024. The updates to the Walker Guidelines demonstrate an increased focus on the corporate governance of private equity firms and their portfolio companies –therefore, as the relationship between institutional capital and sport becomes more intertwined, we expect this will drive further focus on corporate governance in the sector.
Current Trends in Corporate Governance
Governance Landscapes for Sports Organisations
What do the above trends mean more broadly for the sports sector?
Priorities for Sports Organisations
To ensure good governance, there are certain steps sports organisations can take.
Clear and Transparent Strategy
Often, following a corporate governance failing, the shortcoming will be blamed on there being an uncertain strategy. A board should have dedicated sessions at clearly defined intervals where it is agreed to set and evaluate the long-term strategy of the organisation (and not just focus on short-term decisions). This strategy should be communicated throughout all levels of the organisation, with targets in place to evaluate the progress of this strategy to ensure continuous improvement and to hold the board to account if these are not met. Board members should be provided with comprehensive information ahead of any board meeting to ensure they are best informed to make appropriate decisions.
Policies
Good corporate governance requires organisations to state their values and principles, but establishing policies is key to the effectiveness of these, as they set out the practical steps individuals must take or refrain from taking. For example, organisations should have policies on whistleblowing, complaints, conflicts and expenses. The board should ensure that the culture of the organisation empowers employees to rely on these policies if appropriate. There should be clear responsibility within organisations as to who is responsible for designing and evaluating these policies.
Risk Management
Prepare for external events with crisis response strategies, ensuring that stakeholders are clear on the process to follow in the event of a crisis to act quickly and that all stakeholders are kept well-informed. The board should consider on an ongoing basis the main threats to an organisation’s performance and put in place mitigation steps to minimise any adverse impact (for example, through a continually updated risk register).
Independence / Diversity
It is well recognised that independence is crucial to good corporate governance, and as noted above, diversity is a key focus area. Independent and diverse trustees / board members contributes to there being checks and challenges to ensure decisions are well thought through.
Leverage Technology
A critical component of good corporate governance is accountability. Organisations can rely on technological advances to engage with stakeholders, receive feedback and adapt accordingly.
There is a balance to be struck between ensuring good corporate governance through reporting requirements and wasting time that would otherwise be better spent but for complying with such reporting requirements. Effective use of technology can be a good tool in achieving this balance – there are a plethora of software available for organisations to use to digitise reporting and avoid manual inputs.
Find out more
Please feel free to contact Ian Lynam, Mike Herbert and Lucinda Bayley if you have any questions regarding corporate governance in sport.
Disclaimer
This update should not be treated as legal advice and only provides general information on the issues discussed.