Pointon Partners recently hosted Rob Macdonald, a Senior Fellow in the Sports Law Program at the University of Melbourne, for a seminar which he presented to the members of our firm’s Sports Law Practice Group. Rob’s seminar was based upon research conducted ahead of the November 2014 edition of the popular Melbourne Law Masters subject ‘Sports Law: Entities & Governance’, which he has co-taught and developed since it was first offered in 2006.

Rob has undertaken much research into the law & economics of Australian sports governance and regulation. The topic of Rob’s presentation was “Constitutional Voting Rules of National Sporting Organisations”. His latest research includes a detailed analysis of the constitutions of four major Australian national sporting organisations (NSO’s), the:

  • Australian Football League (AFL);
  • Australian Rugby League Commission (ARLC);
  • Basketball Australia (BA), and
  • Football Federation Australia (FFA).

 
Rob provided background on the nature and role of Australian Sports Commission (ASC) sport governance principles, which have been part of the reason for adoption of the company limited by guarantee as the corporate form of these four sporting bodies.

Two of the key issues discussed during the presentation were the allocation of decision making rights between the directors and the members of the company, and the voting rules faced by the members in relation to:

  • admission and removal of company members (where company members might include appointees or representatives of the national league clubs or state associations of a sport, and/or the directors of the NSO itself);
  • election and removal of company directors;
  • amendment of the constitution, and
  • company wind up.

 
An important facet of constitutional drafting is the selection of appropriate parties to be the company members. The membership differs considerably across the four NSO’s. For instance, the only members of the AFL are the independent appointees of the eighteen AFL clubs. Compare this to BA or the FFA, where state associations enjoy membership of the NSO. In particular, The status of the National Basketball League clubs as company members has regularly changed in line with the merger and more recent de-merger of BA and the NBL. For the ARLC, the NSW Rugby League (NSWRL), the Queensland Rugby League (QRL), the 16 National Rugby League (NRL) clubs and the ARLC company directors are now all members with voting rights of different kinds.

The seminar also included extensive discussion of the majority required when company members vote on different issues. In line with a simple economic theory of voting rule design, the majority required to pass a resolution is generally higher for those issues, such as constitutional amendment, which have more significant and permanent consequences for the company members (or a particular class of members with specific interests to be protected).

The Corporations Act of course requires a mandatory special resolution (75 per cent majority) on some issues and provides replaceable rules on others. For many issues then, constitutional drafters may adopt a simple majority or some other super-majority requirement for the passage of a resolution by the members. For example, the ARLC Constitution affords the NSWRL and QRL a right of veto on many issues (including constitutional amendment), but no right to approve the admission or expulsion of NRL clubs. The appointees of the AFL clubs enjoy the right to approve, by simple majority, an AFL Commission (the AFL board of directors) decision to expel an AFL club; as well as the right to overturn, by a two-thirds majority, an AFL Commission decision to admit, merge or relocate AFL clubs.

All in all, it was an interactive and stimulating discussion of great benefit to our Sports Law Group practice members.

Pointon Partners act for a number of national and state sporting bodies.  We have considerable experience in drafting or redrafting the constitutions of such sporting bodies.  If this is an area where you may require assistance or advice then please do not hesitate to contact any of the following members of our Sports Law Practice Group Anthony Pointon, Michael Bishop or Phillip Grundy on 03 9614 7707.

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