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Crows should welcome board democracy


With times changing at businesses across the nation, the Adelaide Football Club should consider how long it can effectively shut members out of its boardroom, argues Morry Bailes.

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A fascinating stand off between club board and club members is presently playing out at the Adelaide Football Club.

To borrow from resident InDaily football guru Tom Richardson, it is the board this time that is said to have a touch of the fumbles.

As for the members, they have what might be described as a touch of the grumbles!

At the heart of it is democracy at the board level.

It helps to understand the ownership structure of the Adelaide Football Club.

It also should concern every board in this day and age that following the Hayne Royal Commission, the way in which directors are expected to conduct themselves has permanently changed.

Although the Royal Commission examined the duties of directors in an entirely different context, we can expect now that boards will maintain a watchful eye on culture and on governance.

Accountability, not confined to financial outcomes, has become key.

So what is the answer to the ownership of the Adelaide Football Club, and to whom is the board answerable?

The starting point is that the AFL owns the licenses enabling AFL clubs to play in its competition.

In 2014 the SANFL relinquished the licenses of both the Adelaide and Port Adelaide Football Clubs, who bought them.

In what some might see as an irony, Crows CEO Andrew Fagan, in remarking on the significance of the moment said: ‘I really hope members take the opportunity to have a say, and we anticipate a number of quality director nominations’.

So the club has acquired the license: what then? The constitution, drafted by local law firm Minter Ellison, provides that the club is a company limited by guarantee, and that by joining as a member you are ‘bound by (the) constitution and the policies and procedures of the AFC so far as they relate to members’.

So it is arguable that the members own the club. But the AFL learnt a thing or two from the break away rugby Super League. They own anything of value at the Crows, right down to the trademarks for the guernsey, and the AFL is the ultimate guarantor of wages. So in reality the AFL owns everything that matters at the club.

How does this play out in a governance sense? Are there examples interstate of how club boards are run? It’s a bit of a mish-mash, but there are certainly seemingly more democratic boards.

At Essendon there are a majority of elected directors, and a minority appointed. At Geelong, seven members are elected and two appointed. Richmond elects six and appoints three. Western Bulldogs has six elected and three appointed.

However at Adelaide only two directors are elected by the membership; the remaining seven are appointed by approval of the AFL.

At Port Adelaide it’s slightly different, with two elected and eight appointed.

So what’s the problem with democracy for our SA clubs? It certainly hasn’t harmed results in some of Australia’s more successful AFL clubs, and may assist in the perception of what fans are vocally calling an ‘out of touch’ board.

There is undoubtedly a concern from the perspective of the AFL that sectional interests can hijack a board.

But as Churchill said so artfully of democracy: ‘Many forms of government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of government except for all those other forms that have been tried from time to time…’.

There is also an interesting public argument that can be mounted. Both South Australian AFL clubs would be very financially worse off without Commonwealth and State Government funding.

The Adelaide Football Club was recently promised $15m of federal government money, so we are talking no small biccies. The state has also over the years also given hundreds of thousands if not millions of dollars to the respective clubs.

In a governance sense then you would expect, as with many other AFL clubs, that the members – and perhaps the public at large whose money is being spent to help the clubs’ development – might get a fairer say in how the show is managed.

Law in this instance can only help explain the corporate structure of these clubs. The only court that matters in this debate is the court of public opinion. And that may not matter that much either, irrespective of how upset members become, because in the case of Adelaide, the club has put in motion the much-publicised current ‘external review’.

If the club steadfastly stares down the members, it faces two risks. First, members may resign if they are disenchanted enough. A sporting club isn’t much without members. Recent on-field performance may result in some natural attrition anyway, but footy fans tend to be a loyal lot.

Second is the withholding of federal or, more likely, state money. The public purse prefers accountability and democracy, particularly in the face of an angry fan base who are also electors.

The irony is that if Adelaide Football Club was performing on field, there may be less attention given to board constituency and accountability.

Be that as it may, there is a new game in town since the findings of the Hayne Royal Commission, and while we may not be talking banks, we are talking sheep stations; footy sheep stations.

Who wins or loses on field at Adelaide Oval and at other AFL stadia across the country is the stuff that legends are made of, and it’s been a very very long time for Adelaide. It’s also a big business.

So whilst the right skills must be present on a sporting club board, the clock is surely ticking on how Adelaide and Port Adelaide can justify holding their members’ interests out of the boardroom.

There are plenty of members who if elected could do the job, and easily fill the skills needs of these clubs.

Culture and accountability would undoubtedly benefit, and members would feel reconnected with their club.

Democracy isn’t perfect, but it’s the best we’ve got.

Morry Bailes is managing partner of Tindall Gask Bentley Lawyers and immediate past president of the Law Council of Australia.

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