Sport needs to tackle high reputational risks

Bribery, supply chain issues and pay differentials have been identified as key ethical risk areas in the global sports industry.

A briefing by the UK-based Institute of Business Ethics (IBE), published ahead of next year’s London Olympics, says sport is a uniquely vulnerable industry, representing an ‘unusual combination of often highly profitable businesses, celebrity “staff” and passionate “customers”.’

It points out: ‘The stakes are high, both financially and professionally; and the pressure to cross ethical lines is also high.’

Against the background of the Olympic values stated by Pierre de Coubertin in 1930, the IBE briefing outlines seven key areas for sport – supply chain management, bribery and corruption, pay differentials, marketing, the health and wellbeing of sportsmen and sportswomen, social impact and discrimination.

Bribery is among sport’s most pressing concerns, following high-profile scandals in international cricket, snooker, football, rugby and horseracing. Given the association of sport with gambling, the IBE says the industry must realize it is particularly susceptible to corruption and organized crime.

The IBE highlights Barcelona football club, which has recently introduced a code of ethics as one way of combating corruption and other ethics problems at an organizational level.

Supply chain management, which emerged as a key issue in football’s 2010 World Cup in South Africa, is also outlined. Oxfam’s Playfair campaign, with which the organizing committee of the London Olympics has engaged, is given as an example of best practice in the area, and Nike is quoted as a brand demanding high ethical standards from suppliers.

Another issue is the uniquely high pay of some sportsmen, which could cause many problems, says the IBE. The remuneration of some professional players not only threatens financial sustainability, as English football has shown in recent years, but affects the brand trust in that the other sports industry workers are among the private sector’s lowest-paid employees.

The IBE recommends that transparency and governance rules be imposed on sports teams and clubs, similar to that recommended for public sector pay, ‘to reassure not only their shareholders but also supporters’.

On more general impacts, the briefing says the social and environmental effects of large-scale events such as the Olympics need immediate attention.

The spotlight also falls on recent problematic examples, such as the 2004 Athens Olympics and the football World Cup in South Africa, where poverty has been linked with extravagant public spending by the host nations.

Last month Suresh Kalmadi, the chief organiser of the 2010 Commonwealth Games in India was arrested as part of an investigation into corruption surrounding the event.

The IBE says London is setting new standards on the environmental planning of the Olympic Games, but says organisers need to be aware of tensions created by heavy spending against a backdrop of tough economic times for the majority of ordinary citizens.