Thursday 22 August 2019

Richard Curran: 'FAI needs more suits and fewer blazers sitting at the top table'

Home advantage: Former FAI chief executive John Delaney at the Aviva Stadium. Photo: Gerry Mooney
Home advantage: Former FAI chief executive John Delaney at the Aviva Stadium. Photo: Gerry Mooney
Richard Curran

Richard Curran

Reality is dawning on the Football Association of Ireland (FAI) as it prepares for the future and the post-Delaney era.

When FAI president Donal Conway said last weekend that it could be another decade before the association clears its debts associated with the Aviva Stadium, it was a moment of real truth.

Less than a year ago, then chief executive John Delaney was still insisting that it was possible for the FAI to clear its €30m of stadium debt by 2020. This was despite the fact the organisation had to take a short-term €100,000 loan from him the previous year.

It was also despite the fact that while 2016 was a record year for FAI revenues, they actually fell in 2017 when State grants and subventions dipped.

It also ignored the reality that when the auditors looked at the association's accounts for December 31, 2017, it had zero "cash at bank and in hand".

The association has been somewhat traumatised by the regulatory, media and Oireachtas scrutiny of recent months. An update on its financial position is due to be published in the coming weeks. This should cover its accounts for 2018 and should also provide further details about the controversial €100,000 short-term loan the previous year, which was not referenced in the annual report for 2017.

The short-term financial situation may not be very encouraging. FAI auditors have reported a suspected breach of the Companies Act on the grounds of failure to keep proper books of account. This is being investigated by the Office of the Director of Corporate Enforcement (ODCE).

The suspension of State funding and the cost of handling all of the probes and consultants' reports at the FAI will not come cheap. But it has bigger fish to fry when it comes to paying down its legacy debt, mainly associated with the Aviva Stadium.

The FAI was due to repay or refinance €2.6m of debt in 2018 and a further €3.7m this year. When the financial update is published it will be interesting to see how it has dealt with those financial issues. A further €32.2m is due for repayment between 2020 and 2022.

Mr Delaney may have talked about clearing the lot by 2020 but the net debt of the organisation actually increased in 2017.

Yet, despite all of the controversy a lot of good work has been done in recent months. The new corporate structure - suggested following a detailed report - looks like a much better way forward.

It will have to be approved by members at the AGM next month. Having a board of 12, which includes several independently-appointed directors, will place the board on a much better footing to run the organisation with the financial and corporate experience that is required for a business that commands revenues of around €50m per year.

However, with better governance structures, come changes in how things are done. The blazers may have to be replaced by the suits. This may be a necessary change that will bring about some tough decisions.

The suits will introduce a better corporate governance structure, better transparency and accountability, and more evenly-shared power at the top of the organisation.

But they will want to have a certain level of financial discipline. They will focus on long-term financial planning and they may have to take tough decisions about how the sport is financed on the ground and what kind of access people get to the top level of the organisation.

It means cutting costs and potentially job losses at the association.

FAI president Donal Conway did not rule out redundancies when he talked about the financial update coming next month. It has been suggested that the FAI has been working on how to put its financial position and debt on a better long-term sustainable footing.

Now is a good time to do this. Interest rates are relatively low. However, credibility has to be restored after the allegations of failing to keep proper books of account.

It has also been suggested that any first wave of cuts would focus more on procurement costs and short-term operational expenses rather than reductions in staff numbers.

The blazers represented a different way of doing things. The suits won't necessarily be footballing people and might not want to be fully aware of the internal politics and needs of the soccer community in Ireland.

They will be better placed to build a good solid long-term financial platform for the sport in Ireland by ensuring things are run under a more practical structure, but that might not go down well with particular groups within the sport.

Unfortunately, this may be a price that has to be paid. The FAI is much more than just some corporate entity, it is a sporting and community body that contributes enormously to Irish life. But it is also an organisation with commercial and State revenues of €50m per year.

It will also have to rebuild confidence in the organisation to ensure it can refinance its debts with banks as they fall due.

In fact, rather than see Mr Conway's remarks about the debt staying around for another decade as a bad thing, it should be seen as a basic acknowledgment of the reality. And it represents an honest starting point for building a solid long-term financial plan for the organisation into the future.

The other two big stakeholders in all of this are the State, as a funder of the organisation, and Uefa, which has stepped in to help.

If the FAI does not embrace a new structure and manage its financial position well into the future, it runs the risk of becoming a satellite of Uefa. The European football body is more than willing to help but it will want a level of control and influence in return for that. Uefa has its own suits, as well as its own blazers.

There will be many at the agm next month who will feel there wasn't anything wrong with how John Delaney ran things at the FAI. They will feel he was ultimately a good soccer man who listened to the grass roots and was extremely dedicated to the job. And they will be right about that.

But the Delaney model has run out of road. It has suffered from the legacy debts of the stadium, the vesting of too much power and control in the chief executive, and the sheer scale of the organisation now.

The bizarre episode of a €100,000 loan was the straw that broke the camel's back. Having the chief executive lend €100,000 to the company he runs might work if you are running a corner shop but not a national, State-funded organisation with revenues of €50m per year.

The full story of the circumstances of that loan have yet to be disclosed. With consultants and accountants poring all over the association's finances, we will also have to see if any other issues of concern have been found.

The FAI faces a tough road ahead and it needs to start the journey by backing the proposed new structures.

Indo Business

Also in Business