Structure and Governance Review of
Basketball in Australia
Report of the Steering Committee
November 2007
Executive Summary
In March 2007 Basketball Australia (BA), the National Basketball League (NBL) and the
Australian Sports Commission (ASC) jointly set up an independent review to examine the
structure and governance of basketball in Australia and definitively determine how to
best manage the relationship between BA and the NBL. This review was overseen and
reported on by a Steering Committee consisting of the President of BA, an owner of an
NBL Club and the Chief Executive Officer (CEO) of the ASC. The review process was
conducted by Ernst & Young, with the support of the ASC. The final report is that of the
Steering Committee.
There was a clear consensus of support from stakeholders that the current BA and NBL
entities should be wound up to make way for a single unified national governing body for
the sport of basketball in Australia. Recommending a unified body as the best structure
was supported by the findings during the review process with regards to the history and
culture of the sport, as well as comparisons with other sports including their relationships
with national leagues, structure and ownership of clubs, and funding relationships within
the sports.
A single unified national body will result in:
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One vision for the whole of the sport of basketball in Australia
One Board driving the strategy for all of the sport
One management structure implementing that strategy.
A summary of the recommendations is as follows:
1. Establishment of a new body constituting as a company limited by guarantee
under the Corporations Act 2001 (Cwlth) (Name of body to be decided).
2. Governed by a seven person Board made up of five elected and two appointed
directors, all of whom are independent; Four year terms, with ‘half board’
elections biennially (odd years); The Chairperson to be elected from within the
Board by the directors.
3. A membership made up of the current member state and territory associations
and the NBL Clubs.
4. A revised voting structure that ensures current member state and territory
associations hold 60% of the votes, with NBL Clubs holding the remaining 40%.
5. Formalised franchise agreements between the new Company and each of the
NBL Clubs, involving payment of annual membership and franchise fees.
6. A revised management structure, including a General Manager to manage the
national leagues within a High Performance and Competitions division.
The transition process will consist of the current BA and NBL memberships voting to wind
up the existing entities and vote for a new single entity governed by a new constitution
and transitional Board. A representative from each of BA and the NBL will join the review
Steering Committee to form a selection panel charged with identifying and appointing five
independent board members, including the Chairperson, to a transitional seven member
Board. The remaining two board members will be elected by the current Boards of BA
and the NBL (one each). The first ‘retirements’ and half board elections for the new
Company will take place at the 2011 Annual General Meeting, with final elections and
completion of the transition in 2013.
Basketball Review Steering Committee Report – November 2007 Page 2 1. Introduction
Basketball Australia (BA) is the national sporting organisation for basketball in Australia
recognised by the Federation Internationale de Basketball (FIBA), the Australian Sports
Commission (ASC) and the Australian Olympic Committee (AOC). It is an incorporated
association pursuant to the Associations Incorporations Act 1991 (ACT). It is responsible
for promoting competitive and recreational basketball and its structure encompasses the
Women’s National Basketball League (WNBL) and the Australian Basketball Association
(ABA) League.
The National Basketball League (NBL) is the flagship basketball competition for men in
Australia. It is run by NBL Management Limited which is a company limited by guarantee
(Commonwealth Corporations Act). The NBL is granted a licence by BA to conduct the
national elite men’s competition. BA owns the intellectual property of the NBL and
theoretically retains powers in relation to: approval over admission of new teams; the
requirement for the NBL to follow FIBA international rules; the number of import players;
and player availability for national duties. BA is a member of NBL Management Limited
along with the 13 NBL clubs. A representative from BA along with representatives from
each of the 13 Club comprises the Board. Due to both the structure and governance of
the NBL, in practical terms BA has limited influence over the running of the NBL.
Concurrently the NBL has poor links with BA membership and the broader basketball
community.
Several reviews have been conducted into the structure and governance of basketball in
recent times, with a fully integrated structure previously recommended but not achieved
(‘One Basketball’ Review, 2001). Dissatisfaction remains with the interrelationship
between the NBL and BA / the broader sport, and also with the overall strategic direction
of the sport, especially from a high performance pathway perspective. The initiation in
early 2007 of reviews of both High Performance Pathways and Marketing led to a strong
desire by both BA members and NBL Clubs to fully examine the structure of the sport and
definitively determine whether or not integration is the best way forward.
The scope of this review was to assess the structure, governance and management of
basketball including the interrelationship of BA and the NBL within the overall context of
the sport taking into account:
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Governance factors such as the constitutional arrangements, board structures,
policies, practices and behaviours.
Organisational structure and strategic management policies and practices such as
planning, resource management, performance reporting and monitoring.
Structural and contractual arrangements between the integrated body and
professional league clubs.
It should be noted that the scoping did not include any robust financial review or risk
analysis of the various entities involved or of the recommendations made.
Basketball Review Steering Committee Report – November 2007 Page 3 2. Steering Committee and Consultation
The Review was commissioned and overseen by a Steering Committee made up of Mark
Peters (CEO, ASC); John Maddock (President, BA); and Eddy Groves (representing NBL
club owners). The co-ordinating project officer was Jackie Fairweather, Senior Sports
Consultant, Innovation & Best Practice Section, ASC. Ernst & Young was contracted to
undertake the review process and, in doing so, reviewed all relevant documentation and
undertook a stakeholder consultation process, resulting in a report to the Steering
Committee.
The consultation process undertaken by Ernst & Young and the co-ordinating project
officer, included interviews with representatives from 38 stakeholders or stakeholder
groups - all State bodies, all available NBL Clubs (11 of the 13), BA & NBL management,
representatives from WNBL and ABA and other relevant parties, including financial
supporters. There was a process through which the public could submit their written
opinions and 15 such submissions were received. Also undertaken was a desktop review
of the structure and governance of other relevant sporting organisations, including their
relationship with national leagues.
This is the final report, findings and recommendation of the Steering Committee, derived
after receiving and reviewing the Ernst & Young report.
Basketball Review Steering Committee Report – November 2007 Page 4 3. Findings and Recommendations
3.1
Overview
The dominant view amongst stakeholders was found to be that:
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The current structures for BA and the NBL are ineffective for delivering and
building basketball in Australia.
The sport lacks strategic direction and focus.
There is no shared vision.
Objectives and focus of the different entities has resulted in fragmentation.
There is a lack of consistency and trust in delivering the sport.
And the sport is significantly undercapitalised.
The existing relationship between BA, the NBL and the NBL clubs, through the NBL
Participants Agreement has been criticised for being set in perpetuity with no provision
for review and little accountability, and for being subject to the control of vested interests
i.e. the club owners. This has created issues for the running of the league from the
perspective of both parties.
The clear majority of stakeholders were in favour of creating a new single integrated
national body for the sport, with the perceived benefits being:
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One voice for the sport that can make whole of sport decisions
One brand for the sport
Integration deemed to be the last chance to get the sport right
Better links between BA, the state and territory associations and the NBL Clubs –
and with it, an opportunity to increase the links to grassroots and the broader
relevance of the sport.
Improved pathways for athletes, coaches and officials.
The minority who were against integration sighted the financial risks, the differing
objectives of each body and the lack of trust between the NBL and BA as their primary
reasons. All stakeholders, however, felt that change was necessary and that whichever
way was deemed best for the structure of the sport into the future, there was a need to
commit to the change and make it work together.
The structure, governance and relationships with national leagues for other related sports
were examined and a range of different models were found to be effective. Concepts
from other relevant sport’s models were used in proposing the best model for Basketball
in Australia. Given the history and context of basketball, the two options were either for
BA and the NBL to fully integrate into a single new national governing body, or to separate
completely with renewed governance structures. The Steering Committee strongly agreed
that full integration was the best solution for the sport and will result in:
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One vision for the whole of the sport of basketball
One Board driving the strategy for all of the sport
One management structure implementing that strategy.
Basketball Review Steering Committee Report – November 2007 Page 5 3.2
Structure and Governance
From a structure and governance perspective and using ‘best practice principles’, the
Review recommends adopting an integrated structure with a new governing body (The
Company) for basketball in Australia that would have the following characteristics:
1. The new body constituting as a company limited by guarantee under the
Corporations Act 2001 (Cwlth). (Name of the body to be decided).
2. Governed by a seven person Board made up of five elected and two appointed
who are all independent directors.
3. The CEO of The Company would not be a director but would attend Board
meetings at the invitation of the Chairperson.
4. A membership made up of the current member state and territory associations
and the NBL Clubs (see below).
5. A revised voting structure that ensures current member state and territory
associations hold 60% of the votes, with NBL Clubs holding the remaining 40%.
6. The integration of all national competitions under the new Company.
7. Formalised franchise agreements between the new Company and each of the
NBL clubs. This agreement would involve payment of annual membership and
franchise fees to The Company.
In referring to independent directors, the word “independent” is defined to mean that a
director could not concurrently hold a position in the sport that would be deemed as a
conflict of interest. Such positions would include an elected official of a state or territory
association, an owner or director of a professional club, a management position with the
Company, state or territory association or professional club; or a material supplier of
goods and services to the sport of basketball.
The name of The Company is to be determined as one that is deemed appropriate for the
governing body of basketball in Australia into the future and that is satisfactory to both BA
and the NBL.
3.3
Membership and Voting Structure of The Company
The BA membership currently comprises the eight state and territory associations and the
NBL, WNBL and ABA. In terms of voting rights, New South Wales and Victoria each have
three representatives; Queensland, South Australia and Western Australia two
representatives each; and Tasmania, Northern Territory, Australian Capital Territory, NBL,
WNBL and ABA one representative each. Each representative is entitled to one vote.
The Ernst & Young report agreed that the state and territory associations should be the
members of The Company and recommended a ‘one state one vote’ voting structure in
line with that suggested in the ASC Good Governance Principles 1.4 (National Sporting
Organisation Governance Principles of Best Practice, Australian Sport Commission 2007
©) for a total of eight (8) state votes. Further, Ernst & Young recommended membership
and one (1) collective vote for the Owners of NBL Clubs, as these private owners are the
only group not represented by the state and territory associations (they are not covered
by any ‘membership’ however they are significant investors in the sport). Taking into
account the history and context of the sport, the Steering Committee did not see this as a
workable solution and has proposed an alternate solution which is outlined below.
Basketball Review Steering Committee Report – November 2007 Page 6 The recommended membership structure is that each NBL Club would become a member
of The Company by virtue of its participation or franchise agreement. Each NBL Club
would, in addition to its annual NBL franchise fee, make a further financial contribution
toward the development of basketball through a ‘membership fee’ to The Company.
The existing state and territory associations would retain their membership of The
Company through a Service Agreement relationship and pay capitation fees based on
participation numbers, monitored through a national player database.
As under the new structure, the national ‘League Associations’ are fully integrated into
The Company, there would be no membership status for the NBL, WNBL, ABA or any of
the underpinning Leagues. The NBL, WNBL and ABA are represented through
Commissions of The Company under its governance structure. By nature of their current
structure, individual clubs participating in the WNBL, ABA or underpinning leagues are
presently represented through their state or territory associations.
The number of votes exercised by the NBL Clubs in General Meetings of The Company will
be equal to one vote per Club, set at 40% of the total votes. The state and territory
associations will distribute the remaining 60% of the votes between them with each
receiving a minimum of one vote. The distribution shall be determined based on
registered members and related capitation fees contributed to The Company. Currently
there are 13 NBL Clubs, so 13 votes would constitute 40% of the votes, leaving 60% = 20
votes to be distributed among the eight state and territory associations. The relative
40:60 percentage votes will be written into the constitution of The Company as a
constant. If the number of NBL clubs change, the number of state and territory
association votes will change accordingly to preserve the relative weighting.
The membership fee payable by the NBL will also be fixed at the 40:60 ratio relative to
the state and territory associations. Thus the total annual NBL membership fee will be
equal two thirds of the total capitation fee paid by the state and territory associations.
Each state and territory member’s voting entitlement shall be cast by one representative
of that member. Each NBL Club’s one vote shall be exercised by its representative.
3.4
Powers of Members
The powers recommended to be exercised by the Members of The Company in General
Meeting include:
1.
2.
3.
4.
5.
6.
Nomination of persons for election to Board positions
Voting to elect directors
Removal of directors, where required
Moving and voting on resolutions such as constitutional changes
Considering the annual reports and audited financial accounts (not approval)
Providing input to the Company’s capitation fees, budgets and strategies (not
approval).
Basketball Review Steering Committee Report – November 2007 Page 7 3.5
Management:
It is recommended that the integrated structure would have the following management
characteristics:
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A revised management structure, including an additional position placing
responsibility for running all major national leagues under the one General
Manager within the High Performance and Competitions division, under the
‘National Performance Director’ (see Appendix A for a diagrammatic
representation of the proposed high level management structure).
Consistent branding throughout the sport.
Strong promotion of the NBL and WNBL as the ‘shopfronts’ for men’s and
women’s basketball in Australia.
Clearer pathways for players, coaches and officials by including the NBL as an
integrated part of the elite men’s pathway.
Strengthening ties between NBL clubs and community development programs.
Increased focus on growth of the professional / semi-professional competitions
within Australia and the Asia-Pacific Region.
Opportunity to improve commercial returns for the sport and private investors.
A key management issue raised during the review was the financial risk associated with
having the NBL fully integrated under one national body. According to information
provided in the Ernst & Young report, protections are afforded from losses of NBL Clubs
by virtue of them being separate legal entities with their own incorporation status and
responsibility for their own costs. The cost of running the NBL would be contributed
largely by the NBL clubs themselves. This is fundamentally the same as the current
arrangement between BA and the WNBL clubs.
As it presently does in relation to the WNBL and ABA, The Company would have a moral
obligation as a result of its responsibility for delivering the elite national basketball
competitions, including the NBL, to strive to sustain and grow the success of these
national competitions. Development of a strong franchise structure and enforceable
agreements will support this aim.
3.6
Other Features of the Integrated Structure
Some of the features associated with the recommended changes to governance and
management, much of which will be included in the constitution of The Company, are:
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Directors to be elected to four year terms, with ‘half board’ elections every two
(odd) years at an AGM.
Elected Directors serve a maximum of two consecutive terms (i.e. total of 8 years).
The two appointed Directors should be appointed to fill identified skills gaps
amongst the directors.
The Chairperson to be elected by the Directors from amongst their number.
The Chair can serve up to three terms as long as they are in the position of Chair
at the end of their second term, but would need to be appointed by the Board as
Chair for the third term (i.e. any Director can only be elected for two consecutive
terms).
Basketball Review Steering Committee Report – November 2007 Page 8 •
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Establish a Nominations Committee to consider and identify skills gaps amongst
the Directors and to identify appropriate people to approach to join the Board to
fill those skills gaps.
Retention of the existing advisory committees and commissions, supporting
management and reporting to the CEO.
Formation of an NBL Commission.
Examination and possible formation of a Players’ Commission.
Protocols be established for the Board reporting to Members.
The management structure of the Company to include the CEO overseeing four
divisions: high performance & competitions; development and community;
commercial operations; and finance and administration
4. Transition and Timeline.
In order to optimise the change over to the new structure, a transition process needs to
be planned and implemented. Based upon the Ernst & Young recommendations the
Steering Committee recommends the following transitional arrangement and timeline for
the change process.
4.1.
Transitional Board
The Steering Committee, along with a further representative from each of BA and the NBL
will form a selection panel of five members. This panel will seek and directly appoint, five
appropriately skilled individuals, including a Chairperson, to form the transitional Board.
The transitional Board will consist of the five independent directors appointed by the
selection panel as well as:
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One director elected by the current BA Board
One director elected by the current NBL Board
These two elected directors are quarantined from the ‘independence’ requirement – i.e.
they can be ‘representative’. There are also no limitations on members of the selection
panel in terms of their availability to be one of the two elected Board or five appointed
members. The full Board will be written into the new Constitution for approval by the
members of both BA and the NBL.
The role of the transitional Board will be crucial to manage the change process and:
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Imbed the new structure and constitutional changes;
Undertake the reform recommended by the Steering Committee;
Obtain the trust of internal and external stakeholders of the sport;
Set the overall strategic direction for the future;
Create policy to align the management of the sport;
Finalise the parameters of franchise agreements with the NBL Clubs;
Create a stable platform for strong governance of the sport and the first
independent board elected after the transition.
The full transitional Board will have a term of three years. The first election by the
members will take place in 2011, with both the BA and NBL elected directors ‘retiring’.
Basketball Review Steering Committee Report – November 2007 Page 9 Either or both of these individuals may be re-elected, or different individuals may be
elected, but they must meet the ‘independence’ requirements. A third member of the
original transitional board would also retire, but the position would be that of a skillsbased director ‘appointed’ by the Board (again this director could be re-appointed or a
new director appointed).
In 2013, the remaining four directors (including the Chair) from the transitional Board will
retire, with three of the positions being up for (re-)election and one for appointment by
the Board. The Chair will then be elected by the Board from amongst their numbers.
4.2
Implementation timeline
Mid-November ‘07
Mid-December ‘07
By 31 January ’08
Feb-March ’08
End March ’08
Mid-April ’08
May-August ’08
September ’08
2011
2013
Steering Committee Report released to BA and NBL members.
In principle support for the report recommendations to be sought
from BA and NBL members. (Also FIBA and the AOC).
Seek input from members re name of the new organisation.
Draft Constitution of the new Company distributed to BA and NBL
members for comment.
Seek legal advice in preparation for winding up of BA and NBL
entities.
Selection panel finalise transitional Board and Chairperson in
preparation for new company.
BA and NBL finalise their nominations to the transitional Board.
Finalise Constitution (and name) for the new company.
Special General meetings of both BA Council and the NBL to wind
up their entities and vote to accept the new constitution and
transitional Board.
Re-affiliation of the new body with FIBA, ASC and AOC.
Transitional Board leads the change process for embedding the new
organisation, including driving of branding and marketing in the lead
up to the Olympic Games.
Beijing Olympics and lead in to WNBL and NBL Seasons.
First rotation of directors and election at AGM by the members.
Rotation of remaining directors, including transitional Chairperson.
Transition process complete.
Basketball Review Steering Committee Report – November 2007 Page 10 Appendix A – Management Structure
Chief
Executive
National
Performance
Director
High Performance
and Competition
General Manager –
High Performance
General Manager Competitions
Development
& Community
Commercial
Operations
Finance &
Administration
General Manager –
Development &
Community
General Manager –
Commercial
Operations
General Manager –
Finance &
Administration
National Teams – Men,
Women, Junior,
Disabled Athletes
NBL
Participation & Player
Development Manager
Broadcasting
Finance
Coach Development
WNBL
Community Programs
Manager
Sponsorship
Human Resources
Officials
Development
ABA and other
competitions
Coaches and Officials
Education Manager
Marketing
Legal
Communications / PR
Information Systems
Administration