Governance and Competition – The Case of Sports

Senior Consultant Damien Neven co-authored an article alongside Petros C. Mavroidis (Professor at Columbia University) as part of Concurrences’ 20th Anniversary book: ‘Why Competition?' on the topic of governance and competition in sports. In the article, Damien explores whether competition enforcement could improve governance in SGBs, emphasizing that while competition can discipline organizations, the unique structure of SGBs often limits competitive pressures, which may justify some regulation.

The views expressed in this paper are the sole responsibility of the authors and cannot be attributed to Compass Lexecon or any other parties.

Introduction

The objective of this short chapter is to discuss the extent to which the enforcement of competition rules can affect the internal governance of Sports Governing Bodies.

Some Sport Governing Bodies (SGBs), and in particular FIFA and UEFA, have well-documented governance issues.1 To illustrate, FIFA experienced rampant governance issues that have culminated in the period 2010–2015. In the context of the choices for the attribution of hosting the 2018 and 2022 World Cups (that eventually went to Russia and Quatar), two FIFA officials were banned from participating in the vote because of misconduct. Jack Warner (the then chairman of the Confederation of North, Central American and Caribbean Association Football (CONCACAF) and member of FIFA executive committee was found to have channeled payments to some of the CONCACAF members from Mohamed bin Hammam of Qatar (another member of the executive committee) shortly before the latter ran for president against Sepp Blatter. In May2 and December 2025, the US Department of Justice indicted 29 erstwhile and former FIFA officials for corruption (including racketeering, wire fraud and money laundering). The indictment found “rampant, systemic, and deep-rooted corruption” that spanned “at least two generations of soccer officials who, as alleged, have abused their positions of trust to acquire millions of dollars in bribes and kickbacks.” Almost all of those indicted either pleaded guilty of were convicted. Sepp Blatter himself was banned from football for six years in relation to a payment to Michel Platini, the then president of the Union of European Football Associations (UEFA).

Following the events, FIFA embarked in a process of reform of its internal procedures that was meant to establish greater transparency, avoid conflicts of interests and establish independent oversight. The process however turned out to be short lived. One of the key elements of the reform was to remove the responsibility for appointing (and firing) members of the newly established Governance Audit and Compliance Committee,3 as well as the existing Ethics Committee from the Executive Committee, and assign it to the wider membership. This power was however soon returned, without explanation, to the FIFA Council, the successor of the FIFA Executive Committee, which is subject to much greater control by the president.4

In response, the chair of the Audit and Compliance Committee resigned, FIFA ousted the chairman of the Governance Committee and the chairmen of the investigatory and adjudicatory chambers of the Ethics Committee, which prompted several other Governance Committee members to resign as well. Maduro and Weiler5 who were chair and member of the Governance Committee respectively, provide a vivid first-hand account of this episode and the overarching governance problems in FIFA. In their account, governance issues in FIFA appear to run deep – with a culture which does not sufficiently recognize the need to avoid conflicts of interest, the need for an independent oversight (isolated from pressure from the executive), and the need to ensure a commitment to the implementation of rules. They describe FIFA as “political cartel with a high concentration of power at the top” which is no longer subject to checks and balances.

This and similar incidents6 raise the question of whether competition (and competition enforcement in particular) can affect the governance of SGBs or at least alleviate its negative consequences. Our analysis starts from the twin observations that competition can be a substitute for effective governance mechanisms, and that SGBs are subject to limited competitive constraints.

Economic analysis has indeed long emphasized the role of competition in disciplining the behavior of decision-makers within organizations.7 Competition across firms will lead managers to take efficient decisions (rather than for instance decisions that suit their personal interest) because failing to do so would lead to a loss of profit, poor returns for stakeholders, job losses, and possibly their dismissal. There is also a large empirical literature which tends to validate the role of competition as substitute for effective governance mechanisms.8 One of the findings is that institutions that are faced with competition may have poor governance structures but those no longer matter for performance as competition provides the necessary discipline.

However, the activities of SGBs like UEFA and FIFA are often not subject to competitive constraints. They are (self-appointed) monopolists. Even though both FIFA and UEFA operate in the football market, they do not feel the competitive constraints of each other because of the geographic market division that they have agreed to.9 It is undeniable that some of their activities are best performed by a single entity in a monopoly position.10 Think for instance of the enactment of sporting rules (such as the size of the pitch or the length of a game). However, some of the main activities of SGBs which relate to the organization of tournaments, and their main source of income, could potentially be subjected to competition.

Nevertheless, the matter is delicate as competition needs to be introduced without jeopardizing the activities of the SGBs that are best left to a monopoly/regulator. More generally, because of the idiosyncratic features of sport as an economic activity, and in particular the need to maintain competitive balance, some restriction of competition may be warranted. Even in those areas in which competition is introduced, it may be appropriate to maintain some form of coordination among competitors. For instance, when clubs simultaneously participate in an open or a closed league (as in the case of basketball in Europe with FIBA and EuroLeague), competitive balance within each of the tournaments will be affected by the design of both competitions; the transfers that a club obtains to maintain competitive balance in one tournament will also affect its position in another. Some coordination may also be required with respect to the calendar of events. Hence, the way in which competition is introduced and its precise scope, might matter. There is clearly some potential for competition enforcement to deteriorate rather than to improve the outcome.

Overall, competition, and competition enforcement in particular, potentially have a role to play in providing a discipline on SGBs. Short of prompting changes in their governance structure, competition might at least alleviate the consequences of poor governance. Still, much will depend on how competitive constraints are introduced and whether the existing enforcement framework is up to the task. If this policy proves difficult, the only alternative will be a direct regulation (presumably at the EU level).

A comprehensive discussion of this issue is much beyond the scope for this chapter. Our ambition is simply to consider recent developments, in particular recent court judgments and highlight some features that may be relevant to this discussion. We will consider in particular the discipline that is developing on SGBs and their ability to justify restrictions of competition. We will tentatively observe that the current framework might need further refinement in order to allow for an effective development of competitive constraints on SGBs.

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