IAAF face bankruptcy

EXCLUSIVE: ‘Shock and horror’ as IAAF heads for financial apocalypse

By Neil Wilson

Last updated at 12:01 AM on 26th March 2010

Athletics has been warned that its world ruling body faces bankruptcy unless it cuts costs.

The startling scenario was set before the executive council of the International
Association of Athletics Federations, which runs the premier Olympic sport, by its treasurer, Frenchman Jean Poczobut, at a meeting in Doha this month.

The crisis could even bubble over before the 2012 London Games and the IAAF’s centenary in the same year.

There was ‘shock and horror’ among council members, including Sebastian Coe, a vice-president and chairman of the 2012 organising committee.

Poczobut presented a financial projection that showed spending is far above its £30million income, and reserves, £50m 10 years ago, will soon be exhausted.

His deliberate intention was to alert the IAAF to the potential for a financial apocalypse.

An extraordinary meeting of the IAAF’s small, all-powerful executive board, chaired by president Lamine Diack, and on which Coe and senior vice-president and pole vailut legend Sergey Bubka sit, has been called to discuss an ‘austerity budget’ for the next four years.

One threat is a cut in prize money and record bonuses for athletes at IAAF events.

Prize money peaks at about £5m for each of its biennial world championships.

Declining television and marketing revenue, which make up almost 90 per cent of its income, have hit it hard.

Major networks such as BBC and ZDF in Germany did not screen the world indoor championships this month, saying that the IAAF was asking too much.

The BBC will also not screen Sunday’s world cross country championships from Poland.

But, while income has declined during Diack’s 11-year presidency, spending has increased with his determination to spread the sport’s popularity through less developed continents. The IAAF now has 220 member nations, more than the number of countries in the United Nations.

The irony is that athletics is struggling to market itself despite the emergence of record-breaking Olympic sprint champion Usain Bolt, who seems the ideal man to sell the sport.

The IAAF, which has headquarters in luxurious offices in Monte Carlo, will find it difficult to slim its vast staff. So cuts are most likely in its costly development programmes for Africa and Asia.

Diack has announced that he will not stand again in 2011. Bubka, Coe and Nawal el Moutawakel are seen as the most likely successors. Whoever takes on the job faces having to pick up the pieces.

Read more: http://www.dailymail.co.uk/sport/othersports/article-1260693/EXCLUSIVE-IAAF-heads-financial-apocalypse.html?ITO=1490#ixzz0jGVeyoI7

It is about 11 years too late for Diack to leave.

no kidding- and no one knows how much has left with him!

Apparently his expenses are over 1 million a year… mainly to fly his extended family in and out. Some more info over on track and field news.

Would be nice to see an audit after he goes. God only knows what he’ll get for a pension.

Now let’s move on to the next case- the Cubic Zirconium League. (They call it the Diamond league but since it pays far less and to less people than the Golden League did, it really needs a new name)

Its a good opportunity for track.Hope the new president ( Bubka??) will capitalize on the gifts( Bolt, Powell, Gay, Isinbayeva…and others), and cut expenses.Diack always seemed to me like a godfather…

New IAAF Deputy Secretary-General Nick Davies, speaking in Sport Intern, refuted the “IAAF bankruptcy” notion which was floated in Britain’s Daily Mail:

“Neil Wilson writes that IAAF reserves were “74 million US$ 10 years ago and will soon be
exhausted”. In fact, the IAAF reserves in 1999 were $23 million and at the end of 2008 they were
$81.5 million, which is an increase of $60 million in the decade that Diack has been in office. If it is
considered sensible to maintain capital of 1 year’s operating budget in reserve, then the IAAF has
more than that at present.

“It is also misleading to claim that “income has declined during Diack’s 11 year presidency”.
In fact, one of the first things Diack did when taking over in 1999 was to negotiate directly with the
EBU for television rights up until 2009, which more than DOUBLED the revenue stream to the
IAAF. The amount of revenue raised from TV since then has been close to $US 400 million. The
IAAF also has a long term deal with Dentsu for marketing which guarantees an annual income
and a profit share, and remains the only sport in the “A” category of summer Olympic sports when
it comes to the distribution of Olympic revenues. It is worth underlining that the IAAF share from
the 1996 Atlanta Olympics amounted to $8,671,000 while the share from the 2008 Beijing Games
had risen to $29,009,000 – so three times as much.

“In recent years more than 20 percent of the IAAF’s overall budget has been spent on
developing the sport and 44% of the IAAF’s budget for Event and Competition management has
been spent directly on Athlete prize money. We should also remember that a large proportion of
IAAF administration costs are in Euros, our income is in US dollars so exchange rate fluctuations
are important. The dollar/euro rate over the past decade has fluctuated dramatically from 0.9
dollar-euro to 1.5 dollar-euro which has had a big impact of IAAF operational costs such as
salaries, office rent etc.

"The IAAF is also not immune either from the harsh reality of today’s
financial markets, which certainly impacted on negotiations for new TV contracts in 2008 and
2009, even if the IAAF is very satisfied with the guarantees from our new TV partner IEC in Sport
(since October 2009).

“Looking forward, the IAAF Council has wasted no time to ensure that prudent budgets,
with reasonable reductions in spending and increased efficiency, will soon be agreed for 2011 and
beyond. But while costs will be pruned, there is also confidence that new revenue streams from, for
example, a title sponsorship of the new Diamond League, will allow us to increase our annual
income to around $47 million, reduce spending to a similar amount, and maintain a very healthy
capital reserve. In short, it is very far from the “financial apocalypse” predicted for the IAAF in the
headline of today’s Daily Mail article.”