2018 Asialink Chairman’s Welcome dinner
Read the 2018 Asialink Chairman’s Welcome dinner keynote address by John Wylie AM. Chair, Australian Sports Commission.
Thank you to Asialink for the opportunity to speak with you tonight.
As someone in the business world who believes passionately that the future prosperity of Australian business, and with it in turn the Australian economy, lies in Asia, I believe Asia Link does a wonderful job encouraging Australian businesses to invest and engage in the region. Many of our bigger businesses and our institutional investment community desperately need that encouragement, so all power to you.
Tonight, I will argue that of all the opportunities staring Australia in the face from the economic, social and political rise of Asia over the coming decades, sport and the business of sport offer some of the most compelling. We’re a proud sporting country, with a fabulous heritage in sport, passion for it and talents in it, meaning our lucky country has an outstanding opportunity for success.
It’s often said that luck is where preparedness meets opportunity.
There is no doubting the opportunity for Australia.
What we need is preparedness not platitudes, which invocations of our traditional love of sport can be.
Society is changing, Australia as a country is changing, and sport needs to change too to avoid the classic traps of complacency, stasis, indifference and overconfidence that can all too easily be the product of decades of success and a failure to confront change.
It’s probably worthwhile first explaining briefly what the ASC does, as some of you may not be familiar with the organisation, and why I’m in the role of Chair.
The Commission is the organisation owned by the Commonwealth Government through which the Commonwealth makes essentially all of its investment in sport, around $220m pa. We and own and run the world famous Australian Institute of Sport, the AIS; we provide the majority of funding for around 40 Australian sports’ national high-performance programs, particularly Olympic and Paralympic sports; and we support their athletes financially to enable them to train and prepare over the four years leading up to an Olympic and Paralympic Games.
We also fund approximately 65 sports’ community participation programs.
Our aspiration is for Australia to be the most active sporting nation, a healthy and successful sporting nation, known for our integrity, vibrant participation base, thriving sports organisations and world-leading sports industry, as well as our elite competitive results.
I’m a sports nut who’s been actively involved all my life in grassroots sport - playing, coaching and barracking. I’m a proud Australian who loves this country. And I’ve learnt a thing or two about business over the course of a 30-year business career.
The three of these things come together beautifully in the role of Chair of the ASC, one that I regard as a privilege to serve in every day.
It’s a privilege because I and everyone at the ASC believe that sport matters.
It matters that Australia continues its proud standing and tradition in world sport, that future generations of Australian kids are inspired and motivated to get up and be active, to participate in sport and enjoy all the benefits sport brings. To have that inner confidence that they can do it, that they have the skills and ability to belong in sport and to enjoy it, that will stand them in good stead to be active and healthy throughout life.
Sport matters because there’s nothing like it to help shape the kind of Australia in which we want our kids to grow up. The evidence backs up what common sense tells us instinctively – that fit and active kids overall have stronger mental health and do better at school. That sports - team sports in particular - promote social inclusion and cohesion, and teach vital lifelong personal qualities such as resilience, courage, teamwork, winning with humility, and losing graciously. I commend to you an article in last week’s NYT on the reasons for the sustained success of the Norwegian ski team at Winter Olympic Games, which the article attributes to incredible personal humility and teamwork irrespective of ability, akin to the fabled ethos of the All Blacks rugby team sweeping the dressing rooms after matches.
Sport matters because there’s nothing like it as a force for social change and good.
Look at the rise of Paralympic sports, one of the greatest forces for good in the world over the past 30 years. The message it sends to all of us - usually dealing with vastly smaller challenges - about overcoming adversity, about you getting on top of life not life getting on top of you, are immensely powerful and inspiring. Athletes like Kurt Fearnley, Louise Sauvage and Dylan Alcott have rightly become some of our country’s most recognised and celebrated in any field.
Look at the rise of women’s sport in Australia and its role in promoting female empowerment. Who would have thought only five years ago that women’s sport would finally be enjoying the place in the sun that it is today, with strong public interest, media coverage, improving corporate backing and financial rewards for players, and that AFLW in its inaugural season would be named the second most powerful cultural force in Australia? The ASC has been proud to have been ahead of the curve for many years now in women’s sport, leading the advocacy for a better deal for our female athletes. We see it as a virtuous circle, contributing to the message of female empowerment, and a beneficiary of it in turn.
Sport also matters economically to our country and will increasingly do so in the future if we play our cards right.
The epic rise of a middle-class numbering billions now unfolding to our north in Asia is creating vast new markets interested in participating in sport and enjoying elite sports events.
Ever-alert and forward-looking Asian Govts well understand the significance of this and the opportunities it creates for the global projection of soft political and cultural power through sporting success. Look at the location of current and forthcoming Olympic Games – the current PyeongChang Winter Olympics in South Korea, the 2020 Summer Games in Japan, the 2022 Winter Games in China. Look at the stated intention of President Xi Jinping to build China into a global football powerhouse, capable of winning the World Cup. The Chinese Olympic Committee is right now trying to recruit some of the best young research talent in sport from Australia.
The pivot to Asia in world sport is well and truly underway.
Smart and forward-looking sports and sports businesses understand this too and are pivoting their businesses in this direction. Australian sports research firm Gemba reports that over the next decade the global sports world will shift its axis to Asia, led by the world’s 2nd biggest sport economy, China. The industry there alone could be worth US$700bn by 2025. Competition will be intense for this global opportunity. Gemba argues, and I concur, that “Western sports organisations will need to move from having an Asian strategy to building their global strategy with Asia at its core. To do otherwise will put them at risk of missing massive growth opportunities.”
What an opportunity this presents Australia with our fabulous sporting heritage. Sport’s our authentic national brand. Ask any non-Australian what we’re famous for, the answer almost certainly will be – apologies to the techies and the hipsters – our beautiful environment and beaches, our commodities that are the engine of the world, and our sport that’s the envy of it.
Authentic national brands can’t be manufactured overnight, they’re a long time in the making, laid down by generations before us.
On top of our fabulous reputation in sport, we’re pretty good in business and have a competitive advantage in Asia not having the political baggage as a country that many of our competitors face.
Many of our sports and businesses are ahead of the game.
Tennis Australia is leading the way, with a very strong Asia focus. Some 59 million people in China watched last year’s AO, Japanese attendance figures doubled, and broadcast rights values are growing sharply on the back of match scheduling and media product tailored in a very intelligent way for individual Asian markets.
The AFL is trying to get in on the game through the new format AFLX, and good luck to them.
Many small Australian services firms and individual entrepreneurs are selling their globally competitive professional skills in and around sport, using skills they’ve learnt here or relationships they’ve built up through sport. The fingerprints of many Australian architects can be found on some of the newest and best sports stadia around the world including Asia.
A number of growing Australian companies are well down the path of building global sports businesses, with Asia as a prime target. Melbourne-based Catapult is feeding the rapidly growing thirst for data and analysis in sport through cutting-edge wearable sports tech, sold around the world. The opportunities in this field will only get bigger - traditional sports coaching will improve substantially in the years ahead through artificial intelligence programs that provide best-of-the-best coaching techniques rather than just the IP of one individual – and Australia has some of the best sports coaching IP in the world. Non-traditional players in sport will drive a lot of this value creation – it’s already happening in and around Silicon Valley, and even consumer products companies like Red Bull are in the game. A strong local tech sector in Australia will really help our sports sector capture this opportunity and keep our edge in global sport, as will research partnerships with our fabulous AIS and sports institute network.
Another local company, 2XU, in which my private equity fund has a shareholding, is leading the way with another Australian company Skins in developing the world’s-best sports compression apparel to improve athletic performance and recovery. 2XU has now become I believe Australia’s largest international sports brand. This little company, founded in Melbourne in 2004, today has revenues of $100 million, sales in 65 countries, and the endorsement of many of the world’s elite sports agencies and national sporting organisations for its technical excellence. Its fastest growing markets are in Asia, with sales there on track to quintuple to $50 million in the next three years.
Other sectors have latent opportunity in sport, notably education. International education has become one of our largest and fastest growing export industries, especially to Asia. Most of it today is in business, commerce and finance. But global competition in business education is increasing, and the day is probably not too far off where Asian countries and universities will think they should be teaching us about it, so we need to diversify our product range. Our reputation and know-how in sport and all the factors that enable elite sporting success – SSSM, physio, biomechanics, sports nutrition, etc – provide an ideal opportunity to meet the demand that is starting to grow from Asian countries seeking to put in place strong professional foundations for international sporting success. Sport-related study today represent only a fraction of international student enrolments in Australia, but it’s grown 34% in the past 3 years and demand from Asia has grown 55%.
For Australia, there is also a large indirect economic benefit from continued excellence in sport. A central goal for the Australian economy over the coming decades is to sell brand Australia into Asian markets, leveraging off our clean, green, healthy image, in particular through food exports and tourism. Having an image as a healthy, active and successful sporting country reinforces the national brand positioning of our food exporters beautifully.
Finally, having a point of excellence as a nation in a field of universal appeal and interest to people around the world, that brings people together through common interest and passion irrespective of nationality, race, religion or the sundry other things that divide people, makes us a natural friend and partner to the world. It’s soft power for Australia, the vehicle for sports-based diplomacy, as in the title of tonight’s conversation. Hard to quantify, but real and important nonetheless.
So it’s a very positive picture, one with a theme of opportunity and entrepreneurship running through it.
But as I said in my introduction, luck needs not only opportunity but preparedness, and a big part of preparedness is vigilance, a mindset that is alert to not just the opportunities but also the risks that come with change and is proactive in dealing with them. Otherwise you slide into the four horsemen of complacency, stasis, indifference and overconfidence, things which eventually kill any business or industry, which are real risks for Australian sport today.
It’s preparedness not platitudes that count. We need to remember the sage words of Intel founder Andy Grove – “Success breeds complacency. Complacency breeds failure. Only the paranoid survive”.
One pressing issue we need to confront in a hurry about how unfit and obese we’re becoming, especially our kids. Anyone with children knows the challenges that technology and iPhones present to getting them off their backsides. This is a global challenge for parents today. What’s unique and surprising for Australia is the way the traditional bedrock of lifelong physical activity in our country, PE in schools, is being marginalised in the Govt school curricula. It’s more and more an optional or low priority item competing with numerous other claims on the school day, with fewer teachers interested themselves in getting sweaty taking PE classes. A recent report into PE in Victorian state schools concluded that only 9% met the state guidelines for PE programs. The data at all levels, young and old, is disturbing. We have one of the highest obesity rates in the world. 1 in 4 children are overweight or obese. The Productivity Commission recently reported that 11.7 million people - 66% of Australians over 18 - exercise little or not at all. Type 2 diabetes now affects 5% of the population – but 12.8% of people above the recommended weight spectrum and only 2.5% below.
This is not a good omen for the country economically – it’s guaranteed to drive up long term health care costs. A recent BCG report concluded that every dollar invested in sport and physical activity drives a $7 return to the country, largely driven by avoided future health costs.
It’s not a good omen for our future sporting success. It’s self-evident that a country with a smaller base of physically active and capable young people will have a diminished long-term capability for success at the highest levels.
And it’s not a good long-term omen for a country that wants to sell itself internationally in business as a healthy and sporting country. The converse of what I said earlier also holds true – a country that is seen as out of shape, unhealthy and not very successful at sport is going to have a hard time selling its super-foods to the world.
The ASC is doing its bit by funding supplementary PE programs in schools and developing a new national reporting standard for parents about the physical fitness and motor skills of their children, graded according to age. We call this “physical literacy”. We believe parents have a right to know how their children are progressing in these life skills just as much as their academic achievement. But as a Govt organisation, we can only do so much. State Govts will only commit to reversing the decline of sport in schools when the people to whom they report, the voters, tell them en-masse that it matters to them.
A second issue is that the commercial structure of sport is changing, rewarding the big professional sports through ever-rising media and broadcast rights and the commercial sponsorships that flow from that exposure. That’s the benefit of their efforts and success, so again good luck to them. But that’s also winnowing out the economic base of the smaller sports that don’t enjoy such mass appeal. That on the surface is just the market economy in operation, and I’m generally the first one to believe in the market economy.
But is it really a pure market economy? The growing political power of large commercial sports means that State Govts are increasingly competing to invest in the best new sports stadia, often with doubtful public CBRs, of which sports with the greatest financial resources are the prime beneficiaries. Without doubt there are two sides to this argument - big sporting events do have significant economic benefits, but a subsidy is a subsidy even if it’s indirect and it’s called another name. Those indirect subsidies:
- further tilt the playing field to the financially strongest sports
- they encourage Australians to be passive consumers of sport rather than active participants while large numbers of community sports facilities around the country are in decrepit condition for lack of investment and girls wanting to play sport have nowhere to change; and
- they contribute in a subtle way to long term reduction in diversity in our sports landscape, and as we’re all recognising these days, diversity in any eco-system matters. In a world where 800 or so contracted AFL players earn an average of $300k each year and an Olympic athlete gets a shot at glory every four years, earns little money and is liable to be criticised if they don’t win, what’s a rational economic actor to do? Athletes generally don’t choose sporting careers based on how they can earn a million dollars, but as Marilyn Monroe once famously said, “the thought of it doesn’t automatically depress me either”.
Finally, a vital and growing challenge is that sport needs to maintain its core of strong ethics and values. We’re lucky in this country, we have a natural commitment to fair play and good values in sport, overwhelmingly demonstrated in action by our leading sports stars and sporting organisations. But integrity is a rising challenge everywhere in the modern world. Sport will only retain its connection with, and the respect of, the community, and its right to seek public funding, if it retains what in the business world is today called a social licence to operate (SLO).
A SLO in sport means a multitude of things, the most important of which I believe are:
- 1, a relentless commitment to combating doping. In an increasingly winner-takes-all world, the incentives to get to the top of the pile and win at all costs keep getting bigger. The know-how to do that illicitly, including new frontiers like gene doping, keep expanding. While we as a country cannot vouch that all our athletes are clean, I believe our system is fundamentally clean. Australia’s visceral reaction to WADA’s report of systematic state-sponsored cheating by Russia at the Sochi Olympic Games showed our intense dislike of cheating in sport. But we can’t be complacent - while the blackest day in sport may have been hyperbole, no-one saw Essendon or Cronulla coming and we don’t want those situations repeated. Better transparency will help; if athletes use TUEs to take otherwise-prohibited medications and that’s legitimate, they should have no issue in that being disclosed. The public interest in integrity in sport outweighs individual interest in privacy, especially if athletes are benefiting from public funding
- 2, a SLO means ensuring competition integrity and avoiding match fixing. All of us who watch sport on television know only too well the feeling of being bombarded by ads for sports betting. Even some wagering service providers have conceded that TV advertising has been overdone. Sports betting in Australia is growing rapidly. According to the QLD treasury department, which has been collecting Australian gambling statistics for more than 20 years, sports betting turnover and customer losses have grown cumulatively at 20-25% p.a. over the past five years. For those of us tasked the with administration of elite sport in Australia, such sustained and rapid growth in sports betting has been met with caution. While we have no reason to believe today that there is a systematic risk to competitive integrity in Australia, we must be vigilant as the dollars keep growing. Sporting bodies should disclose transparently the income they receive from sports betting product placement and sponsorship. Most don’t today. The public must be confident that they’re watching a legitimate contest, otherwise they’ll tune out
- 3, a SLO means ensuring child safety. The appalling events in the US gymnastics program has brought home to all of us that all sports working with children especially young girls need to be ever vigilant. Parents won’t entrust their kids to any sport where there are any question marks about safety on this front. These were questions parents didn’t think to ask decades ago, no-one thought it necessary, they probably should have, but everyone does now, and rightly so. The ASC has a policy of zero tolerance for behaviour that risks the well-being of children and young people. Child safety measures must be prioritised and embedded in every Australian sporting organisation at every level
- 4, a SLO means a commitment by sports to supporting their athletes with their all-round well-being including helping them prepare for life after sport. In this hyper-competitive era, the sacrifices and opportunity cost required for young athletes to make it to the top keeps increasing. It’s all-consuming. Outside the professional sports, most don’t make much money even if they do make it to the top. Most Australians don’t think about the costs this maniacal dedication imposes until there is a train wreck with an athlete’s life, which seems to be happening all too often. No gold medal is ever worth that. We at the ASC have just launched a new division specifically devoted to helping athletes with their mental health and preparing themselves for the future - we believe it’s our moral responsibility and social contract with great young people in whose success we all like to share
- 5, a SLO means having best practice in administration and governance, especially in sporting bodies dependent directly or indirectly on Government funding. The ASC has unashamedly led a campaign for better governance in sport in the past 6 years under my chairmanship. We do so because it’s fundamental to long term success, and it’s appropriate given we’re investing taxpayer money. Big progress has been made, but there’s still a long way to go. We need to move beyond outmoded federated governance structures that breed political in-fighting, duplicate costs and don’t maximise revenues. We need organisational cultures that are positive and inclusive and are transparent, with a cost-conscious mindset that allows reasonable administration and overhead costs but no more. The public expect nothing less and let there be no doubt – their support is critical to the social licence of sports to continue to benefit from public funding. If the public loses faith, we ultimately let down the athletes that sports governance bodies exist to serve.
Governments lead but they also tend to respond to signals from the community about what the community considers important. This is where the dangers of indifference, complacency and overconfidence really impact. The ASC, Australia’s peak body for sport, has now had funding cuts in each of the last 7 years, in total amounting to 26% in real terms, while our competitor countries have increased their funding. Unsurprisingly, this has harmed the competitiveness of our sports that depend on ASC funding, and it shows in results in recent Olympic Games. There has been a notable lack of public concern and debate about this. If that reflects the public’s interests and priorities, then so be it, but I don’t think that’s what our country wants, nor is it in the long term national interest for the reasons I’ve argued tonight.
Fortunately, the Government is stepping up to the plate to answer the call through a forthcoming first-ever National Sports Plan, which will inject more funding into sport. We’re looking at new non-Govt sources of revenue such as a lottery.
So there’s a lot of reasons to be optimistic. The revolution in women’s sport shows that the media and our companies remain hungry as ever for new ways to connect with their markets through the most unifying vehicle of all, sport.
We are lucky indeed to have in this country the fabulous sporting heritage that we do. Anyone who’s ever been to a Sport Australia Hall of Fame dinner and seen the cavalcade of famous names on stage will understand that. We owe it to future generations to ensure that the legacy of endeavour and achievement which has been passed on to us is passed on by us to them. Now, that matters more than ever before, for much more than the feel-good factor sport brings, but also for the health and economic self-interest of our country as the Asian century gets in full swing.
This was is the original speech as prepared for the 2018 Asialink Chairman; Welcome Dinner. An edited version was published in The Australia, view the article here.
Read more about the event here.