Integrity can be a selling point for sports companies

Chiel Warners is an advisor at Dutch Sport Tech Fund and a former top athlete. He represented the Netherlands at the 2004 Olympic Games in the decathlon. As the Dutch information coordinator for match-fixing, he remains involved in elite sports. He uses his experience in the financial sector, elite sports, and integrity to assess how ethically participations operate for Dutch Sport Tech Fund.

“Society is changing, and these changes affect the world of sports. Think of the Black Lives Matter movement, the changing role of citizens, institutions under pressure, and increased attention to sustainability and integrity. Sport can only be sustainable if it is conducted with integrity; viewers will tune out if they do not believe that competitions are fair. I believe the sports sector is still credible. For example, cycling faced major doping scandals a few years ago, but it is now more popular than ever.”

“Not every sports market is equipped to address all integrity issues. You can see this, for example, in the betting market: there are all kinds of new providers, but the question is whether business is always conducted with integrity in this market. I don’t think commerce and compliance have to be at odds: integrity ensures that you can offer a proposition sustainably. Good Governance is already common practice in other industries and sectors, so why not yet in sports?”

“The way sport is organized creates a number of vulnerabilities. Think of the lack of oversight and the large role played by volunteer organizations. Often, millions, sometimes billions, are involved in a sport, but volunteers are responsible. This brings a certain mentality, a degree of non-commitment when it comes to integrity. It is necessary to professionalize, so that the risk of abuses decreases. If we don’t, we as a sector will lose our grip on change and society will intervene, as happened previously in the financial sector.”

“In the financial sector, I was also involved with integrity. In that sector, it is normal to know what a client does and how they earn their money. The sports sector could learn from that. I am therefore happy to bring the best practices from the financial sector and use my knowledge of sports and integrity.”

“In my role, I focus on the following question: how can you ensure that integrity is safeguarded in the participations of Dutch Sport Tech Fund? I analyze how participations are organized and whether they contribute to an honest sports sector. This is also part of our due diligence (screening of new investments) and ensures that we only invest in companies with integrity. It’s about raising awareness and formulating research questions to prevent misconduct. That means not only focusing on numbers, but also asking: how does this participation deal with its clients? What about governance?”

“The fact that Dutch Sport Tech Fund pays attention to integrity is important for three reasons. Firstly, it ensures that investments are only made in companies that contribute to an honest and ethical sports sector. This makes the sector more sustainable, as it remains viable and profitable for a longer period.

Secondly, by focusing on integrity, the risk of reputational damage is reduced. For example, it is important that the data of tech companies is well protected. You don’t want to imagine a scenario where athletes’ medical data is leaked without them having any say in how their data is handled. Such a scandal would pose a significant reputational risk for a portfolio company or the fund itself. That is another important reason to pay attention to integrity.

Thirdly, integrity also offers commercial opportunities. There are many new players who present data and integrity as their USPs. The market for sports companies is moving towards integrity, and we want to be a frontrunner in this area. If a company lacks integrity, that is a risk. A company that focuses on integrity can present this as a selling point.”

“There is a difference between the traditional sports world and eSports. The latter sector has not yet crystallized, and that is both a curse and a blessing. People take advantage of the lack of oversight and the technological possibilities that exist to exploit the system. For example, there is currently no central governing body at the national or international level that organizes things. The initiative mainly lies with the game developers, who are often commercially driven and have little regard for integrity. Because the sector is so young, you can make integrity part of its DNA, whereas in traditional sports that ship has already sailed. This is the perfect moment for digital sports to approach things differently than non-online sports.”

“Online games also differ from offline games. They can be technically manipulated, through code. For example, there could be a delay between recording and broadcasting a match, which could give you an advantage if you are betting on that match. Nowadays, people can use smart algorithms to automatically place bets on such matches. This allows you to capitalize on something the rest of the audience does not yet know. The technology associated with these types of games offers opportunities, but also certain risks.”

“There is another difference between traditional and online sports. In a traditional sport, you are taught at the club that you have to treat each other fairly. Fair Play is instilled in you from a young age. I wonder if that is also the case with online games, eSports, and whether Fair Play plays such a big role there. I can imagine that you are more likely to cut corners in a digital competition than in a physical one.”