Insights Into The Governance Structure Of The Australian Football League (AFL)And The Selection Of Its CEO
Introduction
In April of 2022, Gillion McLachlan, the Chief Executive Officer (CEO) of the Australian Football League (AFL), tendered his resignation and announced his intent to step down from his position at the end of the AFL season. However, as the AFL has progressed into its sixth round of the 2023 season, McLachlan continues to hold his position as CEO, and the AFL has not yet provided a definitive timeline for his departure. There has been a mixed response and communication regarding the termination of his tenure and the announcement of his successor. The purpose of this MicroBlog is to provide insights into the current governance structure of the AFL, the regulations outlined in the AFL Constitution that govern the election process of its board, and the subsequent appointment of a new CEO for the AFL.
Brief Overview on the AFL's Ownership Structure
The AFL employs an independent commission model to govern its sport. This structure entails 18 clubs, of which 11 are owned by their members, five are owned by the AFL, and two are privately owned by the Western Australian Football Commission. Each of the 18 clubs elects a commission comprising up to nine independent individuals, who are constitutionally entrusted to shape the league through strategic and regulatory decisions.
AFL as a Company
The AFL is registered as a company limited by guarantee in accordance with the Corporations Act 2001 (Cth), and comprises 18 individual member positions, each designated for one of the 18 clubs. Clause 16 of the AFL Constitution allows each club to appoint one person to represent them as a member of the AFL, effectively granting ownership of the AFL to the clubs.
AFL Governing Body for Australian Football
In addition to its role as the administrator of the AFL, the organization also functions as the sport's governing body, with jurisdiction extending to the community level and the amateur facet of Australian Football.
AFL's Governance Structure
The governance structure of the AFL comprises three primary elements, namely the clubs (who are the owners of the AFL), the AFL Commission (which serves as the board), and the CEO. This structure is analogous to the traditional corporate model, wherein the shareholders elect their independent board. As in the corporate model, the Commission of the AFL has complete authority to govern the organization on behalf of the owners, and it delegates specific responsibilities to the CEO.
AFL Clubs and Limited Regulatory Powers
Although AFL clubs are members and owners of the organization, they possess limited strategic and regulatory authority over the AFL. However, they have the capacity to elect and hold the commission accountable. Clause 85 of the AFL Constitution affirms that:
'Save the powers required to be exercised by the AFL in general meeting, the Commission may exercise all of the powers of the AFL in respect of any matter whatsoever, including the power to make, regulations and by-laws.'
Clubs possess the power to remove any commissioner by ordinary resolution (Clause 77), although this has only occurred once in the history of the AFL. In 2000, the late Terry O'Connor was removed as Chairman from the Commission due to perceived bias towards non-Victorian clubs.
As a result, the clubs' only constitutional means of decision-making is to remove and elect commissioners at the AFL's annual general meeting. This leaves the direction, commercial operations, strategy, regulations, and rules of Australian Football in the hands of the AFL Commission and CEO.
AFL Commission and Composition
The AFL Commissioners are appointed independently and do not have any direct or indirect conflicts of interest with the clubs. Clause 60 of the AFL's Constitution specifies that the commission must consist of no fewer than six and no more than nine members, which includes the AFL's CEO. The board is elected through a nomination process via a secret ballot (Clause 67(c)), whereby an individual needs to be nominated by three relevant parties (clubs) to be considered eligible for election. According to Clause 67(h), once an individual is eligible for election, the candidate with the highest number of votes will be elected to the extent of the further vacancies.
Clause 61 of the AFL’s Constitution stipulates that two non-executive commissioners shall retire at each annual general meeting, while Clause 63 requires that these should be the longest-serving non-executive commissioners.
Please find the below hyperlink that directs to additional details on the present AFL Commission:
https://reformtheafl.com/the-afl/commission/
AFL Commission's Active Engagement Policy
The Commission has an active engagement policy with its member clubs. According to the AFL's Corporate Governance Report, the Commissioners convene formal meetings with the clubs twice a year to discuss a wide range of matters concerning the AFL's internal and external environment.
Role and Selection of the AFL CEO
According to the AFL's Corporate Governance Report, the CEO of the AFL is entrusted with the responsibility of overseeing the day-to-day operations of the organization, while working in production with the AFL Commission to implement its strategies through established policies and procedures. Comparable to the corporate governance model, the AFL Commission plays a balancing role, overseeing the work of the CEO while working in close collaboration with them. It is noteworthy that the CEO holds a voting position on the commission. Unlike the commission members, who are elected by the clubs, the CEO is elected by the AFL's Commission.
Conclusion
The governance structure of the AFL is defined by an independent Commission, constitutionally empowered to shape the league's strategic direction and regulatory decisions. The Commission also has the power to elect the AFL's CEO, who is responsible for overseeing day-to-day affairs and implementation of strategy, in partnership with the Commission. Constitutionally, clubs do not have the power to shape strategic or regulatory decisions directly but can hold the Commission accountable through appointing and removing them at general meetings. Harmonious relations between the Commission, executive, and clubs are sought to be maintained through the active engagement policy.
If you are interested in learning more about the AFL’s Governance Structure or about Gillion McLachlan stepping down as CEO, please see the links below:
SEN Article, ‘Gillion McLachlan Can’t Put Timeframe on AFL Departure’ by Seb Mottram – https://www.sen.com.au/news/2023/04/13/gillon-mclachlan-cant-put-timeframe-on-afl-departure/
Research Article, ‘Analysing the Australian Football League’s (AFL) governance structure: how does it compare to Europe’s “club-run” leagues?’ by Joshua McLeoda, David Shilbury, Daniel Parnell, and Ian O’Boyle – https://www.tandfonline.com/doi/full/10.1080/23750472.2023.2195405?scroll=top&needAccess=true&role=tab&aria-labelledby=full-article
Concise Finance Report, AFL Corporate Governance (2020) – https://resources.afl.com.au/afl/document/2019/11/15/e970874a-504d-421d-b6a1-471cc3a303ab/AFL-Corporate-Governance.pdf
Australian Football League Constitution (2018) – https://footyindustry.com/docs/Constitution%20of%20the%20Australian%20Football%20League%20(March%202018).pdf