Director of Finance

Debate directly related to English Chess Federation matters.
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Chris Majer
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Re: Director of Finance

Post by Chris Majer » Wed May 20, 2009 10:38 pm

Simon wrote
Glad this is being discussed. A few points re what has gone before, and a few other things to think about...

Clearly the ECF isn't bankrupt. Forget legacies, forget the BCM. It will always be able to raise enough Game Fee to cover its costs, providing there is a competent CFO, because people will pay; even if they don't know what they are paying for, the fear of not having what they don't know they are paying for will ensure that they pay. And Council will always vote it through, even if they rarely understand or even seek the opinion of those they claim to represent. Maybe things are different now.

But the ECF is bankrupt of ideas. You need a CEO who is capable of raising funds from new sources. You are not going to pay a CEO £100k a year (which is cheap in my opinion) and be happy if the result is an increase of Game Fee to cover the increased salary bill - even if (s)he does lick the stamps as well. People can make money out of chess - maybe not a lot - be it from playing, writing, coaching, etc. so there is a market. You just need someone who can work out - professionally, for a change - how to exploit it.

Stewart, I agree that 1972 would have been a good time to do this, but you can't take a 1972 model and apply it to 2009. It is a different world, there are all sorts of new sources of income which weren't around 10 years ago, let alone 35. The problem is that the worthy, but unpaid and therefore often unmotivated, directors and officials of the ECF don't know how.

So I say again - accept what you have and don't expect anything better, or take a risk.

Think about the downside of the risk. If it doesn't work, then after a year, you sack your CEO and Council reluctantly agrees that it needs to transfer some Robinson Trust money to cover the deficit. So you lose some of a windfall but you still have interest on £500k for projects and a decent capital sum in the bank.

Then think of the upside. The more parochial will see Game Fee abolished as the major achievement. You may get more international tournaments, more professionals, more visiting players. More exposure, more newspaper columns, more kids learning and wanting to be chess players, more opportunities for coaching, more chess in schools (and a requirement for many more sets). More sponsors - they like professional administrators. Recognition as a sport, for what that may be worth. A chess culture. Chess in cafes. Professional and semi-professional leagues - yes, I know there is one, but the ECF doesn't appear to be involved now and certainly wasn't when it was set up. Maybe back to a decent chess-playing nation rather than also-rans. Those of us who were around in 1972 will remember what happened afterwards. Ideas of an English GM were fanciful then yet, in 5 years (Leonard, John, I am ready to be corrected) we had three, maybe four?

What are the odds? I don't know. But isn't it worth £100k of money you didn't know you were going to get to find out?

No prizes, again, for guessing what the ECF will do.
Simon

You seem wholly out of touch with what is happening today. The ECF is working on many of these things. Not least, the ECF arranged to borrow £100k from the John Robinson Trust last year to finance support for the Chess for Schools programme and for the follow-up. This initiative is intended to generate the next chess boom. Integral to the plans is the objective to establish new income streams for the ECF.

There are at least two other avenues to provide new income currently being explored.
Chris Majer
ECF Chief Executive

Simon Brown
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Re: Director of Finance

Post by Simon Brown » Wed May 20, 2009 11:47 pm

Chris

I agree. I am completely out of touch. Which means I can have completely independent, unbiased views. If your initiatives result in something, I will be pleased. I haven't read anywhere that the ECF is contemplating paying for expert advice to raise funds, but if I am wrong, I will be even more pleased.

But I am completely in touch with the real world.

Simon

Richard Bates
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Re: Director of Finance

Post by Richard Bates » Thu May 21, 2009 7:32 am

The ECF is not a private sector organisation. It does not have to make a profit, or seek to maximise profits to exist. It does not have major competitors threatening its survival. And yet also unlike a private sector organisation its survival is paramount.

As such, failing to take what might be the only serious option from a private sector perspective is entirely rational. Private Sector organisations might take such strategic decisions every day of the week, but for every one that is successful one will be able to find another that ends in disaster. The risks are magnified when one is taking someone from a private sector organisation where they may have total freedom in their actions, to an organisation like the ECF where they will be inevitably constrained in what they can do. It's the same in the Public Sector. People come in knowing they have a ready made excuse for failure (it was the organisation's fault, of course). Especially if you're only giving them a year!

So you employ someone on £100k. Presumably you also have to give them a significant budget. How much? Money's running out pretty fast if it goes wrong.

The fundamental point i would suggest is that English chess' problem is not its lack of revenue. I also however am somewhat sceptical that the problem (or solution to its problems) lies in Schools, especially Primary Schools. I doubt chess activity has ever been higher in those areas thanks to Mike Basman's tournaments, and the acknowledgement by many players that schools coaching is the only sensible way to try and make a career out of the game. Giving every school 6 chess sets (of which only 4 will be complete within a couple of months) will not change that (forgive my probably highly simplistic portrayal of Chess for Schools). The problem of an aging chess population stems from the lack of opportunity for players once they leave the school environment. It does not arise from people failing to learn the game in the first place, it arises from them giving it up when it becomes too difficult or unattractive to continue to play.

On a more positive note, what plans are the ECF developing to capitalise on the London Tournament in December? It strikes me as the biggest opportunity for English Chess to get the wider public interested in years.

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Re: Director of Finance

Post by Simon Brown » Thu May 21, 2009 2:06 pm

Not sure I agree. Of course the ECF doesn't have to make a profit, but it does need to maximise the excess of revenue over costs, just as a private company does. For the ECF, that excess is what it has available to do the things it wants to do. For a private company, the excess is what it distributes to its shareholders, or keeps in the business for future development. No real difference, to me. The bigger the excess, the more the ECF can do.

Of course you can't constrain someone you are paying £100k+, Council will just have to concede that. And nobody takes on a role such as this simply because there is a ready-made excuse for failure - high earners tend to take pride in what they achieve and always have one eye on their CV. If you get the right person, they won't need a year to have an impact. If you get the wrong person, you don't wait a year to get rid of them. That does mean you will need some experienced non-execs to keep an eye on things, but that's not an unattractive role, and it should be straightforward to find people with chess (not necessarily ECF) experience to do it. Part-time, small honorarium, sounds quite interesting...

However I agree that the solution isn't in schools. British chess has been stagnant for the last 20 odd years, so it needs some life at the high levels as well. When I stopped playing, 12 years ago, the two top British players were Adams and Short. And today - Adams and Short. 12 years and no change. Yes, there are some good players around, but can you see any of them seriously challenging for a World Championship?

The London tournament does look interesting. Do we know who is paying for it? I guess it's not from the profits of Chess & Bridge.....

Andrew Farthing
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Re: Director of Finance

Post by Andrew Farthing » Thu May 21, 2009 3:07 pm

I'm amazed at the fact that a salary figure of £100k+ is left unchallenged. The ECF is simply not that big an organisation to contemplate a salary on that scale (and,as has been said, it would need some other budget increases to support it).

From my experience in the charity sector (like the ECF, run on a not-for-profit basis, although naturally a surplus is desirable and can be turned to good use), a charity with a turnover 2-3 times higher than the ECF's would probably have a CEO earning in the region of £30-40k. It would also have a paid staff considerably larger than 4 people, as well as an army of volunteers as large as it could find.

If the ECF were to engage a paid CEO, I'd suggest that a more modest salary, supplemented by the possibility of a bonus or 'finder's fee' if substantial external funding were obtained, would make a lot more sense.

I do think that we need to reflect on the conditions that have to be in place to make chess attractive to sponsors or other types of funder before consuming large amounts of cash on salary payments. Otherwise, it would be money wasted.

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Ben Purton
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Re: Director of Finance

Post by Ben Purton » Thu May 21, 2009 3:15 pm

My Mum was deputy director for Norwood Charity(Jewish charity).

She took a paycut from 52k to 34k to work there if that helps.

So in this respects Andrew has some point, but Norwood is much bigger than ECF.

Ben
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Simon Brown
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Re: Director of Finance

Post by Simon Brown » Thu May 21, 2009 5:14 pm

If you want to pay a modest salary, you'll get a mediocre person. You can't incentivise them with a finder's fee because the goal alignment is all wrong - you need someone who will commit their skill in the knowledge that if they don't deliver, they will get kicked out and that will be a black mark on their career for ever. That is what makes them care - and achieve.

If you don't want to pay a decent salary, you might as well carry on as you are and remain a small organisation. And spend most of your revenue perpetuating a model which is clearly broken.

By the way, the best charities are run like businesses. They aim to raise as much cash as they can to do the things they want to do. Yes, I know even the largest rarely pay their CEOs six figures, but they have an infrastructure for fundraising and skilled professional people. The ECF doesn't.

You need someone who is going to start from scratch and do it themselves, so you have to pay. That's life, I'm afraid. Take a risk, or forget it.

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Ben Purton
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Re: Director of Finance

Post by Ben Purton » Thu May 21, 2009 7:14 pm

Surely your saying that fiscal incentives are what are needed to achieve, which therefore must assume that money would make a person happy, which is not the direct case. Your previous post almost completely ignores why people work for charities , most work because of passion for the cause rather than £
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Ben Purton
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Re: Director of Finance

Post by Ben Purton » Thu May 21, 2009 7:15 pm

For someone who claims to be able to give life experience, surely someone in for wage incentives is not what you want. You want someone who wants to help chess out. Atm you could argue we have the first of these as Mr Walsh likes his ambassador roles in European chess
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Simon Brown
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Re: Director of Finance

Post by Simon Brown » Thu May 21, 2009 10:37 pm

Ben, the ECF is not a charity, so you shouldn't run it like one.

I'm not claiming to give life experience, just my thoughts on the back of my career. Of course you don't want someone with wage incentives, which is why goal alignment is so important, but actually you don't need anyone whose life passion is to help chess out. You need someone who can see potential and understand that achievement would be good for them as well as good for chess. Not easy to find, but not impossible. Unless you don't bother trying.

Simon

Stewart Reuben
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Re: Director of Finance

Post by Stewart Reuben » Fri May 22, 2009 12:07 am

I would have thought we would be better off awaiting the finalisation of chess being recognised for charitable purposes, which is proceeding dreadfully slowly. This is because the federation may have to split into two.
ECF which would be for what I will call amateur plus junior chess - all recognised as suitable for charitable purposes.
Professional English Chess. The latter would include the British, International Chess, the planned separate English Championship, etc.
Simon Brown might very well argue we should have an agreed structure ready now. But is that fruitful, when the regulations may be such that we want a somewhat different system?

Using £100,000 as the salary we would need to attract a suitable CEO, there is no money available in the ECF to support that. The JR Trust must go for junior chess. The PIF trustees would not countenance using all the funds for such a risky project. Thus it would have to come from venture capital, probably from wealthier people in the chess community. The first objective would then be to pay the salary and then to pay the shareholders a dividend.
If Simon wants to put together a business plan, there will be people who are interested. After all, when I approached him about his becoming the Finance Director many years ago, it would have come as no surprise if he had made such a suggestion. Council preferred a less radical approach to finance and elected a different candidate.


I think any CEO would propose that for players to receive a grade they must be members of the federation and the fee be a substantial one. I think I first proposed that over 40 years ago. When we bought BCM we had that partly in mind, using that as the marketing division.

Stewart Reuben

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Re: Director of Finance

Post by Simon Brown » Fri May 22, 2009 12:34 pm

Stewart, splitting the federation may be a good idea. But I don't think you should assume that getting charitable status is going to solve all your issues in amateur and junior chess, so if "Professional English Chess" is successful, then juniors and amateurs have to benefit in some way.

That's the problem with getting outside capital to do this. Investors will want to see a return and an exit strategy, and as a player I wouldn't be keen to see the benefits going to the pockets of investors rather than, say, funding the abolition of Game Fee. The other thing investors will want is a business plan and a CEO, either in place already or committed to joining. It's all very well finding a good idea, but if you don't have the right person to exploit it, it will usually fail. So you have a bit of a chicken and egg situation. I don't doubt people would invest once they see a strategy which appears to have a chance to work - I probably would - but they will not fund the cost of the research to see if it is viable.

Thanks for your kind invitation to prepare the business plan. I'll decline, but I would happily assist your CEO - for free - when you find him or her. In any event, you will recall that my fairly radical approach never found favour with the old BCF and I guess nothing has changed. Incidentally, I didn't accept your invitation to be FD, so Council didn't have a choice to make.

And no, I shan't be volunteering to do it now either.

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Re: Director of Finance

Post by John Upham » Thu Jun 11, 2009 12:24 pm

Does anyone know how long the ECF can legally continue without a DoF in post? Is there anything in company law about this?

Does the DCMS grant impose different conditions?
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Re: Director of Finance

Post by Sean Hewitt » Thu Jun 11, 2009 12:34 pm

John Upham wrote:Does anyone know how long the ECF can legally continue without a DoF in post? Is there anything in company law about this?
As long as it likes. The Companies Act simply requires there to be at least one director. The ECF Articles of Association do however require a minimum of 5 directors, but this minimum is also currently being met.
John Upham wrote: Does the DCMS grant impose different conditions?
No idea, but I doubt if they specify that there must be a specific post filled.

Stewart Reuben
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Re: Director of Finance

Post by Stewart Reuben » Thu Jun 11, 2009 2:15 pm

Please use your collective contacts to find possible candidates for the post of ECF Finance Director. Many of the posts are filled by contacting people rather than waiting for a response to an advertisement.
Stewart Reuben

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