The review of the Essendon Football Club (EFC) governance processes covers the period from August 2011 until the present time. It seems likely that the approach to player conditioning, specifically the fitness strategy and use of supplements, varied sharply from prior practices from the start of this period.

At the request of the chairman of the Board, my work began around March 5th, 2013 and has involved interviews with EFC staff, board members and three current players (selected from the Players Leadership Group) and has extended to include parties outside the Club as well.

The work is inevitably constrained, in this case primarily by two factors.

Firstly, there is a parallel review underway led by the AFL and ASADA into the nature of supplements administered by the EFC during this period, and their compliance or otherwise with various anti doping codes. This was a no-go area for this report. Questions about the pharmacology of certain supplements, their possible performance affecting properties, compliance or otherwise with anti doping codes etc are issues for the AFL and ASADA investigations, which still have some way to go. This review and report needed to be conducted in a manner careful not to inadvertently compromise their work.

Secondly, a number of individuals key to a full analysis of this period, have been unavailable for interview.

As well, performance enhancing and image enhancing drugs, their delivery processes, and legitimacy for elite sportspeople, fall well outside my expertise. The Club has invited Dr. Andrew Garnham to advise on this issue.

EXECUTIVE SUMMARY

The period of interest begins with the recruitment of new personnel and leaders for the High Performance team at the end of the 2011 season. This new group of experts in player strength and conditioning was given considerable space within which to operate and found little early resistance to their sometimes unconventional ideas.

The arrival of confident, opinionated staff was not accompanied by a simultaneous strengthening of the processes within Football Operations, or by extra vigilance by senior management.

Their mission was to increase strength of players primarily through a revised weights program. This quickly morphed into a larger effort involving allegedly leading practices in sports medicine. This fitness strategy was appropriately bounded by instructions that all practices be compliant with the relevant codes.

However, the supplement plan, if one existed, evolved and probably never reached a coherent, consistent shape. Innovative supplement practices and compounds soon appeared - somewhat predictably given the mandate of the High Performance team. The leaders of the program insist their methods were always legal and compliant, and that conviction prevailed and still prevails within the football department.

But a number of management processes normally associated with good governance failed during this period, and as a result, suspicions and concerns have arisen about the EFC.

In particular the rapid diversification into exotic supplements, sharp increase in frequency of injections, the shift to treatment offsite in alternative medicine clinics, emergence of unfamiliar suppliers, marginalization of traditional medical staff etc combine to create a disturbing picture of a pharmacologically experimental environment never adequately controlled or challenged or documented within the Club in the period under review.

Compliance rules existed but normal controls during an abnormal period were insufficient to check the behaviours of some people who may have contravened accepted procedures, and the CEO and the board were not informed.

This Review looked at the relevant management processes and tried to reconcile certain decisions with the scenarios which unfolded into 2012, and has suggested remedies. Twelve recommendations are made to strengthen management and board processes in the aftermath of these events.

The EFC has been damaged, but not broken. The improvements in governance are straightforward, the Club has moved quickly, and some changes have already been implemented.

Key Findings:

1. Football clubs are changing and growing

Football clubs have grown in sophistication and size over the past two decades.

Where an AFL football department may have had 5 personnel 20 years ago (coach, trainer, physio..) and perhaps 10 around 2000, today's AFL club may employ 30-40 people on the football side of the organization. This requires formal structures and delegated powers, processes and controls and, depending upon the head coach's approach, may limit his close oversight of all matters to do with football.

The organization of most clubs is often divided into a commercial arm and a football operations arm with each head generally reporting to the chief executive officer, who in turn reports to the board. The head coach may report directly to the CEO, or to the Head of Football Operations depending on the club.

The EFC employs 75 people full time across all its functions and another 35 in part time roles. Annual revenues, and costs, surpass $50 million, and some clubs are considerably bigger.

Sports scientists have gained influence at most clubs which continue to seek those small advantages that might win games. Where it works well, these professionals partner with the medical staff to develop bespoke programs for each player, and rarely consider use of unconventional supplements or treatments.

There is a place for injections in the management of a number of conditions that might affect today's player, but a sharp escalation in their frequency across a playing group is noteworthy in every case.

This emerges as a consideration in the EFC of 2012.

2. Significant staff changes in a period of transition and growth led to risk

There has been high staff turnover over the last 4 years.

In its organisational rebuilding post the Sheedy era, of the top 20 executives at EFC only one had been there continuously for longer than 4 years by March 1st, 2012. High staff turnover often accompanies changes in coaches, CEOs and strategy but brings with it some risk.

Following the 2011 season, considerable changes occurred in the football department, especially in the High Performance Fitness team.

The High Performance Fitness team grew to 7 staff in early 2012. A sports scientist joined this team as a contractor, and his role initially focused on nutrition, oversight of GPS results and input to players fitness strategies. Both the head of the Performance Unit and the sports scientist appeared to have credible qualifications in the sports science field and long periods of relevant experience in elite sport.
Under this new team, a dramatic change in practices occurred.

3. Failures in Structure and Accountability

As a general observation, the commercial arm of the EFC is run professionally, with well-developed processes and good discipline. Budget management, project control, HR processes, record keeping, membership and community relations etc are consistent with good business practices except in that they seem not to extend to the football department. Who was accountable for what is difficult to ascertain.

In the period under review, a number of management processes broke down, failed or were short- circuited.

Problems occurred in:
• Selection and Recruitment processes
• Induction processes
• Management of contractors
• Hierarchy and decision making in the Football Department
• Administration

In particular, there was a lack of clarity about who was in charge of the Football Department. There were two separate roles, with fuzzy lines of responsibility. The responsibilities of two key staff overlapped, and the new fitness team was able to largely ignore their attempts at direct management. Added to this is a senior coach in his first coaching role.

4. Cost of success and failure of risk management

The Football Department set a course of pushing to the legal limits, but clear instructions were given to not cross the line and to stay within the WADA and ASADA codes.

Following concerns about the program in January, the Senior Coach reasserted the principles about the supplement program that:
• any supplement must be WADA and ASADA compliant
• it must not be harmful to players health
• players must be properly informed about anything entering their bodies, and
• every product was to be cleared by the doctor

These guidelines were reasonable and unambiguous, but compliance required robust recording and monitoring processes which proved inadequate.

The following key issues led to a breakdown in oversight:
i) An assumption was made by the Senior Coach that his instructions would be followed to the letter. In early 2012, there appears to have been no structured follow up, monitoring or recording of compliance with the wishes of the coach.
ii) Instruction by the coach to the Performance team to manage the supplements program legally and not ‘cross the line' is superficially clear enough, but again involves a high degree of trust. There have been continued assertions in the media by some of the protagonists that nothing ‘illegal’ or ‘banned’ was given, and I have no basis to form any other view. But in this area of moving boundaries, as anti doping authorities try to regain control at the frontiers of pharmacology, it is unwise, perhaps reckless, for any club to even approach this 'line'.
iii) At critical points, the overarching role of the club doctor(s) was consistently emphasized and, by the end of the 2012 season, ultimately prevailed, but for too long was marginalised.

As well, members of the performance team introduced a Confidentiality form aimed at protecting the intellectual property of the fitness program namely the content, delivery and timing of the various components of the supplements regime. Superficially this sounded innocuous, but in retrospect could have raised alarms about the need for secrecy.

5. Sidelining of the medical staff

The attitude of some in the new fitness team was that EFC's medical personnel were yesterday's men - not abreast of the most modern sports science methodologies, excessively conventional, and pharmacologically illiterate. They were 'part of the problem, not part of the solution'.

The climate in the football department created conflicts. The fitness team had a mandate for change, to push to the legal limit with formulae which were assumed as effective and safe, if mysterious.

This led to poor internal processes with improvised fixes to ensure authorization of some, but not all, supplements and a lack of any overall documented strategy to guide the steps taken in a coherent way.

6. Administrative processes

A number of normal business processes were either not complied with, or too easily circumvented during this period.

• EFC contractors placed orders on suppliers outside normal procurement and authorization processes with EFC listed as the purchaser. This included acquisition of exotic compounds that may or may not have been intended for use by the Club.
• New suppliers were used outside the approved list of vendors. Sign off by the medical staff should be mandatory for all medical and supplement supplies and associated treatments.
• Terms and conditions for purchase orders should be clear and all invoices reconciled with
original orders and with approved authorizations for budgeting. Contra deals, or other
arrangements, need documentation and controls.
• Some claims on Medicare, made by external doctors, may have been inappropriate and
should be notified for review and action.
• Audit - the normal tests undertaken by external auditors would not reveal loose processes,
and there is no separate internal audit function. The Audit sub committee of the board may need to update its terms of reference in light of these findings.

6. RECOMMENDATIONS (many already underway)

1) Pioneering work with supplements and exotic treatments should be left to the Australian Sports Commission. At a club level, this is not an area for risk management but for zero tolerance. A club's pharmacology skills should not normally be independently and secretly developed as a source of competitive advantage. And an arms race for the most sophisticated molecules must be prohibited.

2) There may be alternative models for organizational connections between medical staff, sports and nutrition scientists, psychologists etc but a clear framework of accountability and authority must be established and complied with. In general, the club doctor should be expected to be the signing authority for all medicines, supplements, diagnostic tests and therapeutic treatments.

3) There may be a case for the employment of full time medical staff but this needs to be balanced against the advantages of part time doctors with active private practices which keep them abreast of best external practices.

4) Treatment by injection, and IV drips, may be justified so blanket bans are not recommended. But the medical officer must authorise, and detailed records kept. A tolerant, even permissive, attitude to use of supplements must not be allowed. This
requires a mindset change within the Club which has already occurred.

5) The CEO must be accountable for everything that happens within his organization.

Coaches cannot bypass him, and boards must work through him. If commercial priorities consume his time and attention, steps must be taken to ensure proper oversight of football operations.

6) The position of GM, Football Operations is an especially difficult one given subordinates and peers, eg coaches, can be charismatic alpha males who carry the weight of supporters' expectations on their shoulders. But this is a critical appointment requiring a strong capable individual who has the respect of the football staff and the support of the CEO.

7) Football clubs value having flexibility in their practices, staff who multitask, and the ability to adjust to circumstances. This is desirable but dynamic 'change management' requires discipline - clear expressions of changed accountabilities, updated job descriptions, confirmed reporting lines. And when positions are added to an org chart with full and dotted lines of responsibility or worse, left floating, the CEO must step in to clarify. Dual (or more) reporting lines can be a recipe for confusing communications. Responsibilities must be clear and employees held to account.

8) Bad news must be passed up the line quickly. Sometimes, organizations seem to have holding depots where issues await a fix while being shielded from upper management and the board. This is poor practice. Boards should ask the question 'what's keeping you up at night?' and follow up and monitor action on concerns. Boards should not resile from detailed interrogation of operations, including within the football department, even when times are good.

9) The club's Policies and Procedures should be reviewed and updated as required. This would cover all HR and remuneration policies, procurement, security, compliance, codes of conduct etc and require annual endorsement by the board.

10) Institutions are often judged by how well they respond to crises. Post February 2013, the EFC response seems textbook correct. But the best organizations are judged by how well they anticipate and prevent crises. Risk assessment and mitigation, while already part of the core board agenda, should be re examined.

11) The board agenda should also be modified to cover issues around player welfare and treatments. Ideally, as much clarity should emerge on this topic as is demanded re illegal drugs, total player payments, contract negotiations, list management. The EFC board could consider occasional attendance of players, perhaps from the Leadership Group, at its meetings.

12) The executive should regularly report to the EFC Board on implementation of these remedial actions and these reports should be shared with the AFL.