Athlete Organizations in Individual Sports Part 2: How to Successfully Establish Them

Establishing Athlete Organizations under Swiss Law?

The establishment of athlete organizations that aim to protect and enforce the interests of all international athletes in a sport does not have to be done under Swiss law. Rather, athletes can establish them under any law and with free choice of location almost anywhere in the world. The arguments in favor of establishing them in Switzerland are of a softer – but often not less important – nature. These include the following:

• Switzerland is traditionally a hub of international sport and has an established sports infrastructure. In addition, most international sports federations are based in Switzerland and are therefore also structured under Swiss law. The geographical proximity also has the potential to keep the exchanges between the offices close and thus create political and economic proximity.
• If an association is considered a suitable legal form (see the explanations in the next chapter), Swiss association law allows for a very flexible design of the athlete organization, which can be structured according to the purpose, needs, and individual circumstances of a particular sport.
• If the athlete organization aims to become a member of an international sports federation (as far as statutorily possible at a given time) or to cooperate with the latter in other ways (e.g., right to propose members of the athletes' commission or athlete representatives on the board of the international sports federation), structuring it under Swiss law can significantly simplify such initiatives and save some legal clarifications in connection with foreign law and international relations.
• Further reasons for structuring in Switzerland are political neutrality and stability, its reliable legal and secure environment, and the favorable tax treatment of international sports federations.
   

Which Legal Form is Most Suitable?

For the establishment of athlete organizations in Switzerland, the association according to Art. 60 et seq. of the Swiss Civil Code (CC) is suitable because this form focuses on the personal commitment of the member and not on the deployment of capital (as would be the case with a corporation). The personal commitment of members or athletes primarily refers to their participation in forming a joint endeavor to promote the interests of the athletes and, as provided for in the statutes, and the obligation to contribute.

Swiss law recognizes other such personal company structures (such as the simple partnership, general partnership, limited partnership, and cooperative). However, due to

• the great flexibility in the design of the association,
• the liability limited to the association's assets, and
• the predominantly idealistic purpose of an athlete organization,

The association will prove to be the most suitable legal form in most cases. Admittedly, part of the purpose will often also be to enforce better economic framework conditions for its own members (or athletes) (e.g., higher prize money at events, funds to support socially disadvantaged, injured, or other athletes as members, etc.). If the economic goals of their own members are paramount, the athletes could also consider establishing a cooperative according to Art. 828 et seq. of the Swiss Code of Obligations (CO). However, structuring a cooperative is significantly more complex and can impose some financial obligations on the members. Incidentally, it is not considered an economic purpose as long as the athlete organization also satisfies the economic interests of non-members. In this case, however, it pursues an economic, social, and sports policy objective.

However, athlete organizations will regularly have an overriding interest in having as many athletes of a sport as possible join their own athlete organization and in keeping the hurdles to entry for existing athletes as low as possible. In addition, the economic purpose is not the central focus, but rather one of many other purposes that tend to be of a non-material nature and the examples of the economic activity mentioned above will often be for the benefit of all athletes (including those who are not members of the athlete organization), as they are aimed at regulatory changes in sports organizations. This intention would ultimately clearly speak against a cooperative and in favor of an association as a suitable legal form.

The Necessary Steps for Establishment

Establishing an athlete organization as an association is subject to the following conditions:

1. Although the law does not stipulate a minimum number of founding members, Swiss practice assumes that two people are sufficient for the legally valid establishment of an association. This should not pose a problem for athlete organizations, as the common will to establish an organization to protect the interests of athletes should, for its effectiveness, be present in significantly more than two athletes who join an athlete organization from the outset.
2. According to Art. 60 para. 2 CC, the athletes must draw up the statutes in writing, whereby the statutes must at least address the purpose of the association, the association's funds, and its organization (see the explanations on the content of the statutes below). We recommend that the people designated as authorized signatories sign the statutes by hand following the resolution of the founding meeting.
3. A founding meeting is required to establish an association. Since, especially in top-level sports, athletes are permanently traveling to various competitions and training sessions, it is recommended to conduct this as an online conference. This is permitted if the statutes expressly provide that association meetings can be held online and/or in hybrid form. Minutes of the founding meeting must also be drawn up, in which the founding members record that they wish to establish the association by approving the statutes and electing the governing bodies (in particular the Board). Representatives of association members at the founding meeting must be authorized, to the extent that such representation is possible according to the statutes. In addition, further documents may be required (e.g., declarations of domicile, declarations of acceptance of election, etc.). If the founding meeting is held online, it can also be recorded with the consent of all participants and used as minutes of the meeting.
4. It is usually advisable to hold a board meeting immediately after the founding meeting to decide and, where required to pass resolutions, on the necessary business depending on the statutory duties of the board (such as determining the signing authorities).

Structuring and Most Important Statutory Content

Precisely because Swiss association law grants the founding members a great deal of autonomy in enacting and applying the rules, an intensive examination of the needs and goals of an association is essential when drafting the statutes in order to build an effective organization. The following is therefore a list – which makes no claim to be exhaustive – of some of the most important points that athletes typically must consider, weigh up, and record in the statutes in connection with the statutes or with the organization and structuring:

• Purpose: This is the actual identity of an athlete organization. Athletes should define the purpose in such a way that it is ultimately clear what the task of the athlete organization is without unnecessarily restricting it. The focus is on improving the economic, social, health, legal, and educational conditions for all athletes and maintaining close contact with the relevant sports organizations; in particular, with the international sports federations as regulators. Furthermore, the purpose can highlight some particularly important tasks by referring to a non-exhaustive list. The following objectives are typically paramount for athlete organizations:
   
  • Involvement, co-determination, and participation in important decisions of the international sports federation that have an impact on the technical aspects of the sport and the business of athletes as sole proprietorships;
  • Protection of the legitimate interests and global rights of athletes (including protection of the athlete's name, image, performance, and other rights) and ensuring that corresponding consents to the commercial and non-commercial use of athlete rights by sports organizations are given voluntarily, on the basis of appropriate information basis and on fair terms;
  • Increase in prize money at competitions;
  • Improvement and development of the safety and health of athletes (including R&D of beneficial technological applications);
  • Support (e.g., risk funds, regulatory adjustments for facilitation) injured, sick, pregnant, athletes or those who have to interrupt their sporting career for other reasons;
  • Promotion and preparation of athletes for their careers after their active sports careers.
     
• Funds: The funds with which the athlete organization can form its association assets can come from different sources. For athlete organizations, the following funds are particularly obvious:
   
  • Fixed and/or variable membership fees: The statutes can stipulate fixed amounts that the athletes have to pay annually. However, it is also conceivable that athletes donate (small) portions of the official prize money paid out at competitions to the athlete organizations. The contributions would then be of different amounts (whereby the athlete organization could, for example, grant different voting rights depending on the amount of the contributions; it should be noted that there are limits under association law – see explanations below).
  • Contributions from third parties and/or events: An athlete organization can be interesting for sponsors, as especially personal sponsors of athletes are likely to support some projects and goals of the athletes, and some brands want to associate their image with this. In addition, an athlete organization would be predestined to organize events such as fundraising events, as well-known faces are likely to attract many private and public donors. Athletes in top-level sports also have an excellent network, whereby contributions can also flow from patrons, investors, or other people who have an interest in the agenda of an athlete organization.
     
• Membership: First, the athlete organization must stipulate the requirements for each type of membership (e.g., are only athletes of a specific or several sports of an umbrella federation admitted? Are only athletes of the highest level allowed to join? How exactly is the highest (competition) level defined?). In addition to active members, athlete organizations are likely to be interested in admitting passive members so that as many athletes of a sport as possible join the athlete organization and it also has direct access to all athletes. It is foreseeable that, especially in individual sports, not all athletes will be willing to pay the corresponding fee; however, some would probably submit a corresponding declaration of submission to the statutes and regulations of the athlete organization. In addition to active and passive members, honorary memberships or special memberships (e.g., in the case of career interruptions, injuries, etc.) typically considered. In addition to joining, expulsion must also be regulated if certain reasons (e.g., competition bans) are to lead to immediate expulsion without the need for a resolution of the association (i.e., a resolution of the general meeting).
   
• Rights of members: In addition to the right to submit motions to the general meeting, the members are entitled to vote. The statutes may provide that the athletes have different voting rights (i.e., that individual athletes have more than one vote), for example, depending on the variable membership fee mentioned above. Of course, such a statutory provision must not take on the characteristics of a corporation. However, Art. 67 CC, which states that all members have the same voting right (so-called one-member-one-vote principle), is a non-mandatory law. The establishment of multiple voting rights could make sense in view of the purpose of an athlete organization, as those athletes who, for example, receive significantly higher prize money and would therefore also pay higher membership fees are at the same time the center of attention in the entire sport, whereby their statements, opinions, and initiatives simultaneously carry more weight in the public and sports policy. However, in order to avoid exceeding the association law framework, we consider a gradation of 1 to 5 votes per member or athlete to be justifiable.
   
• Organization: In the early stages, the athlete organization usually has the following bodies:
   
  • General Meeting / "Athletes' Congress"
  • Board of Directors
  • Committees (if there is a need for expert groups – e.g., with regard to safety/safeguarding/material, competition organization/calendar, ethics/law, ESG, marketing/prize money, finance, and the like)
  • Auditing body (unless waived and/or legally required)

The organization and governance of the individual bodies is the subject of a further article. For the statutes, it is certainly relevant that the composition of each individual body, the term of office, and the respective tasks or responsibilities are laid down in the statutes. In addition, the statutes should provide for the formalities and deadlines for convening and submitting motions, any representation options (e.g., to the general meeting or the athletes' congress only by other athletes who are also members), and the possibility of holding these meetings and sessions online and/or in hybrid form with regard to the general meeting and the board meeting (especially since athletes travel a lot and are usually never all in the same place in the world at the same time).

An in-depth examination of the individual needs and circumstances of the respective sport and the consideration of the above points are the basis and essential for structuring an effective athlete organization. We would be happy to support you with our expertise in setting up such an organization.

In addition, many other questions arise in connection with the further organization and governance, which we will address in a further article at a later date.

Authors: Moritz Jäggy, Sven Hintermann