Last updated 25 October 2021
A range of different entities organise sporting activities. The type of entity a club or organisation chooses to form will depend on a number of factors including:
- financial resources
- human resources
- protection of the organisation’s assets and members from claims by other people
- contracts the organisation has with other parties
- the type of sport the organisation is involved with.
Whether to incorporate
People are free to form clubs and associations for any purpose. Informal groups could choose to remain unincorporated, that is, their club is not legally different to the individuals who are in it. For example, a group of four friends might meet weekly for a game of tennis and refer to themselves as ‘a club’, without there being any legal effect to that term.
For most sporting organisations, the decision to incorporate is often a safer option because the organisation then becomes a separate legal entity to its members (with all the same powers as an individual). This separation protects the members and the management committee from potential liability (as long as the latter can show they have carried out their duties in good faith and exercised due diligence).
A sporting body can incorporate by establishing either a company or an incorporated association. Companies are dealt with under the Corporations Act 2001 (Cth) and are more suited to large national sporting bodies. Usually companies in sport are ‘limited by guarantee’, that is, their members do not pay money in advance but agree to guarantee, often only up to a fairly small amount, the company’s debts should it fail (e.g. Australian Rugby League Commission Ltd). Some sporting companies are ‘limited by shares’ and aim to make a profit for those shareholders (e.g. Brisbane Broncos Ltd). For sporting bodies more at grass roots level, incorporation under the Associations Incorporation Act 1981 (Qld) is often more relevant.
However, there are obligations and responsibilities associated with incorporation, which may be seen as disadvantages (see the Incorporated Associations chapter for greater detail about the benefits and risks of incorporation).
Affiliation between organisations
It is quite common for different organisations to run a sport at different levels. For instance, a local club might be affiliated with a district or city-based association that organises competition between clubs. The club agrees to follow the rules that the district association imposes and, in return, the club benefits from having competition organised. The district association might be affiliated with a state-level association, who in turn might be affiliated with a national body. Most sports have a recognised national body (sometimes termed a ‘National Federation’ in sports literature), which governs that sport across the country. While it is possible that there may be multiple rival organisations at any of the various levels (including nationally), it is usually the case that only one national body is recognised by the relevant sport’s international federation, or for Australian Government financial support through Sport Australia. Many international federations are in turn recognised by the International Olympic Committee (IOC), especially if that sport participates (or aspires to participate) in Olympic Games. Through these many links of affiliation and mutual recognition, the IOC indirectly controls much of the governance of sport throughout the world, even at local levels.
For further information and resources to assist with the governance of clubs or sporting organisations, see the Sport Australia website.