Response of German Chess Federation to Memorandum on the Commercialization of FIDE

Egon Ditt - Meißener Str. 18 - D-28215 Bremen
President of FIDE
Mr. Kirsan Ilyumzhinov
FIDE Secretariat
Avenue de Beaumont 9
CH-1012 Lausanne

Bremen, 23.2.2000

Memorandum on the Commercialization of FIDE

Dear Mr. President!

Thank you for distributing your memorandum to all federations. The ideas of your memorandum will have enormous relevance as well for FIDE as for the member federations, so a thorough discussion is needed before any action is possible. I am sure you are aware that General Assembly as the highest body of FIDE has to decide on this issue.
Emmanuel Omuku, Executive Director of the World Chess Federation
This photo was taken by Sam Sloan during the FIDE World Chess Championship in Las Vegas

The Board of the German Chess Federation has intensely studied the document and debated it at a meeting in February. In addition we had a meeting with FIDE Commerce in their new office in Düsseldorf.

As a result I am authorized to give you some comments of our federation and to ask you for some more information.

1. Let me first point out what extra information is needed for the federations:

You mentioned in your memorandum two partners of FIDE, the World Chess Foundation and FIDE Commerce.

1.1 During the 68th FIDE Congress in Kishinev on your proposal General Assembly accepted to enter into an agreement with the World Chess Foundation and the proposed terms, annexed to the minutes, were signed by Ambassador Alexey Orlov on behalf of the Foundation and by Deputy President Georgios Makropoulos and FIDE Treasurer David Jarrett on behalf of FIDE. The terms were in short:

* that the Foundation is the Organizer of the next ten Worldchampionships for men and women, at that time in a biannual cycle with a prizefunds of US$ 5.000.000 for men and of US$ 500.000 for women. FIDE was to receive a share of 20 % of the men's prizefunds, the sum of US$ 1.000.000 to be paid as a guarantee sum until the 31.12. of the preceding year.

* that FIDE guarantees the current regulations not to be amended without the consent of the Foundation, grant the Foundation the exclusive rights to issue FIDE credit cards and is responsible for the provision of a comprehensive list of all chessplayers in the world and will share the property rights for all game scores between the player, FIDE and the Foundation.

The information needed on the World Chess Foundation is:

a) Has a contract according to these terms been signed and could you give a copy to the Delegates / federations, or is there no contract?

b) Can you give information on the Foundation, for instance where is the Foundation registered, who is representing the Foundation today and has FIDE knowledge of the Statutes of the Foundation so you can give a copy to the Delegates / federations?

c) Has the Foundation fulfilled it's obligations, especially has the Foundation paid the guarantee sum for the Worldchampionships 1998 and 1999 in time?

1.2 Concerning FIDE Commerce the memorandum has given the impression that there is no contract with FIDE at the moment, though FIDE Commerce already is active.

The information needed is:

a) Is there any contract between FIDE and FIDE Commerce or the World Chess Foundation and FIDE Commerce and if there is, could you give a copy to the Delegates / federations?

b) What are exactly the rights that will be subject to a contract with FIDE Commerce?

c) Can you give official information on FIDE Commerce, where the company is registered and who has authority to represent it, who are the owners and are FIDE officers among them?

2. Now the comments of the German Chess Federation:

a) We fully agree that FIDE is in need of a sound financial foundation for the high costs and prizefunds especially of the Worldchampionships for men and women. We agree on most of the analysis in the memorandum, because we believe it is not good for an international sports federation to be financially dependent on one generous person. So it is natural that FIDE takes steps to have a better financial background.

As it seems, the cooperation with the World Chess Foundation, that started in Kishinev, did not have the results we hoped for, because instead of raising funds the Foundation had to be financed by you. If this situation does not change, we question the cooperation with the Foundation: Does it make any sense for FIDE to cooperate with a foundation that cannot fulfill it's obligations? As you, according to the memorandum, seem to be willing to continue the cooperation, you should inform the Delegates / federations about the reasons.

We also do agree, that marketing cannot be done for the Worldchampionships only, there should be cooperation for all big chess events. FIDE Commerce could offer their services and organizers and national federations could decide if the services are helpful for them. Our federation is willing to cooperate with FIDE Commerce, we can establish contacts with our organizers.

b) But we miss the spirit of cooperation in the memorandum. Instead of cooperation with them, the organizers of chess events are asked to apply to FIDE for permission; and if they do not cooperate as FIDE asks they are threatened by sanctions, and their federations too. Most organizers just love chess and take a lot of risks to have good chess events, they raise a lot of money to finance the events. FIDE should do more than in the past to encourage them.

FIDE Statutes clearly define the part of FIDE and that of the member federations:

- (1.3) FIDE supports a close international cooperation of the chess devotees in all fields of chess activity, thereby also aiming to improve friendly harmony among peoples.

- (1.4) FIDE issues the rules of chess and the provisions pertaining to the organization of the World Championships and all other FIDE chess competitions. It awards the international chess titles.

- (2.1) Members of FIDE are national chess federations which have principal authority over chess activities in their own country ... .

It is quite clear that all tournaments in Germany are part of German chess activities according to 2.1 FIDE Statutes; they are not FIDE events and FIDE has no authority to regulate them. While the German Chess Federation is willing to cooperate in marketing big chess events, we are not willing to give up our authority on all chess events in our country. Your aim, that FIDE gains "total management and control of all activities related to chess" is not supported by the FIDE Statutes and by our federation. I want to make it quite clear: if FIDE tries to establish this control, our federation will fight with all means against the proposal.

c) In the memorandum you claim the commercial right to exploit the tournaments organized by organizers in the federations for FIDE or FIDE Commerce, and if an organizer does not follow this without the approval of FIDE this is a reason for FIDE not to approve future tournaments of this organizer. This idea would damage chess events in our country, because it is fundamental for financing a tournament, that the organizer can exploit the commercial rights.

d) For Commercialization it is most important that FIDE will bring a good image into any cooperation. Now as you know the image of FIDE has suffered a lot during the past years. Reports on FIDE Congresses, on the trouble with the Worldchampionships and the Worldchampions, on financial matters, on rating problems and problems with the FIDE Secretariat have damaged the image of FIDE. The image of chess is in Germany still excellent, the image of the German Chess Federations is ok, but the image of FIDE is very low. So FIDE officials first have to work hard to gain more reputation for FIDE to convince organizers to cooperate with FIDE.

e) One of the ideas of FIDE Commerce you referred to is to create in cooperation with banks and credit card companies a special credit card "Chess World Club". In Germany there is much competition for the market of credit cards, everybody interested has excellent offers at a very low price, so everybody interested already has one or more credit cards. A membership fee for a credit card of 120,00 DM as proposed by FIDE Commerce is three times as much as a membership fee for a normal credit card. In addition FIDE Commerce is asking for a decision of our federation on all levels, that the members should buy the credit card "Chess World Club". This decision is not possible, because we are a nonprofit organization and our membership expects the chess organization to keep neutral in business. Nevertheless if FIDE Commerce continues the project it is possible to inform the members so they can decide whether they will buy the credit card.

f) Concerning your proposal to extend the rating limit from 2.000 to 1.500 we see two major difficulties. First all existing problems with the rating system should be solved, before a huge number of additional tournaments can be rated (in Germany some hundred tournaments have to be rated each month). Second, our federation sees no necessity to include players between 1.500 and 2.000, because they play on a national level covered by a national rating system. You should keep in mind, that most of the rating work has to be done by the national Rating Officer by collecting and checking all results. We do not accept your idea, to force all rated players to be members of the "Chess World Club" (and to pay a membership fee of 120,00 DM!), the players have to decide and not FIDE, whether they will be members.

g) The ideas to have a FIDE bank system and FIDE Internet access may be interesting for some of the members of FIDE, but not so much for the German Chess Federation. We have excellent bank connections and we can handle our Internet Sites ourselves, so we do not need assistance from FIDE.

h) These are our major objections. Of course there are a lot of questions in detail, but I would propose to discuss them during the next FIDE Congress, when you put the final draft of your memorandum or any actions based on the memorandum on the agenda.

Dear Mr. President, these comments, though critical, are meant to be constructive. I am aware that the FIDE President and the FIDE Board need the input of the federations, so again I offer the cooperation of the German Chess Federation.
Kind regards,

Egon Ditt
des Deutschen Schachbundes e.V.

Meißener Str. 18
D-28215 Bremen
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Telefax (0421) 3 76 34 76

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