Response of Morten Sand, FIDE Executive Committee, to FIDE Memo

From: Morten Sand
Sent: 20. februar 2000 20:32
Subject: Commercialisation of FIDE

Dear Mr. Omuku

Thank you for sending me the memorandum on the commercialisation of FIDE. I fully agree that FIDE must have a business plan that in future will bring sufficient revenue to the organisation. For too long we have been dependent of individuals and their efforts either to bring in sponsorship or to spend their private funds on FIDE. This cannot and must not continue. We must create a situation where the FIDE name and logo stands for quality and trust, and that the FIDE brand through hard and dedicated work, will be respected and sought after by the chess communities all over the world.

I have studied the memorandum and so far I have the following comments:

1. Protection of the FIDE logo

One of the reasons for IOC`s economical success is their vigorous defence of their intellectual property rights to the Olympic symbols. At the Lillehammer Olympiad even the tiniest domestic infringement of the IOC rights where immediately dealt with, in court if necessary.

Still FIDE (to my knowledge) has not completed the protection of its logo. I have twice been asked to do this, and twice I have reported back, in full detail about proceedings and the cost involved. On both occasions nothing happened because there was no money (approx. USD 100 000) available for this project.

I strongly recommend that FIDE before entering contracts with external companies or bodies, starts the procedure to fulfill the logo protection program. There must be no uncertainty or doubt in future as to who owns the intellectual property rights to the FIDE name and logo. This is in my mind our most important asset.

2. World Chess Foundation

I have understood that the WCF is a "paper" foundation fully owned by the FIDE President. If this is the case, FIDE is still fully dependent on one person. From which country is the WCF operating, does it pay tax, who audits their operations, is FIDE represented in the board etc.??? These are important questions and issues were FIDE must secure its position.

In 1997 the WCF was given the right to stage the next 10 World Championships. For these rights the WCF guaranteed to FIDE, a total prize fund of USD 50 million. At that time the WCC was every second year. Given the fact that the WCC cycle later was changed, FIDE accepted a prize fund of 3 mill USD in Las Vegas. If this will be the level for the future championships, in my view the agreement between FIDE and WCF should be revised accordingly.

If in future the WCF cannot or will not organize the WCC, or do not fulfill the financial requirements, the agreement is no longer valid and FIDE must look for other options regarding the WCC.

3. FIDE Commerce PLC

I must inform you that the general opinion of the performance so far of FIDE Commercial PLC, is not as bright as put in the memorandum. This leads to serious questions and doubts about the company's ability to handle the commercial side of FIDE businesses.

First a comment regarding the FIDE statutes. The question of granting FIDE C PLC affiliated membership of FIDE, must be put before the FIDE GA. The same goes for the proposal of any person being a member of FIDE Executive Committee. Please do not decide on this matter in the PB and then ask the GA for approval later. This way of "parliamentary" procedure belongs to the past FIDE history.

Personally I see no need for this move. The representative of this company (or any other company/organisation or foundation) will report at any time in any FIDE body, if and when FIDE so desires. He will also work closely to the FIDE President and the FIDE Secretariat.

A contract between FIDE and FIDE C PLC must of course be carefully looked trough before signing. What is the purpose and financial expectations? What is FIDE exactly allowing the company to do on its behalf? The time frame and trial period in which the results are examined. In case of none deliverance, how do FIDE terminate the contract etc. I am sure these issues will be well taken care of before signing any contract.

My main concern is the "money flow" between the involved parties and the actual distribution of any income.

First: The contract should be between FIDE and FIDE Commerce PCL. The World Chess Foundation has no legitimacy in this business arrangement.

Second: The Net profit (after Tax) of FIDE C PLC should be split between the company itself and FIDE. Before the net profits is established, the WCF receives a sum equal to the WCC price fund including a given sum for necessary expenditure. Why should the profit first be distributed to the WCF, a "paper" foundation, out of any serious control, that may or may not exist to morrow? As long as they honour the agreement and deliver the WCC, they should of course receive the necessary funding for the WCC. But whatever profit the FIDE Commerce PLC may generate, belongs to FIDE and should stay within FIDE.

4. Presidential Board meeting in London.

I would be happy to attend the PB meeting in London for further comments and contributions regarding the contents of the Memorandum.

Best regards

Morten Sand

FIDE Executive Committee

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