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English Chess Federation Board – Emergency Meeting

The English Chess Federation Chief Executive Phil Ehr called an urgent, additional Board meeting on Saturday 8th February 2014 with the following agenda:

1. A discussion about the issues raised in the recent print and web articles, various claims involving the recent activities of Andrew Paulson and Nigel Short concerning the imminent ECU and FIDE elections, and various threats to refer ECF members to the FIDE Ethics Committee.
2. Motion: A vote of confidence in Andrew Paulson as President of the English Chess Federation
3. Motion: A vote of confidence in Nigel Short as the FIDE Delegate of the English Chess Federation

The Draft Minutes of last Saturday’s Emergency Board Meeting of the English Chess Federation are now available online.

The Minutes contain the opening summary of ECF Chief Executive Phil Ehr (point 6), Directors’ remarks against ECF President Andrew Paulson and ECF President’s answers to each (point 7), summary of the voting (only 2 votes each in favor of Short and Paulson, points 9 and 10) and Appendixes.

Shortly after the Minutes were published, the ECF President Andrew Paulson issued a statement which is posted below in full:

“The Agenda for some confused pedantic reason chose to call a vote of Confidence rather than to call for a vote of No Confidence against me. The Minutes of the meeting reveal that in fact it was a vote of Whinging (Brit. variant of to bitch, whine, complain): (a) he was doing too much, too fast, (b) he wanted to stand for the Board of the European Chess Union and we weren’t sure, (c) he had a strong personality, and (d) two years ago he did something that appeared inappropriate, though in fact it wasn’t.

The ECF Chief Executive, one of the ECF Non-Executive Directors and a former Chief Executive (now Chairman of the Governance Committee) of the ECF all supported me; the ECF Membership Director abstained admitting that he had no grounds for complaint. The remaining Board members all had close connections with either Malcolm Pein or Nigel Short (thence to Garry Kasparov) and I have demonstrated that their complaints are spurious (see Minutes).

Members of the Board attempted a coup d’état last Saturday, but failed. The Board has not (could not have) removed me. Several may try to call an Emergency Council Meeting to remove me, but the grounds laid out in the Minutes will provoke ridicule of them rather than outrage at me. In an attempt to solve this impasse, I will propose a new harmonious Board (replacing several of its current members) to Council at its regularly scheduled meeting in April, as the current one has been rendered dysfunctional. This will allow us to proceed constructively in the renewal of the ECF and its communications and marketing development that we promised at our election.

But, what actually happened and how did we arrive at this point in less than four months? It’s election time in FIDE! Kasparov needed to distract attention from his agreement to pay $1.5m from his charity in the U.S. to a private company in Singapore, 100% owned by Ignatius Leong. Bad enough to have Leong on his ticket, people were saying, but to have bought him away from Ilyumzhinov at such a high cost to deliver a mere 11 (of 158) votes . . . And, Kasparov was unhappy that my presence lent credibility to Zurab Azmaiparashvili’s ECU ticket and, supposedly, by association to Ilyumzhinov (even though I have openly declared that I do not support Ilyumzhinov and am considering standing for FIDE President myself).

Once again (let me count the times) Nigel Short has acted in his own best interest and not in the best interest of English chess … or any chess, for that matter: if Ignatius Leong is getting $1.5m to deliver S.E. Asia, one might ask how much Nigel is getting for the U.K. to topple me. He has teamed up with the otherwise splendid and admirable Malcolm Pein whose shop, charity and tournament benefit from association with Kasparov. Kasparov put direct and relentless pressure on both of them as his agents in the UK to get rid of me. They in turn browbeat their pocket members on the Board (several of whom are employees of Malcolm Pein) to lead this failed coup d’état.

Sincerely,
Andrew Paulson
ECF President”

Earlier, Paulson had given this report on FIDE-AGON to the ECF Board:

Allegations have been made that Kirsan Ilyumzhinov or some other FIDE official(s) representing a conflict of interest are behind AGON. Allegations state that they stand to reap huge profits or that they seek to control the World Championship Cycle for some other nefarious reason, you’d assume that you’d see some evidence of this. None has been offered and there’s only one place to look:

Under the AGON/FIDE Contract (unanimously approved by the Presidential Board; ratified by the General Assembly; publicly available since February 2012), the first four years (two World Championship Cycles, not including the World Cup — 2012-2015) cost AGON over €20m, of which FIDE receives €1.75m (prize fund commissions, the rest being overhead, product development, event costs and prize funds). The ambitious assumption that sponsorship revenue will grow from zero to €5m/year by year four, this implies a loss of about €10m before break-even.

Starting in 2016, AGON starts paying to FIDE 30% royalties on any sponsorship revenues (over agreed-upon base costs) up to $5m, with percentages growing on a sliding scale to 55%. Therefore, in addition to €436k/year in prize fund commissions, assuming AGON was by then breaking even (now requiring about €7m/year), AGON would be paying FIDE an additional €2m/year. As soon as AGON makes a profit, even more goes to FIDE.

The owner(s) of AGON would therefore receive no dividends unless AGON grew sponsorship revenue from zero to €5m/year by year four and continued to grow it to over €10m/year by year eight to pay back the €10m start-up deficit; at which moment, AGON would have only 3 years left to earn money on what would generally be considered a crazy high-risk, capital-intensive investment … before the Agreement was up for renewal with FIDE in year eleven. By which time, AGON would have paid to FIDE €35m. (To put this in perspective, currently FIDE’s budget is about €3m/year.)

FIDE removed from the Agreement any intellectual property, digital rights or broadcast rights — the World Championship Cycle’s principle source of revenue. A sponsor willing to pay millions of dollars for sponsorship of a chess event probably would be interested in communicating the fact of their sponsorship beyond the audience in the playing hall.

Several members of the FIDE Presidential Board commented that the contract was heavily weighted in favour of FIDE! Clearly an understatement.

Having conclusively established that I own 100% of AGON, I hope that this analysis now shows that even were there a side agreement (impossible to disprove), it would reap so little benefit compared to the enormous benefit to FIDE and the chess world that it is immaterial.

[This is an unaudited rough summary with no caveats for innumerable contingent details. It is a ‘best efforts’ attempt to summarise a complicated contract as it is realised in a complicated business model.]

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