Tuesday, 31 May 2011

Blattered !!

Author: Peter Burton

In 1996 Joao Havelange retired as President of FIFA. Serge Blatter, a Swiss Lawyer and Havelange's chosen successor defeated the reform candidate Lennart Johannsoon (a Swedish truck magnate). Johansoon had stood on a platform of transparency, accountability and greater recognition within FIFA for European pre-eminence. Blatter did the rounds in the heart of Johannson's support in Europe and Africa, blatantly electioneering under the guise of official business with Havelange at his side. He won 111-80 in the first round of voting and there was no need for a second round.

Havelenge's authoritarian and patrician-charm style was replaced by an extensive system of bureaucratic power. Blatter's staff were hand-picked at the Presidential office and an enlarged phalanx of kept support was sent on official business. Five-star hotels, business class flights, black Mercedes, $500-a-day expense accounts with no receipts required all became the norm. As if that wasn’t enough $50,000 "honorariums" were given to all Executive Committee members. This combined with a new level of opaqueness over all financial transactions. Blatter's salary, expenses, emoluments and accounts remained top secret in spite of numerous requests from the Press and UEFA. Massive debts owed to FIFA from Confederations and Football Associations were written off without any good reason given

Blatter's first three years from 1999 to 2001 coincided with an economic boom, the growth of digital television, inflated TV rights deals, the expansion of the Champions' League and a transfer market that visibly increased its prices for players. The bubble seemed to burst in 2001 when FIFA's main marketing partner, International Sports and Leisure (ISL), went bankrupt. Extraordinary financial transactions were revealed and included $60 million due to FIFA from the Brazilian TV company Globo for World Cup rights in secret bank accounts.

£200 million sponsorship money was simply missing. Under Blatter companies like Coca-Cola and McDonalds were prepared to pay FIFA millions in exchange for their brand name being sold to billions of people worldwide at the World Cups. Difficult markets to break into like China and Russia became accessible. And FIFA was prepared to take companies to court to guarantee exclusivity.

Blatter's solution to the burst bubble – a huge private securitization deal – a large loan at above market rates secured for the creditors against the income FIFA would receive for selling TV rights to the 2002 and 2006 World Cups in the future. Opposition within FIFA mounted to Blatters's methods.

The crises deepened with the collapse of European companies who had gambled on investments on television rights for subscription channels. The mighty German conglomerate Kirch Media took over these companies investments after ISL collapsed. Kirch already had the rights to the 2002 and 2006 World Cups. They now took the rest of the tournament rights and sold them across the world. In April 2002 it collapsed too under a mountain of debt and unachievable income projections.

This was the final straw for the then FIFA General Secretary Michel-Zen Ruffnen who distributed a detailed report on all the financial mismanagement that had been going on to the FA Executive. Eleven of its members were so alarmed they took court action at the Swiss public prosecutor's office in Zurich..

Blatter's response was to indirectly call an extraordinary meeting of the Executive on the eve of the 2002 World Cup at the Seoul Hilton. A succession of FA Presidents close to Blatter were wheeled out to offer paeans of praise to Blatter. No one critical was allowed to contribute. Blatter's critics were themselves criticised incoherently by a succession of FA Presidents loyal to Blatter. Adam Crozier, the then head of the English FA, described it as "an absolute disgrace from start to finish. There was no attempt at transparency in two hours of manipulation".

When the votes rolled in the next day, Blatter had won an even bigger margin than in 1998 – 139 votes to 36. Leo Mugabe - nephew of Robert Mugabe and President of the Zimbabwean FA - commented "It is shocking...this is a travesty of democracy". When Adam Crozier and Mugabe's nephew are outraged you know it’s been a bad day for democracy.

The threat of intervention from seriously powerful organisations like the European Commission led Blatter to adopt the language of his enemies and he also set up a Committee of Investigation. He appointed Ricardo Teixeira and Jack Warner to this committee - the two most corrupt bureaucrats he could have picked.

In Spring 2006 it was revealed Jack Warner’s family travel agency was selling World Cup ticket packages straight out of the Football Associations allocation. Asked for an explanation by Blatter he said he and his wife had resigned from the board of the travel agency and so there was no conflict of interest, an explanation that was accepted. Since then the allies in corruption have fallen out, with Blatter raising the need for a corruption investigation into his rival for the Presidency Mr Bin Hamman (a Qatari billionaire) on the eve of the election for President.

Since the 2002 World Cup a global pandemic of corruption has grown with much match-fixing. The biggest clubs have grown much richer and more powerful at the expense of smaller clubs. A globalised international financial elite now controls football in which the winners are a few rich clubs, some star footballers and their agents and the owners and controllers of the game from a world of corporate finance. Many of them have little or no real interest in the game. The governing bodies like the FAs often have conflicting interests with FIFA and other regulators of the game and in any case are cash dependent on FIFA. Blatter's "Ethics Committee" has represented that corporate elite in stating that he has "no case to answer". The losers will continue to be the smaller clubs, the fans and the beautiful game itself.

No comments: