FIFA Closes the Books on the ISL Case

Today FIFA released a short 8-page report on the so-called ISL case (here in PDF). The report, which describes a series of bribes or kickbacks received by FIFA officials from the now-defunct marketing company. The report concludes:

1. The ISL case is concluded for the Ethics Committee.
2. I note that Mr. Havelange resigned from his position as Honorary President effective from 18.04.2013 and that Dr. Nicolás Leoz resigned from his positions as a FIFA Executive Committee member, as a FIFA standing committee member and as CONMEBOL President effective from 24.04.2013. Hence, any further steps or suggestions are superfluous.
3. No further proceedings related to the ISL matter are warranted against any other football official.

The substance of the report -- what little there is -- has been commented on elsewhere, see Kier Radnedge, Sepp Blatter, Richard Conway, and Play the Game.

For his part, Sepp Blatter says that no one has tried to bribe him since 1986. Given the staggering scale of corruption involving many (if not most) of Blatter's colleagues now exposed, it is a remarkable statement, but I digress.

The release of the judgment reinforces FIFA's well-earned reputation for a lack of transparency.  The 8 page judgment notes:

The Report of Examination spans approximately 30 pages, and the documents obtained during the course of the examination, including the transcripts of testimonies, comprise approximately 4,200 pages.

Neither the 30 pages examination report nor the documents obtained during the investigation have been made available. Contrast this with the massive dump of information by USADA as part of its "reasoned decision" on doping in cycling.

FIFA finds itself asking people to "trust us" -- hardly a viable position for the organization. FIFA should make available its 30 paper investigation report and 4,200 pages of investigatory materials and allow its stakeholders to see for themselves.

The End of the NCAA?

This week, the Economist points to the hypocrisy that is big-time college athletics:

Under the strict rules of the NCAA, student athletes are not paid for the value they create. Many do get a free education, as well as room and board, a package that can be worth more than $50,000 a year. Defenders of the system say that is plenty.

Yet critics say a scholarship is hardly commensurate with the value of some student athletes. Take Johnny Manziel, the star quarterback at Texas A&M University. According to a study by Joyce Julius & Associates, a research firm, Mr Manziel generated $37m-worth of media exposure for his school last year. Under the rules, he is not allowed to profit from his performance. But critics allege that the NCAA and its members are doing just that. A replica of his number “2” jersey can be bought for around $60 in the university’s online store, and his avatar will appear in an officially licensed videogame.

Similar complaints can be found in an antitrust lawsuit that poses a threat to the current system. The initial challenge was brought in 2009 by Ed O’Bannon, a former basketball player for the University of California, Los Angeles, who tired of seeing his image used in ways that profited only the NCAA and its licensees. He has since been joined by other former college stars. In June a judge will decide whether to certify the lawsuit as a class action involving all current and former student athletes.

If that happens, the NCAA will face astronomical claims. Mr O’Bannon and company want a share of everything from TV contracts to trading-card deals. A settlement upending the system would be the most likely result. Such a deal might set aside a portion of the revenue generated by elite college sports to pay ex-players and create a trust to compensate current student athletes when they graduate. But it would also raise thorny questions, not least over how the money is divided.

Sports Illustrated recently put together a short primer on O'Bannon vs. NCAA. CBS Sports discussed newly released emails from NCAA officials that show deep concern over the implications of the lawsuit:

[N]ew emails made public Friday and published in part at al.com strongly suggest that the NCAA was aware that EA was using real athletes in their games but did nothing to stop them.

"The jersey number along with the position and vital statistics is clearly an attempt to have the public make the association with the current student-athlete," NCAA membership services official Steve Mallonee wrote in a 2005 email to NCAA colleagues. "And it appears to be working ... The biggest concern I have is that such a position really does allow for the maximum commercial exploitation of the (student-athlete), and if that occurs, will it be long before we can defend not giving them a piece of the profits?"

Former NCAA official Bo Kerrin wrote that he considered the threat of revenue sharing with athletes over the games a "real concern," and NCAA Vice President David Berst participated in another 2005 email exchange with an Ivy League compliance coordinator who raised the same issues.

"This seems to go beyond the plausible deniability inherent in selling a jersey with a uniform number but no name on the back," the coordinator, Brian Barrio, wrote. "Is anyone at the NCAA tracking on this issue?"

For a range of informed views on what the lawsuit might mean, see this nice overview by Inside Higher Ed of a panel discussion at the University of North Carolina.

Next stop is a June 20th certification hearing to determine if the suit will be allowed to proceed. Stay tuned.

Travis Tygart Testifies on Doping Before French Senate

Lutte contre le dopage

In French FYI.

Famous Predictions in Sport - Doping in Baseball

On performance enhancing drugs in Major League Baseball:

"Nothing has ever come to my attention that would require a special ruling. It never has come up, and I don't think it ever will."

Warren Giles, President, National League
1969 in Sports Illustrated

Note to US Media: Curious How this Came to Be?

Jack Warner stands accused of fraud and is allegedly being investigated by the FBI.

So how did he get a personal meeting with President Obama?

The meeting was a part of the US effort to win the World Cup, and presumably was brokered by US Soccer and its political allies. Ultimately, the question that will need to be asked (or at least, should be asked), is what did Sunil Gulati know about CONCACAF corruption, and when did he know it?

Jack Warner Responds, Digs Deeper Hole

Last night in a speech to his (former) constituents in Trinidad and Tobago. embattled politicians and former FIFA Executive Committee member Jack Warner offered a response to the recent CONCACAF Integrity Report, which accused him of fraud and other transgressions (the original document prepared by Warner, with exhibits, is here in PDF).

It is not clear that Warner has helped his cause. He explains how a $6 million loan from FIFA to help build the now infamous "Centre of Excellence" (described in detail in the CONCACAF Integrity Report), was converted into a "grant" by then-FIFA President Joao Havelange in exchange for Warner delivering the support of CONCACAF and its 30 votes in the FIFA Congress to Sepp Blatter, Havelange's choice of successor at the helm of FIFA:

Blatter was Havelange’s candidate to succeed him for the FIFA Presidency. Blatter had been at this time the most hated FIFA official. by both the European and African Confederations and without my CONCACAF support at the FIFA elections, Blatter would never have seen the light of day as President of FIFA.

I told Havelange that, through him, Blatter will get CONCACAF’s total support and Bin Hammam also said the same day thing though at the time he did not have Asia’s 100% support as I had with the CONCACAF.

“Votamos como un bloque”, I told my Central American colleagues. In 1997, Havelange came to Antigua for the Shell Umbro Cup and in an invitation meeting at St. James Club, Antigua, again reiterated his request to me. Again I promised him CONCACAF’s total support. Then and there he began to count Blatter’s votes and said that if CONCACAF supported Blatter he will win by thirty votes.

CONCACAF at the time had 30 voting members.

The FIFA Presidential elections were held in Paris on June 8, 1998. I will now ask that the results of that election be read.. . 

The Congress elects Joseph S. Blatter as his successor. Rival Lennart Johansson withdraws after Blatter has gained 111 votes to Johansson’s 80 after the first ballot.. .

Havlange was off by one!!! Blatter had defeated Johanssen by 31 votes.

Warner explains how swinging the election to Blatter made him extremely powerful in FIFA with commensurate rewards:

In 1998 therefore, I had delivered and since then I emerged the second highest sporting personality in the FIFA.

1. I was placed on 6 out of 11 committees,

2. I was the Chairman of 2 and the Deputy Chairman of 2, one being the prestigious Finance Committee of the FIFA,

3. Trinidad and Tobago was given the seat to host the Under 17 2001 World Cup, and

4. Additional financial assistance was given for the further construction of the Center of Excellence.

I was Blatter’s idol then and he was mine.

Warner explains that anything he may be guilty of was because of FIFA's complicity:

It is still a mystery to me to fathom how a little country boy from Todd’s Road, Longdenville and Chaguanas could deceive for so long the mighty FIFA with more than 200 lawyers and an annual budget of US$2 billion for so long.

One must ask the question how did little Jack Warner manage to stay in his corner under the radar and enjoyed so much success for so long? Or is it just that what we are seeing today is the vindictiveness of an oligarchy against one who attempted to challenge the power of a Eurocentric and White regime and thus balance the playing field so that leaders of every colour, race and ethnicity could have a fair chance to become a President of FIFA?

Warner singles out journalists Andrew Jennings, Jens Weinreich and Lasana Liburd as his enemies for their efforts to expose corruption in football.

Warner ended the speech by announcing his intent to compete in the by-election for the parliamentary seat which he just resigned from. Jack Warner is not done yet.

My Abstract for PTG 2013

I just submitted a paper proposal for Play the Game 2013, to be held later this year in Aarhus, Denmark. Here is the call for papers.

Here is my abstract:

An Evaluation of the FIFA Reform Process
Roger Pielke, Jr.
University of Colorado

Following years of allegations of corruption and cronyism, in 2011 FIFA embarked upon an ambitious program of governance reform. The process was championed by the organization’s President, Sepp Blatter, and centered on the creation of a new body, the FIFA Independent Governance Committee. This paper evaluates the FIFA reform effort rigorously, drawing upon the well-developed academic literature on policy evaluation, which has been extensively applied to the appraisal of organizations in the public, private and non-profit sectors. A formal evaluation consists logically of four distinct parts: goals to be achieved, metrics of attainment with respect to goals, data with respect to the metrics and finally, judgments of responsibility for successes and shortfalls with respect to goal attainment. This paper conducts a two-part evaluation of the FIFA reform process as implemented from 2011-2013. A first evaluative perspective considers the overall reform effort according to three different sets of objective criteria. These criteria are drawn from internal recommendations produced by FIFA and its IGC, with a third set of criteria distilled from recommendations for FIFA governance reform put forward by Transparency International, an external governance watchdog. A second evaluative perspective focuses on the performance of the FIFA IGC as an advisory body, applying more general criteria distilled from appraisals of advisory bodies across policy settings. The paper concludes with a comprehensive summary “report card” on the FIFA reform effort and its IGC, and presents broader recommendations for governance reform efforts in sports organizations drawn from the FIFA reform experience.

Comments welcomed!

Lance Armstrong and the Prisoner's Dilemma

Bill Brock, the general counsel for the US Anti-Doping Agency or USADA, explained earlier this week at a panel discussion at the University of Texas that Lance Armstrong would have retained five of his Tour de France titles had he agreed to cooperate with USADA.

Bill Bock, USADA general counsel, at a University of Texas discussion Monday night, entitled “The Real Price of Winning at All Costs: A Discussion about Elite Cycling” ... said that of the Americans the anti-doping body approached as part of its investigation, Armstrong was the only one to refuse to work with his agency. The key question USADA asked, Bock said, was if athletes were willing to be truthful to help the sport.

“Lance is the only American rider that refused that request … had he done that? The reason we could go back and seek disqualification of results from 1998 was because of the subversion of the legal system,” said Bock. “If he had been open and honest with us … we wouldn’t have been able to do that.”

Somewhat shockingly, Bock said that if Armstrong had contributed to the USADA investigation, he would have kept five of his seven yellow jerseys. “Yeah, he would have kept five of them,” Bock said. “And most likely would not have been banned for life.”

Sounds like Lance Armstrong needed to brush up on his game theory.

Rough Rider Trailer

Rough Rider Promo from Wildfire Films on Vimeo.

Alexandra Wrage Explains Resignation from FIFA IGC

If you are interested in FIFA governance and (non)reform, then you should listen to the outstanding interview with Alexandra Wrage conducted by Richard McGovern (@RichardMcGovern) available here (from 52:44-1:11:41).

Wrage also has written a hard-hitting blog post at Forbes, which starts like this:

When FIFA’s leaders could no longer ignore the spate of scandals ranging from World Cup hosting decisions to irregularities in its internal elections, they announced a new “reform initiative”.   The initiative was declared an effort to restore public confidence in the organization, but has done little more than polish the veneer on an outdated men’s club.   The inaptly named Independent Governance Committee was originally comprised of a cross-section of stakeholders, including two people who have since been elevated to FIFA’s Executive Committee, as well as governance professionals.  The process has been expensive and time-consuming, but little has really changed back at FIFA’s headquarters in Zurich.

Read the rest here.

My Questions for Sunil Gulati

Here are the immediate questions that I would like to ask Sunil Gulati upon his election to the FIFA Executive Committee:

You are assuming a role as a member of FIFA's Executive Committee, and are presently a member of the FIFA IGC.

a. Will you be resigning from the IGC? Why or why not?
b. As one who has signed on to the recommendations of the IGC for FIFA officials, will you voluntarily adhere to those recommendations even if they are not adopted as formal policies by FIFA?

Specifically, I am referring to the following provisions recommended by the IGC as "indispensable":

• That the President and all Members of the ExCo as well as the standing Committees of FIFA undergo an integrity check performed by an independent body within FIFA centrally prior to their (re-) election.
• Both, the President and the Members of ExCo should be subjected to limited terms of office.
• The IGC would like to stress the importance of transparency in the area of compensation and benefits. [NOTE: In this case as related to all compensation with respect your roles with CONCACAF and FIFA]

Of course, with respect to each I would like to know why or why not.

FIFA IGC Bits and Pieces

An interesting day:

• Alexandra Wrage has resigned from the FIFA IGC in protest, she has not yet made a public statement but has spoken to several reporters;
• Strangely, Mark Pieth, FIFA IGC chair, attempted to spin Wrange's resignation as being due to the time commitments of the role rather than her frustration with the process. Wrage rejected this characterization;
• In the process Pieth made news by announcing that the IGC (minus Wrage) had unanimously agreed to continue working into 2014, apparently contradicting Sepp Blatter's view of the situation;
• Sunil Gulati, who last Friday was elected to the FIFA Executive Committee as a representative from CONCACAF, finds himself in the interesting position of sitting on the IGC and developing recommendations that will be delivered to the ExCo in May (or before), where he will be a recipient of them. Independent?;
• Gulati is the second of the original 12 members of the IGC to move on to the ExCo. Lydia Nsekera resigned from the IGC last year upon joining the Executive Committee. Gulati presumably will step down from the IGC, but I have not seen that announced.

Did I miss anything?

Stonewalled by Sunil Gulati

Sunil Gulati (pictured above with Sepp Blatter) is the president of US Soccer. He also just won an extremely narrow victory to represent CONCACAF on the much criticized FIFA Executive Committee. On Friday, CONCACAF released a report documenting how its leadership -- including the man Gulati is replacing on FIFA's ExCo -- took the organization for an estimated $88 million. Gulati also serves on the so-called Independent Governance Committee of FIFA which today saw a member resign in protest (Alexandra Wrage, more on that later).

I emailed Gulati requesting an interview as part of my ongoing research into the governance of football. Not long ago Gulati has declined to be interviewed when I contacted him about the IGC, however, in 2011 he did kindly offer some comments on an early version of my recent paper on FIFA accountability.

Today, through a spokesman who just emailed back, Gulati refused again to be interviewed as follows:

Roger,

Thanks for reaching out. I handle most of the interview requests for Sunil.

We just did a call with national media that should be helpful in providing you with some information. I will send along the audio and transcription when it is completed later today.

Also, there will be another time down the road where we will be making Sunil available for questions. We can make sure you are included in that opportunity.

Take care. 

Neil Buethe
Senior Manager of Communications
US Soccer

Gulati is busy no doubt. However, I am a professor doing research (busy also) and can wait for my questions related to governance to be answered on his schedule. The refusal to be interviewed at all speaks for itself in a way I guess. And not in a good way.  Gulati should expect much more attention in his new role. Continued stonewalling of legitimate questions probably can't sustain.

I'll post the transcript of the pooled media interview when I get it (here it is). 

The CONCACAF Integrity Report

On Friday, CONCACAF (the Confederation of North, Central American and Caribbean Association Football) released the report of its "Integrity Committee" which it describes as follows:

The Integrity Committee was established by the Executive Committee of CONCACAF by resolution dated June 26, 2012, and was charged with conducting an investigation of certain matters related to the conduct of the former management of CONCACAF.

Before I get to the top line conclusions of the report let me first note the following recommendation of the FIFA Independent Governance Committee which has not been accepted by FIFA (PDF):

The IGC would like to stress the importance of transparency in the area of compensation and  benefits. The establishment of an expert subcommittee to the Audit and Compliance Committee is an important step. However, the decisions of the sub-committee need to be made public, to the same degree as in not-for-profit organizations and other international organizations.

As you will see, this is not a matter such as making Sepp Blatter's compensation public, but rather, a matter of preventing the wholesale looting of football associations for personal gain.  Onto the report.

The report focuses on the activities of Jack Warner and Chuck Blazer (pictured above), both of whom have been discussed on multiple occasions on this blog. Here is the remarkable list of top line conclusions of the report:

• Warner Committed Fraud Against CONCACAF and FIFA
• Warner Committed Fraud and Misappropriated Funds from FFA
• Warner and Blazer Breached Their Fiduciary Duties to CONCACAF
• Warner and Blazer Violated the CONCACAF Statutes
• Warner Violated the FIFA Ethics Code
• Blazer Misappropriated CONCACAF Funds
• Warner and Blazer Breached Their Fiduciary Duties to CONCACAF
• Blazer Violated the CONCACAF Statutes
• Blazer Violated the FIFA Ethics Code
• Blazer Violated U.S. Federal Tax Laws
• Blazer Breached His Fiduciary Duties to CONCACAF and CMTV
• Blazer Violated the CONCACAF Statutes
• Warner and Blazer Committed Fraud Against CONCACAF
• Warner and Blazer Breached Their Fiduciary Duties to CONCACAF
• Warner and Blazer Violated the CONCACAF Statutes

Not surprisingly, neither Warner nor Blazer cooperated with the investigation meaning the the investigators relied a great deal upon investigative reporting from the media to assemble the report. This means that much of the information in the report has been publicly available for some time, and should serve as (another) vindication of the excellent reporting that has been done by reporters, and largely ignored by FIFA (or worse, treated hostile fashion).

The scope of the alleged fraud is remarkable, totaling to the tens of millions of dollars. It is also comedic in its apparent brazenness. One of the holding companies that Jack Warner incorporated to take ownership of a FIFA-sponsored football training center -- called a Centre of Excellence -- the report alleges, was named Renraw Investments Limited. Yes, that is "Renraw" as in Warner spelled backwards.

FIFA was contacted by the CONCACAF Integrity Committee on this issue. Here is how the report characterizes the response:

As FIFA informed CONCACAF in 2012, based on its review of records, it “was never aware that the Centre of Excellence would not be owned by CONCACAF."

Because FIFA has also rejected the following recommendation of the IGC, FIFA is in effect saying that it does not want to have the capability to identify such fraudulant activities -- even when it comes to the misappropriation of FIFA funds.

That the President and all Members of the ExCo as well as the standing Committees of FIFA  undergo an integrity check performed by an independent body within FIFA centrally prior to their (re-)election.

The scale of the alleged corruption is staggering. The report quotes Chuck Blazer as saying:

“[T]here are so many things that we could have done with the 10s of millions of dollars wasted there.”

Here is tabulation of the looting of CONCACAF according to my reading of the report:

• $16 million (misappropriated Centre of Excellence, from FIFA, T&T)
• $10 million (more COE, from FIFA FAP funds, other?)
• $462,000 (COE, from Football Federation Australia)
• $11 million (CONCACAF expenses paid to Warner)
• $20 million (CONCACAF compensation to Warner)
• $20.6 million (CONCACAF compensation to Blazer)
• ~$10 million? (CONCACAF for Trump tower apartment, Miami South Beach apartments, Bahamas apartment, a Hummer, American Express account, insurance)

This totals to a staggering $88 million!

The Integrity report concludes:

The record leaves no doubt that Jack Warner and Chuck Blazer did much to promote and develop the sport of football both in the CONCACAF region and globally over a period of more than two decades. Each man deserves considerable credit for his contributions to the advancement of football. Nevertheless, it is equally apparent that Warner and Blazer, together and individually, used their official positions to promote their own self-interests, and frequently acted with disregard for the interests of the CONCACAF member associations and with disdain for the rules that governed their conduct. Furthermore, it is apparent that Warner and Blazer each was aware of the risk of potential misconduct posed by the other and was most capable of holding the other accountable; but neither did so, at least in part, to preserve the unfettered freedom to act in his own self-interest. This mutual lack of accountability enabled Warner and Blazer to coexist in unity for many years until May 2011, when Blazer disrupted the balance by reporting Warner to FIFA for ethics violations related to Mohamed bin Hammam’s campaign for President of FIFA.

The Integrity Report leads to questions:

• What will FIFA do in response?
• What will CONCACAF do in response?
• What will Sunil Gulati, newly elected CONCACAF representative (US) and FIFA IGC member, do in response?
• What will US authorities do in response?

Football governance has reached another important fork in the road.

UCI Impeaches its Credibility

The Union Cycliste International (UCI), the international body which governs cycling, released a 9-page statement today (here in PDF) seeking to justify its behavior in an important episode in the Lance Armstrong affair. Instead, UCI gives more reason to call for a deeper investigation of the organization.

In what is now well understood and accepted by Armstrong and his accusers, in 1999 Armstrong used a prohibited steroid in a race prior to the Tour de France, which was detected in doping tests at the Tour. The USADA Reasoned Decision explains (here in PDF):

On the first day of the Tour Lance seized the yellow jersey by winning the prologue. A few days later the USPS team was notified that Armstrong had had a corticosteroid positive. According to those who were there, Armstrong did not have a medical authorization at the time to use cortisone and the positive drug test result set off a scramble. Tyler Hamilton remembers, “a great deal of swearing from Lance and Johan, and Dr. del Moral repeating, ‘¡Qué lío!’”Tyler said, the “general understanding was that they were scrambling to come up with something because Lance had used cortisone without medical authorization.”

Emma O’Reilly was in the room giving Armstrong a massage when Armstrong and team officials fabricated a story to cover the positive test. Armstrong and the team officials agreed to have Dr. del Moral backdate a prescription for cortisone cream for Armstrong which they would claim had been prescribed in advance of the Tour to treat a saddle sore. O’Reilly understood from Armstrong, however, that the positive had not come from a topical cream but had really come about from a cortisone injection Armstrong received around the time of the Route du Sud a few weeks earlier. After the meeting between Armstrong and the team officials concluded, Armstrong told O’Reilly, “Now, Emma, you know enough to bring me down.”

Armstrong admitted that events transpired as related by O'Reilly in his inteview with Oprah Winfrey.

Today, following a report in a Belgian newspaper that Armstrong had actually failed four drug tests in the1999, not just the one that was admitted by UCI at the time, the UCI released its 9-page statement in an apparent effort to absolve itself of any responsibility. The new information comes from a leaked internal UCI memo which Cycling News has published.

However, the memo does exactly the opposite. It shows that Armstrong had tested positive for the steroids three times prior to the UCI press release of 21 July 1999, and once after. The UCI failed to release that information in 1999, and in fact, implied that there was only one failed test on July 4, 1999. Even more remarkably, during the events of the past year when the full scope of Armstrong's doping became widely known and accepted, UCI continued to keep secret the 1999 tests. It is very difficult to come to any conclusion other than UCI was being economical with the truth back in 1999 and has continued to do so -- leading to an obvious question: Why?

I'm not sure what has become of the idea of a full investigation of UCI, but clearly there are skeletons rattling around in its closet.

Here is that 1999 press release courtesy of UCI:

New Sports Governance Research from Europe

Jens Sejer Andersen AGGIS Interview from Play the Game on Vimeo.

Last week in Brussels, several institutions from across Europe held a seminar on the results of an EU-funded project titled "Action for Good Governance in International Sports Organisations (AGGIS)."

One of the tools developed by the project is called the Sports Governance Observer, which is a tool to allow for the systematic evaluation of the governance of sports organization -- a report card of sorts.

Above, Jen Sejer Andersen of Play the Game, discusses the AGGIS project and the new tool, which is to be released at the Play the Game conference in October. The presentations from the Brussels seminar can be found here. The final report of the AGGIS project, which is full of valuable data, history and analysis can be found here in PDF.

Here is another short interview with an AGGIS researcher, Barrie Houlihan of Longhborough University, see the AGGIS website for more interviews with researchers:


Barrie Houlihan AGGIS Interview from Play the Game on Vimeo.

The Tiger Rule: USGA 33-7

Here it is:

33-7. Disqualification Penalty; Committee Discretion

A penalty of disqualification may in exceptional individual cases be waived, modified or imposed if the Committee considers such action warranted.
Any penalty less than disqualification must not be waived or modified.
If a Committee considers that a player is guilty of a serious breach of etiquette, it may impose a penalty of disqualification under this Rule.

I note that "exceptional individual cases" is undefined. Thus, a decision not to disqualify Tiger is entirely appropriate, as under any number of criteria this situation is surely an "exceptional individual case."  The two-stroke penalty that Tiger was assess comes apparently from Rule 20-5.

For background on the whole situation, see ESPN. The NYT provides a run down of potentially relevant rules.

And here is the statement from The Masters, identifying Tiger's TV interview as the source of information leading to the controversy.

NCAA Brackets: Why Skillful Prediction is So Difficult

Last week I explained that Nate Silver, the widely admired NY Times blogger and political prognosticator, has been unable to demonstrate an ability to skillfully prediction the NCAA basketball tournament over the past three years.

Silver's quantifications did put Louisville as the most likely team to win the tournament -- which they did -- but that was hardly a skillful prediction as Louisville was tabbed by the NCAA selection committee as the overall number 1 seed. You wouldn't have needed any fancy methodology to pick Louisville, as they were the obvious and naive choice.

Writing at The Sports Economist blog, Victor Matheson provides some data to help explain why it is so difficult to show skill in predicting the NCAA Tournament:

Seed	Men’s Tournament, 1985-2011
	Win Margin	Win %
1	25.84	100.0
2	16.77	96.2
3	11.53	84.6
4	9.49	78.8
5	4.54	66.3
6	3.94	68.3
7	2.20	58.7
8	-0.16	48.1

He explains:

[H]istorically, the people at the NCAA who put together the brackets have done a remarkably good job seeding the teams. Obviously, there is always uncertainty of outcome in any sporting event – that’s quite a bit of the allure of spectator sports – but higher seeds tend to do better than lower ones and beat lower seeds by higher margins. Here’s the data since the men’s tournament went to a fully seeded 64-team tournament (minus the last couple of years I haven’t gotten around to updating yet.)

What the data show is that if you had simply picked the higher seed to win each game in the first round of 32 games, you would have achieved a greater than 75% success rate in predicting winners. Beating that level of forecasting is difficult, obviously.

It is no different for weather forecasters and mutual fund managers -- As Neils Bohr once said, prediction is hard, especially so when it is about the future.

A Newly Informed Guesstimate at Sepp Blatter's FIFA Salary

In a 2011 blog post, Grant Wahl of Sports Illustrated appeared to have uncovered some new information on FIFA executive compensation. That information came to my attention today in a new NBC News story on FIFA compensation (and this appears to be the original source this week).

Below, I use this information to generate an informed guesstimate of Sepp Blatter's FIFA salary (shown above illustrating the size of his pay package).

Wahl wrote in 2011:

Mohamed bin Hammam, a FIFA executive committee member from Qatar who is challenging Blatter for the FIFA presidency, told SI.com that he made 200,000 euros ($281,720) from his FIFA duties in 2010. Bin Hammam added that he believed other executive committee members (aside from Blatter, who spends far more time on the job) earned the same amount in 2010.

"We don't get any salaries," Bin Hammam said. "We are only getting bonuses [and FIFA expense reimbursements]." One FIFA source told SI.com that personal bonuses for the executive committee are larger in years when FIFA's profits are higher, as was the case in 2010.

Bin Hammam, a wealthy businessman, insisted that he did not collect his $281,720 for 2010, saying: "If you go to FIFA and ask them, 'How much do you owe Bin Hammam?' they will tell you how much money I have with FIFA. ... It is there in my name and it belongs to me. I don't collect it. I don't collect most of it, let me say. But this is not only me. I believe most of my colleagues are the same.

"I don't think FIFA has to hide anything. It is not in FIFA's interests, and not in the interests of the people who are receiving this," said Bin Hammam, who promised that FIFA would reveal "100 percent" of its pay packages for the president and executive committee if he is elected. "Why should we make this so secret and make the public always have a question about it?"

Bin Hammam provided considerably more detail than FIFA was willing to give.

In my recent article on FIFA I provide some of the big picture numbers on compensation from the FIFA budget documents that are public record (here in PDF):

In 2010 FIFA reported compensation for its ‘‘key personnel’’ (Executive Committee, Finance Committee and FIFA management) of $34.5 million, representing an increase of almost 11.5 million – almost 50% – over 2009 (FIFA, 2011b). Using employee numbers from the FIFA website this works out to an average compensation of about $1 million per person (FIFA, 2011d). (The Executive Committee has 24 members and FIFA describes its management to include 10 officials.)

The new numbers aloow us to do a bit of simple math.

In 2010, if 24 Executive Committee member, minus Sepp Blatter, each made $281,720 then that totals $6,479,560, leaving about $28 million to be allocated among 10 management officials. The average is $2.8 million. If we assume that Sepp Blatter makes twice the average then that would place his salary at ~$6 million per year (or at least, in 2010).

To one significant digit, I'll offer that as a first best guess at Sepp Blatter's salary. Any takers on the over/under?

Interview with Alexandra Wrage, FIFA IGC

Alexandra Wrage, president of Trace International, has kindly agreed to be interviewed about her experiences as a member of the FIFA Independent Governance Committee. Recently, Wrage has made some provocative comments about the FIFA reform process which I have discussed here and here.  You can read an interview of Michael Hershman, another FIFA IGC member, that I did last October here.

My questions and Wrage's replies follow.

What has been your role in the FIFA IGC over the past several years?

Shortly after being asked to form the IGC, Mark [Pieth] approached me and asked if I would be interested in working with the group. I have known Mark for many years, both because of his work on the OECD Working Group and because we have worked together, informally, on some “best practices” projects. The group has met several times in Zurich and during the Budapest Congress and, between meetings, has communicated over lengthy conference calls. Calls can be challenging because of the different locations and languages, but the group has worked hard to keep the conversation going between formal meetings. As you know, our next meeting will be next week in Zurich.

The organization that you head, TRACE International, performs due diligence reviews for organizations seeking to comply with laws and guidelines against corruption. If FIFA were to be a client, how would it score from a TRACE perspective?

I’ve never really thought of it that way! TRACE does indeed undertake due diligence, as well as anti-bribery training, consulting and audits. The due diligence work we do is almost always collaborative. That is, we start by asking the entity a series of questions that we then use independent means to either verify or refute. It’s a positive and iterative process that generally results in a very robust due diligence report. So, my answer depends on whether I can assume that FIFA would cooperate and provide all requested information. If not, then they wouldn’t make it through the process.

How effective has the IGC been from the standpoint of an independent advisory body? More broadly, what grade would you give FIFA’s reform process (including the IGC and FIFA itself) and why?

The reform process has had two distinct stages. The formation of the two chambers has been largely successful and, if they are left to run as they should, they will be effective. The second stage has not been successful. This includes the transparency around compensation and benefits, a robust independent vetting process and, critically, independent oversight of the ExCo. These fairly standard and usually uncontroversial steps toward more transparency were dropped by the ExCo. As such, a respectable grade on the first round, and, well, 0/3 has to be a failing grade on the second round, right?

Lord Triesman, former FA president, said last October at the EASM conference in Aalborg, Denmark that "FIFA as it stands is incapable of cultural change, its current leadership will have to go." Do you agree with this statement? Why or why not?

I am not sure I agree that any organization is “incapable of change”; a lot of companies guilty of egregious violations of law have rehabilitated themselves over time. In fact, I think there are few things as powerful as senior management at companies or the leadership at international organizations standing up and saying “it’s time for change; we support it, we’ll fund and staff it and everyone should consider this a top priority”. This would have to be the first of many steps that demonstrated commitment and constancy. FIFA – like any organization - is capable of cultural change, but they have to take the steps necessary to get there and dropping key reforms is going to weaken the process and damage their credibility. Without that, efforts can generate cynicism very quickly and people will begin to conclude that the political will wasn’t there in the first place.

How well is the new investigation/adjudication process working? It is impossible to tell from the outside -- for instance, FIFA rendered a final judgment on Mohammed bin Hammam, but never released a report. Should such investigations resulting in sanctions be made public (A parallel example would be along the lines of information released upon the rendering of CAS judgments)?

First, I think it’s too soon to say whether this process is working. The sample is too small. It seems to be moving in the right direction, but we don’t know the universe of cases, which cases are being pursued and which are not, how priorities are set, etc. I am not suggesting this isn’t being done appropriately, we just don’t have much visibility into it. There is a relatively new practice in the corporate world that might work well here, although not for the most notorious cases. Companies are increasingly willing to publish examples of wrongdoing and the related sanction, but sanitized of individual details. Any measures that would give the larger community more visibility into the process without violating the rights or privacy of individuals would be welcome.

FIFA's issues are not unique, we see similar issues across sport (recent issues involving UCI/WADA/USADA come to mind). Do you have some more general recommendations or thoughts on how to improve sport governance more broadly, based on your term on the FIFA IGC but also your broader experience with corporate governance more generally?

This is difficult, as you know. In the corporate world, where I usually work, if the shareholders want something, they generally get it. In the sports worlds, the fans tend to have no voice, the sponsors have clout, but don’t want to get involved and things just tick over as they always have. But there are other options. These organizations are non-profits, typically, and subject to the laws of the countries in which they’re headquartered. Regulating non-profits is in the public interest. Where is the Swiss government in all of this? The IGC has never had any means by which to compel change, but the government certainly does and has shown an extraordinary lack of initiative or commitment in that respect.

Finally, you have raised the possibility of stepping down from the IGC. What is your current thinking on such an action?

The IGC is meeting next week. The consensus when we last spoke was that we should decide next steps then. It’s difficult for this group, across different time zones and speaking several languages, to communicate by conference call. For my part, I will stay as long as there is any realistic opportunity to effect change and then I’ll leave. Unfortunately, we’re quickly running out of such opportunities.

Thanks to Alexandra for taking the time from a very busy schedule!

bin Hammam Turns Down Interview Request

@keirradnedgeIt looks to me a bit late Mr Radnnedge..I don't want to disturb my family life any more.
— Mohamed Bin Hammam (@Bin_Hammam) April 7, 2013

Mark Pieth Threatens FIFA with a Nuclear Option

In an apparent violation of Sepp Blatter's prohibition against speaking out, Mark Pieth, head of FIFA's Independent Governance Committee, today threatens FIFA with the possibility of what might be called a "nuclear option":

FIFA reformer Mark Pieth is perplexed by European opposition to a key part of his plan for wiping out corruption in soccer's governing body.

He suggested that if reforms were not forthcoming at FIFA's annual Congress in Mauritius in May, the Swiss government could hit FIFA where it hurts by making the organisation pay tax.

Pieth expalins what the consequences might be if the Swiss government were to revoke FIFA's non-profit status:

Pieth added that the ultimate punishment could be handed out by the Swiss government by ending tax exemption for the international sports organisations based in the country.

"This is plan B for Switzerland," he said. "We have between 40 and 60 associations. Switzerland as a country has to ask the question, 'will FIFA reform itself?'

"If it doesn't, there is a brutal way: tax. They are all tax exempt, but the government could say it has to understand the finances and if there is no governance, no tax exemption. "Maybe some of those associations will leave Switzerland, this is a risk we have to accept if we to take ethics seriously. Let them go to Qatar or other countries."

It is not clear if Pieth's threat is based on any serious proposals being considered by the Swiss government -- I have not heard any such proposals being advanced -- but his comments do indicate Pieth's return to outspoken public criticism of the organization. I suspect that we will be hearing more from Prof. Pieth in the near term.

Home Field Advantage in the "Appealability" of CAS Judgments

An article in the Arbitration Newsletter Switzerland explains how a recent judgment of the Court of Arbitration for Sport was overturned by the Swiss Federal Supreme Court (here in PDF). The details of the case and the process that lead to the overturning of the CAS decision are interesting but not the focus of this post.

Here I draw attention to the author's claim that the low number of CAS arbital decisions overturned by the Swiss Federal Supreme Court is an indication of the high quality of those decisions. The article explains:

[S]ome practitioners in the field of commercial arbitration are of the view that CAS Awards lack sufficient quality and use the high number of sports related cases submitted to the Federal Supreme Court as an argument.

We believe those practitioners are wrong, and this for the following reasons:

• Under the regime of Chapter 12 of PILA, starting as per January 1, 1989, the CAS has up to December 31, 2011, rendered in total 1674 awards. The figures of cases resolved in 2012 are not yet available, but alone in this year CAS registered an impressing number of 362 new cases. Out of those 1674 awards rendered up to December 31, 2011, only 7 were squashed by the Federal Supreme Court6. The present decision is now number 8.

While a record of 1667-7 is indeed impressive, it must be considered in the context of the procedural difficulty in actually challenging a CAS decision.

The most recent Bulletin of the CAS included a lengthy article on the "appeal-ability" of CAS judgments under Swiss law by a Swiss lawyer and former member of its parliament, Charles Poncet (here in PDF). The article is worth reading in full, but the short answer to the question of "appeal-ability" is: Not easily.

Poncet writes:

The time-limit to appeal a Swiss award is extremely short: thirty days and unlike otherwise comparable systems a fully reasoned and argued brief is expected within that time limit. Any argument raised later – in a reply for instance – will be rejected by the Court if it was not already developed in the original appeal.

This makes counsel’s task quite arduous: within thirty days a file needs to be mastered, at least as to the facts, testimony and legal arguments germane to the issues to be argued in the appeal. As international arbitrations develop into ever more complex litigations this may be quite a challenge given so little time. The appealing party is unlikely to be able to handle French, German or Italian, thus making English or other translations of the draft brief a necessary, albeit almost impossible requirement because by the time one or several lawyers have (i) become acquainted with the facts and the record of the arbitration (ii) recognized the legal issues to be raised in the appeal (iii) drafted a thorough brief meeting the fairly strict requirements of the LFT and case law, there will be merely a few days – sometimes a few hours – left before the filing deadline. Whilst theoretically possible, appeals drafted by foreign counsel only are not advisable in practical terms. It takes a fairly experienced Swiss lawyer to work her1 way through the pitfalls of admissibility requirements, yet cooperation between foreign and Swiss counsel will be reduced to a minimum by the constraints of time unless one takes the precaution of associating Swiss counsel to one’s team well in advance. Whilst undoubtedly helpful to the prosperity of Swiss law firms, this seems to defeat the very purpose of international arbitration, which is to make it possible for a party to appear with counsel it feels comfortable with without resorting to expensive and sometimes hardly useful local assistance.

Last but not least, as we have seen above, the costs involved in Swiss appeal proceedings can be very significant when the amount in dispute is high, which is a very frequent occurrence in modern commercial or investment arbitration. It is hardly advisable for a jurisdiction wishing to remain a favorite venue of international arbitrations to cause litigants to spend hundreds of thousands of dollars to be told merely that the matter is not capable of appeal or that an appeal should have been made earlier.

The practical difficulty of challenging CAS judgments represents a significant obstacle to the development of a legitimate and comprehensive body of lex sportiva -- sports governance jurisprudence. It also helps to explain why the CAS has such an apparently impressive record of not being overturned.

Limits of Austerity in European Banking and Football Clubs

At the Guardian today Stefan Szymanski has a neat post which compares European banking an football. He writes:

Contrary to appearance, there is little difference between a football manager and a bank manager. Both are gamblers who use other people's money to bet on the next big thing. Both work hard to present an aura of invulnerability and inevitability, when in reality both are exposed to the fickle laws of chance.

The principle of banking is to borrow short and lend long, giving rise to two sorts of risk – liquidity risk (depositors want their money back) and solvency risk (the long-term investment you lent to went belly up). Usually it is insolvency that leads to a liquidity crisis and general failure.

The principle of football is to buy players today in the expectation of future success and income, which also gives rise to liquidity risk (the future revenues are slow to arrive) and insolvency risk (the future revenues never arrive).

Given that we cannot live without banking or football, both sorts of manager are prone to moral hazard – taking excessive risk today in the knowledge that if things don't work out tomorrow then the organisation is too big to fail. Banks and football clubs almost never disappear, but they often have to be propped up when they fail.

Austerity won't work in banking (see Martin Wolf) and it won't work in football either:

Many people argue that Europe's austerity policy is not tenable in the long run if it impoverishes the poorer nations, and much the same can be said of the financial fair play regulations. Sound finance is a worthy goal, but not if it guarantees German and English dominance (in the latter case funded by international broadcast income) at the expense of the game's traditional southern powers.

Smart stuff. Do read the whole thing.

So Does Nate Silver Have NCAA Skill?

At the start of the NCAA tournament I noted that Nate Silver's past few NCAA brackets failed to show skill. What that means is that Silver's predictions failed to result in more winning picks at the start of the tournament than one would achieve simply by picking the higher seeded team to win each game.

I then went out on a limb with a prediction:

I am going to go out on a limb and predict a >50% chance that Silver's 2013 predictions fail to show skill as well.

With the Final Four set and only Louisville left in both Silver's bracket and the top seed naive bracket we can declare a winner.

• Silver's bracket resulted in 41 correct picks from 60 games.
• The top seed naive bracket resulted in 41 correct picks from 60 games.

All the fancy methodology and analysis performed no better than a naive bracket. Sorry Nate, still no skill! ;-)

It is easier to predict predictions than to predict the real world.