Wednesday, August 31, 2011

Financial Fair Play in UEFA

According to today's FT, UEFA's Financial Fair Play regulations related to teams in the Champions and Europa League competitions have yet to curb the profligate spending of most of the biggest European clubs:
The European Club Association, which represents around 200 clubs across the continent, said the new era of financial prudence instigated by Uefa, in conjunction with the ECA, has yet to be acknowledged by some of its members.

The ECA signed up to Uefa’s Financial Fair Play doctrine, which requires clubs to spend within their means and which takes effect from this season. Under the rules of FFP, clubs have three seasons, starting with the one just commenced, to get their finances into shape.

But Michele Centenaro, general secretary of the ECA, said: “Looking at this year’s summer transfers, the impression is that not all clubs have really understood what Financial Fair Play means. And that is a bit worrying.”

The ECA declined to say which clubs were causing concern. But its general worries follow an ominous warning from Michel Platini, the Uefa president, about the game’s financial problems.

“Red lights are flashing,” he told journalists in Monaco last week. “We cannot live with billions of euros of deficits without paying the consequences one day or another.”
One reason why there may be little concern about the regulations is that UEFA has no sanctions in place until 2013/14, although the spending for the two previous seasons (and starting this year) will determine those sanctions.  This sets up a prisoner's dilemma sort of calculus for the top clubs -- Limit today's spending and risk missing out on next year's Champions League revenue? or Spend freely and risk sanctions 3 years down the road?  It is not hard to see why clubs continue to spend.

According to UEFA (here in PDF) there is an enormous disparity in the spending among European clubs,
The 10 clubs with the largest spending power again spent almost double the next 10 largest clubs on wages (€1’620m) & net transfer costs (€152m). The difference between clubs narrows the further down the rank order with clubs 11-20 spending 30% more than clubs 21-30 who spent 14% more than clubs 31-40 who spent 24% more than clubs 41-50 and so on. The clubs ranked 101-200 by personnel cost expenditure reported €71m net profit from transfers again underlining how the transfer system acts as a mechanism for the financial redistribution of wealth.
Why do clubs spend so much?  UEFA explains that there is an extremely high correlation between spending on personnel and sporting success, and shown in the following graph for the top leagues in Europe.
The skewed nature of the graph arises from the fact, as UEFA wryly explains, that there is an upper limit to success but not to spending. With spending so closely correlated with success, perhaps UEFA might have instead chosen to focus on buoying the lower level teams, rather than limiting those at the top.  Even Manchester City, it seems, can continue to spent and survive Financial Fair Play.

Caribbean Football Post-Warner

Lasana Liburd of the Trinidad and Tobago Sunday Express has a sobering stock-taking of the state of Caribbean football up at PTG. The piece shows just how far-reaching the consequences of FIFA reform will have to be -- arguably change is already underway.  

Here is an excerpt:  
The system of power that allowed 25 Caribbean nations with a total of four World Cup final berths between them—one each for Haiti, Jamaica, Trinidad and Tobago and Cuba—more clout than South America always seemed incongruous. Democracy irked the more established football nations. 

Arguably, the greater sin was in the fact that the Caribbean’s elevated status on FIFA’s political ladder rarely translated into tangible support for the regional teams.

Trinidad and Tobago came within a point of the 1990 World Cup and then went a step further in 2006, Jamaica qualified in 1998 while St Vincent and the Grenadines, St Kitts and Nevis and Barbados enjoyed periods of relative success in between. In almost every case, the financial rewards for their positive showings was not administered in a way that would benefit the island’s football structure or never made it into the coffers of the respective associations at all.

Islands pocketed millions from FIFA grants and developmental programs without properly accounting for its use.

Nearly half the member associations charged with improper conduct in relation to the Bin Hammam bribery scandal have not played a single international game in this calendar year. And yet there they were with hands out for oil money as they mused over the possible identity of the next FIFA President.

Monday, August 29, 2011

Declan Hill's Ten Commandments for Anti-Corruption

Declan Hill offers "ten commandments of anti-corruption" and they are summarized below in abbreviated form (see his blog for more detail):
The Ten Commandments

1) Thou shall have an anti-corruption hotline

2) Thou shall have a security department for the league

3) Thou shall make sure the players and referees get paid well and on-time

4) Thou shall make it obligatory to report attempted match-corruption

5) Thou shall issue genuine lifetime bans for corruption

6) Thou shall implement an effective education program for players and referees

7) Thou shall put into place an effective anti-addiction program

8 Thou shall have proper educational or medical benefits for players and referees

9) Thou shall oblige sports gambling companies, if they want to bet on the games in your league, to share accurate information about the odds movements and bettors who are betting on the games.

10) Finally, you would like to know how can all these reforms can be financed? Again, this is very easy. The legal sports gambling industry is enormous. The market is worth tens of billions of dollars. If Bwin, Betfair, Paddy Power, Ladbrokes, William Hill, Bet365, members of the World Lottery Association and other legal gambling companies want to offer bets on sports – then they must pay to make sure that sport is clean. I am not talking about a large share of their profits. I propose a figure of one-percent of their total gross revenue to finance integrity reforms, but one-percent of billions is a lot of money to protect sports. 
Hill writes, "if a sports association does not put into place at least four of these reforms then, please, do not believe them when they make their solemn declarations of wanting to clean up their sport."

The Wit and Wisdom of Sepp Blatter

Sepp Blatter, FIFA president, has said some interesting things lately.  On England's call for reform in FIFA:
"This animosity comes from England," said Blatter. "The timing of the accusations is interesting. It was just around the time when they failed to win hosting rights to the 2018 World Cup. Three weeks before the presidential election these accusations emerged.

"Let me tell you the truth: All this has been an act of revenge for [England's Sir Stanley Rous] having lost the Fifa presidency in 1974 to [Brazil's] João Havelange [pictuerd to the right with Blatter]. Still, they cannot accept that they no longer control Fifa. Since they cannot regain the presidency, they decided they would try to destroy it."
Blatter, who is Swiss, adds another interesting explanation for the increasing pressure on FIFA:
"Europe will do everything it can to win the presidency,'' he added. ''I would say, to regain, because they do not consider me European. To prevent this war, we are going to create a formula for this election. We will have renewal, not revolution."
Perhaps the Europeans think that Blatter is Egyptian?
The European Club Association chairman, Karl-Heinz Rummenigge, has called on the Fifa president, Sepp Blatter, to introduce reforms in football's world governing body or risk the fate of the toppled Egyptian President Hosni Mubarak.

Rummenigge told Friday's edition of the Swiss business magazine Bilanz that Blatter would be smart to introduce reforms "before his successor does it or before a revolution comes from outside".

The Bayern Munich chairman added: "Mubarak never imagined a year ago that he would be hounded from office."
Blatter's definition of corruption is interesting as well:
"Fifa is not corrupt. I cannot start with the word corrupt. Someone is only corrupt when he is been found guilty"
Blatter has announced that FIFA's internal reforms in response to recent calls for change will be released on October 21, 2011. Call me a skeptic, but I doubt that they will amount to much.

Sunday, August 28, 2011

Arsenal's Historic Meltdown and the Modern Football Manager

From here are the worst defeats in Arsenal history:
Biggest AFC away defeat overall
0-8 (Loughborough Town (a) 12 Dec 1896 Lge Div 2)

Biggest AFC home defeat in Top Division
0-5 (Huddersfield Town (h) 14 Feb 1925 Div 1)

Biggest AFC away defeat in the League
0-7 (West Ham Utd (a) 7 March 1927 Div 1)
0-7 (Newcastle Utd (a) 3 Oct 1925 - Div 1)
0-7 (West Brom (a) 14 Oct 1922 - Div 1)
0-7 (Blackburn (a) 2 Oct 1909 - Div 1)

Biggest AFC home defeat in Premiership1-4 (Chelsea May 10 2009)
0-3 (Coventry City 14 Aug 1993)
0-3 (Middlesbrough 14 April 2001)
2-4 (Charlton Ath 4 Nov 2001)
Today's scoreline reflects some bad decision making -- not today or yesterday -- but perhaps for years.

On Twitter, @OptaJoe puts the magnitude of the collapse into Premier League history:
10 - Only teams to let in 10 gls in 1st 3 games of PL season: Leicester 01-02, Bolton 03-04, Wolves 03-04, Wigan 10-11, Arsenal 11-12. Leak.
Conventional wisdom in football is that managers matter less than is popularly thought, and this is backed up by a bit of empirical evidence, such as this study that found no evidence that manager turnover in the Dutch league improved team performance.

Simon Kuper explained why this is so:
The obsession with football managers is misguided. Hardly any of them make any difference to results. The institution of manager is something of a con-trick. Ferguson and Ancelotti are best understood as marketing tools.

The fact is that players’ salaries alone almost entirely determine football results. Stefan Szymanski, economics professor at Cass Business School, studied the spending of 40 English clubs between 1978 and 1997, and found that their spending on salaries explained 92 per cent of their variation in league position. The team that pays most, wins.
Of course, when the manager also controls the payroll, he matters a lot. For Arsenal, replacing Arsene Wegner is not the issue, rather Stan Kroenke needs to tell him to go spend some money -- or find someone who will.  I suspect the Arsenal experience will be a case study in modern football management (filed under "what not to do").

Thursday, August 25, 2011

So Now You Think FIFA Governance is Flawed?

In my graduate seminar earlier this week I presented my students an example of how decision rules -- even very simple ones, such as a city council election -- can be construed in different ways (all legitimate) that when employed lead to different outcomes (such as a different winner of the election).  The plasticity of decision rules means that debates about mechanisms of governance cannot easily be separated from preferences for particular outcomes associated with different versions of those rules. In general then, it is typically preferable to address issues of governance independent of particular disputes that hinge on the choice of governance mechanisms.

This is an academic way to lead into the lesson just learned by Mohammad Bin Hammam, who has recently been given a lifetime ban from football by FIFA.  Bin Hammam, who to my knowledge has never before expressed reservations about FIFA's governance mechanisms, now finds those mechanisms to be substantially flawed:
On Thursday, 18 August 2011, FIFA issued the motivated decisions of the Ethics Committee almost a month after the Ethics Committee decided to ban me for life.

Since then, I have submitted my case to the FIFA Appeals Committee, not hoping for justice to prevail but as a protocol to enable me to obtain access to the Court of Arbitration of Sport (CAS).

After all, the panel from the Appeals Committee is decided by my opponent and in this case, as previously, the judge is the rival. Therefore, I should not exaggerate my hope for a fair decision.

Going through the motivated decisions, we found them to be deeply flawed and raises grave doubts on whether any decision-making body of FIFA has sufficient independence to ensure a fair decision based solely on evidences and applicable laws.
Of course, he is right, FIFA's governance policies are deeply flawed.  But this is a difficult issue to press when the issue that he is concerned with is Bin Hammam and not FIFA.

Wednesday, August 24, 2011

Declan Hill on FIFA and Match Fixing

Have a look at the highlights of the Serie B game above, from December 2010 and which ended in a 3-3 draw.  Notice anything unusual (aside from the strangely empty grounds)?  It looks like a normal soccer game, right?

Now consider this analysis of wagers made in advance of the game:
Italy's Serie B is famed for its end of season draws but it is rare to see the draw trade at such a low price as in tonight's AlbinoLeffe vs Piacenza game. The best odds avalable about a draw tonight are 4/9 (bet £90 to make £40 profit) with William Hill, when the draw would normally be expected to trade at somewhere between 15/8 and 9/4 in a game of this type.

What is even more amazing is that more than three million US dollars has been traded on the game on Betfair at 4pm UK time today, a huge volume for such a low profile game. In fact, to illustrate how big a market it has become, only 2.7 millon US dollars has been traded on tonight's Manchester City vs Everton game in the Premiership. Of the $3.1 million traded so far, $2.99 million has been on the draw.
A fixed match?

At his blog, Declan Hill, author of The Fix, gives an unvarnished perspective on FIFA's current efforts on match fixing:
Let’s focus on FIFA. Ever since their controversial non-election this spring, they have been banging a drum about match-fixing.

So what is FIFA actually doing about the problem? In my opinion, at this moment, they are running a public relations campaign. They are not running an effective investigation against match-fixing. Repeat. I believe, at this moment, they are not running credible investigations. I hope in the future they will prove me wrong, but at this moment I think there is not a credible investigation going on.

Why not? Well first of all, FIFA has a massive credibility problem when it comes to corruption. There are not many disinterested people in the world who will believe that a current FIFA investigation would root out all match-fixing if it were found to be linked to a high-level sports official. Because of this perception, few players and referees will trust FIFA officials to give them the necessary information. Second, neither FIFA nor Interpol (which has been linked to FIFA) has the jurisdiction to investigate or make arrests. To stop these problems, they need to link to a credible national police force.

What FIFA is doing is having their head of security Chris Eaton fly around the world where he gives press conferences and media interviews. To be fair to Mr. Eaton, he has considerable manly charm. He looks exactly like the guy you want at your back during a bar fight in the Australian outback. You can understand why some of the tame sports journalists are so besotted that they forget their professional duty and do not ask any difficult questions. Mr. Eaton is also saying all the right things to the press. He has pointed out that there are fixing gangs that go around the world trying to corrupt matches in dozens of different countries. He has pointed out that many international friendly matches have been corrupted. He has pointed out that match-fixing gangs often import groups of players from Africa or the former Soviet sphere to win/lose matches on command in small leagues.

This is all true, and kudos for Mr. Eaton for saying what I revealed three years ago in ‘The Fix’. However, it is not an investigation. Credible investigations feature a careful collection of evidence. Credible investigations feature international arrest warrants and actual arrests. Credible investigations are linked with an appropriate, well-resourced national police force who will press the investigation to their natural conclusion even if top-level sports officials are also involved in the corruption.
Hill promises a series of posts on what he thinks ought to be done.

Monday, August 22, 2011

Malcolm Gladwell on the "Business" of Sports

At Grantland, Malcolm Gladwell discusses the NBA lockout and the psychic benefits of sports franchise ownership:
Basketball teams, of course, look like businesses. They have employees and customers and offices and a product, and they tend to be owned, in the manner of most American businesses, by rich white men. But scratch the surface and the similarities disappear. Pro sports teams don't operate in a free market, the way real businesses do. Their employees are 25 years old and make millions of dollars a year. Their customers are obsessively loyal and emotionally engaged in their fortunes to the point that — were the business in question, say, discount retailing or lawn products — it would be considered psychologically unhealthy. They get to control their labor through the draft in a way that would be the envy of other private sector owners, at least since the Civil War. And they are treated by governments with unmatched generosity. Congress gives professional baseball an antitrust exemption. Since 2000, there have been eight basketball stadiums either built or renovated for NBA teams at a cost of $2 billion — and $1.75 billion of that came from public funds.4 And did you know that under the federal tax code the NFL is classified as a nonprofit organization?5 Big genial Roger Goodell, he of the almost $4 billion in television contracts, makes like he's the United Way.
Simon Kuper has made a similar argument about soccer:
That's the paradox of the football industry: so visible, and yet so little. Football's problem is what economists call appropriability: clubs can't make money out of (can't appropriate) more than a tiny share of our love of football.

Perhaps tickets and replica shirts are overpriced, but few fans actually buy them. A Mori poll in 2003 found that 45% of British adults are interested in football, yet on any weekend only about 1.5% of Britons watch a professional game. In other words, most football fans rarely go near a stadium. They watch football only on TV, sometimes at the price of a subscription, or for the price of some pints in the pub. It's a cheap way to have fun.

And watching games is only a tiny part of the fans' engagement with football. Fans read newspapers, trawl internet sites, and play computer games. Then there is the football banter that passes time at work and school. All this entertainment is made possible by football clubs, but they cannot appropriate a penny of the value we attach to it. Portsmouth cannot charge us for talking or reading or thinking about Portsmouth. That's why Portsmouth is a small business.

Because clubs are small businesses that spend like big ones, they keep getting into trouble. From 1992 through May 2008, 40 of England's 92 professional clubs had been involved in insolvency proceedings, some more than once. But as Stefan Szymanski and I noted in our recent book Why England Lose, the peculiarity of the football business is that no club disappeared. True, Aldershot went bankrupt in 1992, but supporters simply started a new, almost identical, club. "We must be sustainable," clubs now say, parroting the latest business cliché. In fact they're fantastically sustainable. They survive even when they go bust. You can't get more sustainable than that. Even Portsmouth will most likely always be with us, in some form or other. If football clubs really did collapse under their debts, there would now be almost no football clubs left.
They are too beloved to go bust. Creditors dare not push them under. No bank manager or tax collector wants to say: "Portsmouth is closing. I'm turning off the lights." Luckily, society can keep football going fairly cheaply. The total revenues of European professional clubs for the 2007/08 season were €14.6bn. Tesco turns over four times as much.
Gladwell offers some advice on owners who don't like their profits:
The big difference between art and sports, of course, is that art collectors are honest about psychic benefits. They do not wake up one day, pretend that looking at a Van Gogh leaves them cold, and demand a $27 million refund from their art dealer. But that is exactly what the NBA owners are doing. They are indulging in the fantasy that what they run are ordinary businesses — when they never were. And they are asking us to believe that these "businesses" lose money. But of course an owner is only losing money if he values the psychic benefits of owning an NBA franchise at zero — and if you value psychic benefits at zero, then you shouldn't own an NBA franchise in the first place. You should sell your "business" — at which is sure to be a healthy premium — to someone who actually likes basketball.

South Park Visits CU to Discuss Student Athletes

Thursday, August 18, 2011

When Sports Diplomacy Goes Bad

Vice President Joe Biden's trip to China is at risk of being over-shadowed by an on-court brawl at an exhibition basketball game  between the Georgetown Hoyas and the Chinese professional Bayi Rockets (see above).  ABC News has details:
At the same time that Vice President Biden is in China to work on relations with that country, another American institution, The Georgetown men’s basketball team, wasn’t helping the cause.

An exhibition game between Georgetown and the Chinese professional team Bayi Rockets “deteriorated into a melee during which players exchanged blows, chairs were thrown and spectators tossed full water bottles as Hoyas players and coaches headed to the locker room at Olympic Sports Center Stadium,” according to the Washington Post’s Gene Wang. Read his story.

Georgetown Coach John Thompson III pulled his players off the court with less than ten minutes left in the game and the scored tied at 64.

The team is on a 10 day trip, according to the university.  Team members were briefed by state department officials in advance about what to expect in Beijing and Shanghai and about the status of diplomatic relations between the U.S. and China (this won’t help.) 

Wednesday, August 17, 2011

Inside FIFA

Here are a couple of interesting exposes about FIFA.

First, at Grantland Brian Phillips has a detailed look at FIFA history of corruption:
FIFA corruption matters, in other words, not because the integrity of the ExCo makes much difference to the average American or European fan, but because FIFA isn't a closed system. Its decisions, however farcical in themselves, open the door for better or worse things to happen elsewhere. Old men fluttering about knighthoods in Asunción lead to exploitation and murder in South Africa. "Society is full of devils," Blatter once said, "and these devils, you find them in football." For all that they act like minor Dickens villains, FIFA executives are not sequestered in a novel; they impact the real world.
Second, that piece points toward Mel Brennen's recounting of a few episodes from his experiences inside FIFA, working for Chuck Blazer:
Nine days into my tenure as Head of Special Projects for CONCACAF (UEFA’s equivalent in the Caribbean, North and Central America) my boss – everyone’s boss – invited me to dinner.
Neither paints a pretty picture.

College Football's Latest Scandal

The image in the call-out below is a cover from Sports Illustrated from 1995, but it could be in use again soon based on investigations over 11 months by Yahoo! Sports.  Here is a summary of the bombshell allegations that a now-jailed booster has made against the University of Miami:
A University of Miami booster, incarcerated for his role in a $930 million Ponzi scheme, has told Yahoo! Sports he provided thousands of impermissible benefits to at least 72 athletes from 2002 through 2010.

In 100 hours of jailhouse interviews during Yahoo! Sports’ 11-month investigation, Hurricanes booster Nevin Shapiro described a sustained, eight-year run of rampant NCAA rule-breaking, some of it with the knowledge or direct participation of at least seven coaches from the Miami football and basketball programs. At a cost that Shapiro estimates in the millions of dollars, he said his benefits to athletes included but were not limited to cash, prostitutes, entertainment in his multimillion-dollar homes and yacht, paid trips to high-end restaurants and nightclubs, jewelry, bounties for on-field play (including bounties for injuring opposing players), travel and, on one occasion, an abortion.
The allegations go all the way to the top of the university. Below is a photo of the booster making the allegations, Nevin Shapiro, along with the Miami head basketball coach and University president Donna Shalala.  Shalala is holding a $50,000 check from Shapiro, which he claims originated in the Ponzi scheme for which he is now serving 20 years in jail.

The details revealed by Yahoo! Sports beggar belief.
Both the scope and severity of the major violations that Shapiro both cops to and backs up with bank records, financial statements, credit card receipts, emails, phone bills and witnesses is simply unprecedented in the history of the NCAA.

Most damning, however, is the Miami administration allowing Nevin Shapiro into its world and then never kicking him out.

Just this year Ohio State was able to avoid a lack of institutional control charge by arguing only then-head coach Jim Tressel knew of violations within the program. North Carolina was able to do the same by cordoning blame solely on associate head coach John Blake.

Plausible deniability is a school’s best friend in the NCAA’s enforcement process; setting up walls between frontline coaches and the administrators who serve as the conscience of the university.

Even by the loose standards the NCAA allows, it doesn’t seem plausible Miami could make that claim with Nevin Shapiro. This wasn’t the case of just one action or one relationship with a coach, Shapiro says he dealt with seven different football and basketball coaches, regularly took them out to dinner and strip clubs and even loaned one $5,000.

Shapiro was always begging for attention. His relationships with players were out in the open – from hugs in the postgame locker room, to meals at popular South Beach restaurants, to huge gatherings in VIP sections, all bankrolled by him. Shapiro had been honored by the school on the field during games and taken in action from the Canes sideline. He had access to practices. He twice led the team onto the field and once flew to a road game on the team charter.

When Miami was looking for a replacement for head coach Larry Coker after the 2006 season, Shapiro met with Shalala and offered not to just coach the team for free, but to personally pay $1 million a year for the nation’s best offensive and defensive coordinators.

“‘Just let me walk the sidelines,’” Shapiro said he told Shalala. “She was laughing. I wasn’t.”

When Randy Shannon got the job, Shapiro said he had a face-to-face meeting with him on his first day as coach.
This is not just a story about a booster or an athletic program, but a rot that goes to the core of the University of Miami administration, and highlights systemic problems in college athletics and the NCAA.
Paul Dee ran the Miami athletic department from 1993-2008. Into 2010 he was the chairman of the NCAA’s committee on infractions, where he was known for doling out stern and controversial penalties against USC football and Memphis basketball.

“High-profile players demand high-profile compliance,” said Dee, citing USC’s failure to monitor all parts of Reggie Bush’s life as reason for heavy sanctions.

So what about high-profile boosters? . . .

Coming on top of a year of intense scandal, this case should rattle college athletics to its core. In coming clean, Shapiro doesn’t just shine a light on how Miami operated, but further exposes how schools systematically ignore the NCAA rule book.

The NCAA maintains a strict ideal of amateurism in an effort to avoid having to pay taxes or its players. The rulebook is worth billions to the universities, which don’t hesitate to pay major salaries and benefits to administrators and coaches. However, denying players an ability to earn extra money honestly actually makes them more susceptible to people such as Shapiro, who despite the open support of the school was a cutthroat thief and con man.

It’s the NCAA’s own statutes that provided Shapiro with much of his power, access and influence over the very players the NCAA claims it is protecting. All while the administrators look on and get rich.

Shalala, the school’s high-profile president, is like so many college administrators. They talk a big game. She told ESPN the Magazine that she constantly looking out for shady people around the program; “I’m on alert all the time,” she said. Last week she was one of 54 hand picked presidents that participated in a NCAA retreat about reforming college sports.

And yet for years, Nevin Shapiro was able to run wild.
If the Miami scandal does not lead to major reform of college athletics and the NCAA then nothing will.

Tuesday, August 16, 2011

Transparency International on FIFA Reform: A New Report

Transparency International has released a new report ( "Safe Hands: Building Integrity and Transparency at FIFA" -- here in PDF) authored by Sylvia Schenk with some recommendations for how FIFA might reform itself.  The report calls for the creation of a new body, which it calls a "multi-stakeholder group" to help oversee reform and offers TI's expertise in the process.

The report makes a number of specific and useful recommendations, here are the top line suggestions (far more detail can be found in the report):
  • To limit the danger of bribery and corruption, FIFA should – under the guidance and scrutiny of the multi-stakeholder group – follow the principles set out in leading anti-bribery codes, such as the Business Principles for Countering Bribery.
  • FIFA should address the way it appoints officials.
  • FIFA should identify enhanced anti-bribery measures such as job rotation and involvement of independent external experts in assessed areas of high risk.
  • FIFA must ensure adherence to its code of conduct not only from its employees but also from FIFA officials, including delegates at the FIFA Congress (who usually come from national federations or confederations) and all other persons as far as they play a constitutive role and are paid in one way or another (for example by receiving travel expenses) by FIFA.
  • FIFA needs clear published guidelines for the initiation and execution of investigations.
  • FIFA officials and employees, volunteers, referees, players, players’ agents and others should commit to the code of ethics and be aware of the sanctions process.
  • FIFA, as well as its confederations and national federations using money allocated by FIFA, should report annually on anti-corruption policies and their implementation, as well as on any bribery allegations and the actions taken.
The report is strong on the details of reform, as might be expected from TI which has much experience in these matters, but offers little guidance on how to get from here to there. Motivating meaningful reform is mainly an issue of politics and accountability and presents a central obstacle to FIFA reform. This quandary is acknowledged in the report:
FIFA is both a non-governmental, non-profit organisation and a global company with huge revenues, unprecedented reach, political clout and enormous worldwide social influence. But unlike a multinational company, answerable to shareholders, FIFA’s mandate comes from the member federations represented by officials (i.e. presidents and delegates, mostly working on a voluntary basis) from all over the world, elected bottom up. This means that FIFA is answerable to the 208 national football associations who themselves are partly dependent on the funds that FIFA allocates to them. This lack of mandatory accountability to the outside world makes it unlikely that change will come either from within the organisation or from the grassroots of the football organisations. Moreover, the scale and specific structure of FIFA makes it difficult to adapt what is considered best business practice to the governance challenges it is facing.
While it would be nice to imagine that FIFA will undertake meaningful reform on its own, I am not so optimistic. Much stronger mechanisms of accountability will necessarily have to accompany, if not precede, implementation of a reform agenda at FIFA.

Monday, August 15, 2011

FIFA's Troubles Spread

FIFA's troubles with corruption are not going away. Yesterday in The Independent Andrew Jennings reports on an FBI investigation of Chuck Blazer, an American who is the general secretary of Concacaf and also a member of the FIFA Executive Committee.

Jennings explains:
The man credited with blowing the whistle on bribery and corruption in Fifa, the body that runs world football, is now himself the subject of an FBI inquiry. US investigators are examining documents appearing to show confidential payments to offshore accounts operated by an American Fifa official, Chuck Blazer.

Mr Blazer sparked an investigation into allegations of bribery in the Fifa presidential election two months ago. He claimed his long-term ally Jack Warner was involved in a plot to hand $1m in cash to Caribbean officials to vote for Qatar's Mohamed bin Hammam, who was running against the sitting president, Sepp Blatter.

The subsequent scandal shook world football's governing body.
The latest allegations are as follows:
Now the spotlight has turned to payments to accounts controlled by Mr Blazer in the Cayman Islands and Bahamas. The Fifa official is contracted to work for Concacaf, the regional football association for North and Central America and the Caribbean, but FBI officers are examining evidence that payments have come from the Caribbean Football Union (CFU), a separate regional football body, tightly controlled by Mr Warner.

The most recent payment of $250,000 was last March – before Mr Blazer's allegations. Mr Blazer deposited the cheque in a Bahamas account and initially claimed it was "repayment of a personal loan" he had made to Mr Warner. He now claims Mr Warner may have misused the CFU account and says he is prepared to repay the money if that is the case.

In September last year, Mr Warner approved another CFU payment of $205,000 to a private company operated by Mr Blazer from Cayman. It is also alleged that another payment of $57,750 went from the CFU to Mr Blazer's Cayman account. Mr Blazer denies any impropriety, saying: "All of my transactions have been legally and properly done, in compliance with the various laws of the applicable jurisdictions based on the nature of the transaction." . . .

During a Fifa marketing dispute in a Manhattan court five years ago the judge ruled that Mr Blazer's testimony was "generally without credibility, based on his attitude and demeanour and on his evasive answers on cross-examination". The judge added that some of his testimony was "fabricated". Mr Blazer reportedly owns a $3m apartment in the Bahamas. He is said to own it through a Bahamas company, in turn owned by two other companies registered at a Nassau bank where he has an account.

Mr Blazer's confidential contract reveals he hires himself out from his Cayman-based company Sportvertising. It also reveals he receives 10 per cent in "commissions" from regional football marketing deals. Over the past five years he has taken $9.6m. The payments are recorded in private Concacaf accounts but with no indication that he received them. Mr Blazer says they are "consistent with industry standards". His remuneration from Concacaf has never been disclosed. He employs his son Jason, 41, as Concacaf's $7,000-a-month medical officer, and his daughter Marci has been a member of Fifa's legal committee.
In Trinidad and Tobago Jack Warner promises that he will get his revenge:
In response to the reports and the FBI investigation, Warner said he "was not surprised" that Blazer was under scrutiny.

In a telephone interview yesterday, Warner said all CONCACAF payments were above board and he was not concerned that his name would be called into question in this new scandal.

"The world will finally get to understand what I have been saying all along," Warner said.

"This is only the beginning. There is a whole lot more to come trust me," he added.

Warner said he heard Blazer was paying himself a commission and did not renew Blazer's advertising contract with the CFU for the past six years.

Warner sees this latest round of investigation into the man who sought to bring him down as "just the start".

"Listen to me carefully, I will have the last laugh in all of this," he said.
More from Andrew Jennings here. Chuck Blazer blogs here.

And if you are curious as to why football governance is such a mess, you might have a look at my paper on the subject.

Friday, August 12, 2011

Friday Fun: 36 Free Kicks from Ronaldinho

Reminder - Submit Your EPL Predictions

Please submit them here.

NCAA vs. The Academy

Over at The Sports Economist blog Robert E. McCormick and Robert D. Tollison, two professors from Clemson University, argue that the NCAA works against the interests of American universities.  Here is an excerpt:
What is the root of the problem here? We assert it is the enormous economic rents, or free money, that have been created by the NCAA cartel. Moreover, no college or university can be expected to withstand the ill-gotten gain that lurks underneath the NCAA banner. The NCAA is a cartel of the major athletic universities in the United States that sets wages, playing conditions, and other aspects of intercollegiate athletics. Most prominently of these is a restriction on payments to football and basketball players. These two sports create billions of dollars in local and national revenues via gate receipts, TV contracts, and ancillary merchandise, not to mention millions of dollars annually at member schools in donations by alumni and other supporters of athletic programs.

Coaches sign multi-year multi-million dollar contracts while players get tuition, room and board, and recently, only because of an important court case (White v. NCAA), some pocket money to cover the cost of living. Big chunks of these revenues also go to support other men and women athletic teams on campuses, swimming, track, golf, soccer, and the like. None of this would be possible but for the overarching cartel agreement between all of the major U.S. colleges and universities operated under the umbrella of the NCAA.

Both of us have long held, along with numerous other economists (such as Gary Becker and Robert Barro), that the NCAA’s cartel harms the market, the world, and the athletes, but now we are prepared to claim more. To wit, this crisis in athletics puts the American system of higher education at risk.
Does athletics threaten higher education?  I don't think so. Their argument hinges on the impacts of failures in athletics governance on the moral fiber of the university:
We contend that the moral fiber of the university is one of its most powerful social virtues. It helps bring young people to adulthood with a care and concern that things are done correctly and on the up and up ethically. There is a clear positive implication of our argument. Cheating teaches cheating, and it is a mistake to think that our kids will not watch what we do instead of what we say. The scandals that now infect the best universities in the land will almost surely lead to more and more academic dishonesty and disregard for the basic traditions of the academy if something does not happen to reverse course. Cheating in the athletic department begets cheating in the classroom and perhaps generally  in life.
I don't find this particularly compelling nor their remedy that college athletics should seek a return to pure amateurism:
If amateurism is a shrine, then let us all worship it. The fans should get to see the games for nothing or nearly so (the costs of facilities and game day services). The coaches should be faculty or volunteers as they are in Little League and in local neighborhoods. It is not amateurism, but the business of intercollegiate athletics is a growing cancer bound to infect other storied American institutions of higher education.
Richard Vedder, of Ohio University, writes at the Cronicle's Innovations blog offers a dose of realpolitik coming out of the recent university presidents summit held in Indianapolis::
There are all sorts of reforms with both positive academic and financial implications, such as dramatically reducing team sizes (e.g., from 85 to 60 in football), season length, practice time, maximum travel distances for most games, red-shirting, and freshman participation. Put athletic departments under general university administration, not in separate empires of their own. Put limits on coaches’ pay and the number of assistants, weight trainers, PR specialists, etc. Outlaw athletes-only dorms and eating facilities in order to integrate athletes more into the campus. Don’t let athletes sleep in motels the night before home games. Make athletes more like students and less like privileged jocks. Require capital costs of athletics to be considered as part of expenditures (somehow, the NCAA thinks stadiums are given to universities by God). Reconfigure the formula for TV revenues so the financial incentives for winning are reduced. Require athletics to pay overhead fees (a “tax” if you will) to university administrations for the costs associated with overseeing programs, covering capital costs, etc. Require full public disclosure of every dime spent on ICA, broadly defined. The list goes on and on.

As a couple of former Big Ten presidents have told me privately, this is not going to happen. University presidents don’t want huge fights with their alumni and associated Bubba fellow travelers, with trustees, legislators, governors, and above all, with coaches and athletic directors.
College athletics is presently experiencing tremors -- whether they foreshadow a big earthquake remains to be seen.

Wednesday, August 10, 2011

The Soccer Coach as Anthropologist

An answer to Roger Pielke jr.’s comment on Klinsmann as the new US coach. By Werner Krauss (pictured below), a German cultural anthropologist, who lived and taught for five years at the University of Texas at Austin.

Today, sport is the most visible expression of culture in a globalized world. The best architects compete for building ever more spectacular stadiums; the Olympics and the soccer World Cup are the greatest mass events on the planet; and every weekend, hundreds of millions of people root for their teams. Bodies, dreams and identities are shaped in these global arenas, while the performances of athletes transcend the gravity of the everyday. This universal cultural sports machine has its own geography of disciplines, with soccer as the most popular sports worldwide – except in the United States of America.

That’s exactly where Klinsmann starts as US soccer coach; his ambition is to find a place for soccer in the American culture. In order to do so, soccer will have both to reflect and to shape American culture as much as football, basketball, hockey or baseball do. It indeed takes a coach with an anthropological understanding of culture in order to establish soccer on the cultural landscape of North America, as Klinsmann already observed: “There are a lot of opinions, a lot of ideas from youth soccer to college, which is a model different from anywhere in the world.“ American soccer is both a cultural model that still is in search of its anthropologist and a sportive diaspora that is in search of its perfect coach and developer.

If someone will manage to establish soccer in the American culture, maybe Klinsmann really is the man. He had his share in rejuvenating Germany’s national squad and Germany’s image. Remember 2006, the World Cup summer that was dubbed ‘a summer’s fairy tale’? Klinsmann brought a big Californian smile back home to sober Germany, and it smiled back. And do you remember how puzzled Americans realized that something is going on without them really being part of it? They had a team over there in Germany, but the team was just a team representing the most ordinary of American pragmatic values: you are only in it as long as you win. It wasn’t and still isn’t rooted in American culture, and it even less represents American culture.

It was in a baseball stadium where I once personally discovered America’s true heart and soul. Happy loving couples were strolling through the stadium, kids were photographed, everybody balanced enormous cokes and hot dogs with chili sauce and jalapenos – it was in the Minute Maid Stadium in Houston. The audience was singing the national anthem and Bright Eyes of Texas, and once in a while a voice from the loudspeakers reminded them that there is a match going on, too. It was a beautiful American Sunday afternoon, while in the outside world, the wars in Iraq and Afghanistan were going on, the housing crisis was already looming and Bush’s America was spelled K-a-t-r-i-n-a by the rest of the world. Only here in the stadium, America was all by itself, peaceful sharing their provincial dreams of being an invincible super power.

While I taught at the University of Texas at Austin, students whispered into my ear that soccer is for those who are not tough enough for football; it’s for the intellectuals, the Hispanics, the fags and the girls. For the rest, it’s American football where it’s at. The stadium of the Longhorns at the University of Texas fits for 100.000 spectators. The Longhorns are the totem of a deeply ritualized culture, which worships young gladiators with (fake) scholarships, playing in teams whose coaches earn 5 million dollars while faculty salaries are cut; with cheerleaders entertaining the crowd, while oil billionaires, old families and other VIPs have their drinks in the player’s lounge and negotiate America’s or even the world’s future. The Longhorn is a cultural symbol, and in football truly American culture is performed, week after week. It’s not the melting pot or the salad bowl that represents American culture; it’s the super bowl.

Is there really no place for soccer in this deeply rooted American sports culture? Klinsmann is a clever guy, who indeed has seen many soccer cultures in this world. Many young Americans already show a great interest in European cultures or at least the European Champions League. And soccer doesn’t mean Europe only. Klinsmann knows that America’s future is Hispanic, too: “What will be the U.S. style of play? Aggressive or reactive? It comes with the players and people you surround yourself with. There is a wealth of knowledge here that is unheard of in the Europe or South America”.

Maybe it really takes a coach with an anthropological eye to face the challenge of bringing soccer really to the US. The answer will be simple, and here Roger Pielke jr. indeed is right: either he wins, or else he will get kicked out. But this is not unique to American pragmatism; it is part of the game.

Tuesday, August 9, 2011

New Paper on FIFA

I have submitted a paper to the journal International Organization on mechanisms of accountability and FIFA.  Here is the abstract:
How Can FIFA be Held Accountable?
Abstract. The Fédération Internationale de Football Association, or FIFA, in a non-gvernmental organization located in Switzerland that is responsible for overseeing the quadrennial World Cup football (soccer) competition in addition to its jurisdiction over international competitions around the word. The organization, long accused of corruption, has been increasing criticized by observers and stakeholders during the past year for its lack of transparency and accountability. This paper draws on literature in international relations to ask and answer the question: how can FIFA be held accountable? The paper’s review finds that the answer to this question is “not easily.” The experience in reforming the International Olympic Committee more than a decade ago provides one model for how reform might occur in FIFA. However, successful reform will require the successful and simultaneous application of multiple mechanisms of accountability.
I am happy to share the submitted version, just send a request by email to rpielkejr(at)gmail(dot)com.

Saturday, August 6, 2011

Thursday, August 4, 2011

English Premier League 2011-2012 Season-Long Prediction Contest

The Least Thing 2011-2012 season-long English Premier League prediction contest is now open for entries. Get your entries in before the first game next week to participate.

To enter, in the comments below simply rank your prediction for the end-of-season table from 1 through 20.  The tie-breaker will be first selection of champion and then relegation.  I will at a few points through the season provide updates on standings and discuss the competition.

The metric of skill used as the baseline for evaluation in this competition will be the Ladbrokes odds for winning the championship as of August 4, 2012, as below.

1. Manchester Utd
2. Chelsea
3. Manchester City
4. Arsenal
5. Liverpool
6. Tottenham
7. Everton
8. Aston Villa
9. QPR
10. Blackburn
11. Bolton
12. Fulham
13. Newcastle
14. Stoke
15. Sunderland
16. West Brom
17. Norwich
18. Wigan
19. Wolves
20 . Swansea

I have searched and requested from several sources, with no luck, data on currrent team salaries and player values.  If I can come across this information, I'll add it in as a second metric of skill (and pointers welcomed in the comments).  For those new here wanting to get up to speed on this notion of "skill" in prediction, please see the posts here and here.

The winner of the competition wins a signed copy of The Climate Fix, paperback edition.  Good luck!

PS. For those looking for the Bundesliga prediction contest, join here by August 5th!

Wednesday, August 3, 2011

Frank Deford on NCAA Hypocrisy

At NPR today, Frank Deford voices a strong opinion about college athletics.  It is one that I happen to agree with:
Next week, at some place in Indianapolis where time has been instructed to stand still, Mark Emmert, president of the NCAA, will convene what is being called, without irony, a "retreat."

Assembled will be about 50 college presidents, pledged, it seems, to make sure that college athletics continue to remain firmly in the past, in the antiquated amateur hours. . .

If the retreat would only admit that the reason integrity has flown the coop is because it is impossible to maintain the fiction that billion-dollar entertainment industries –– which is what ticket sales, concessions and TV contracts make college football and basketball to be –– simply cannot logically exist when everybody is making money but the entertainers themselves. Never mind fairness; it is against human nature. The system obliges hypocrisy and mandates deceit.

Yet a stated purpose of the retreat is to "maintain amateurism" –– even as more and more observers and insiders, including coaches, have changed their minds and concluded that the NCAA must acknowledge that the 19th century really did end sometime ago. . .

The NCAA's stated defense for athletic penury is "student-athletes should be protected from exploitation." Hear! Hear! But right now, it's the NCAA member colleges which exploit football and basketball players.

Would there be just one president at the retreat who would speak the truth and acknowledge that the only true reason for amateurism in big-time college sport is because it allows colleges to get something for free with which to amuse the paying students and fleece the wealthy alumni?

Tuesday, August 2, 2011

The Most Improbable Finals Appearance Ever

Last month saw the playing of the 2011 Campeonato Sudamericano Copa América -- the Copa America, an twelve team international football tournament for South American teams and their invited guests. The winner this year was Uruguay, continuing their excellent form following their impressive run in last year's World Cup.

The tournament however should be remembered for the remarkable performance of Paraguay, the team that lost in the final.  They achieved one of the most improbable feats in the history of international football by reaching the final without winning a game. In the group stage they had three draws, leaving them third in their group after Brazil and Venezuela.  Paraguay advanced to the quarterfinals as the second wildcard, finishing ahead of Costa Rica on goal differential for the last spot.

They played Brazil in the quarterfinals, which was a scoreless draw after extra time.  Brazil's players  inexplicably forgot how to take a penalty, missing all attempted, and lost the shootout.  The semi-final against Venezuela saw another draw after extra time, and Paraguay advanced 5-3 on penalties.

That put them in the finals with 5 draws and no losses, no wins. I asked the brilliant guys at Opta Sports just how rare an event it was to advance to the final of a major international competition without winning a game.  Here is what they told me:
Before Paraguay in 2011, Italy had reached the final of Euro 1968 without winning, however there were only four teams involved in the tournament. Ethiopia reached the final of the 1957 African Cup of Nations without even playing a game, because South Africa - their semi-final opponents - were banned.
Based on this history, I'd guess that it will be a very long time before we see another performance like Paraguay's -- maybe never.

Monday, August 1, 2011

Top 20 Player Payrolls in Professional Team Sport

Courtesy via ESPN here is a list of the top 20 payrolls in team sports.  They list at ESPN has the top 200 teams.  Of the top 20, 9 are soccer, 7 are basketball and 4 are baseball.

Rank Team League Average Annual Salary Per Player Average Weekly Salary Per Player
1 Barcelona La Liga $7,910,737 $152,130
2 Real Madrid La Liga $7,356,632 $141,474
3 New York Yankees MLB $6,756,301 $129,929
4 Los Angeles Lakers NBA $6,540,690 $125,782
5 Orlando Magic NBA $6,367,114 $122,445
6 Chelsea EPL $6,020,741 $115,783
7 Inter Milan Serie A $5,999,643 $115,378
8 Boston Red Sox MLB $5,991,203 $115,215
9 Denver Nuggets NBA $5,990,174 $115,196
10 Manchester City EPL $5,863,585 $112,761
11 Utah Jazz NBA $5,829,643 $112,109
12 Bayern Munich Bundesliga $5,780,358 $111,161
13 Philadelphia Phillies MLB $5,765,879 $110,882
14 AC Milan Serie A $5,647,633 $108,608
15 Boston Celtics NBA $5,236,922 $100,710
16 Manchester United EPL $5,106,214 $98,196
17 Chicago Cubs MLB $5,001,893 $96,190
18 Houston Rockets NBA $4,972,115 $95,618
19 Philadelphia 76ers NBA $4,954,303 $95,275
20 Liverpool EPL $4,935,847 $94,920