Soccernomics. Simon Kuper

football clubs survive crises because some of their customers stick with them no matter how lousy the product. Calling this brand loyalty is not quite respectful enough of the sentiment involved. To quote Rogan Taylor, a Liverpool fan and Liverpool University professor, ‘Football is more than just a business. No one has their ashes scattered down the aisle at Tesco.’

       CROOKED BUSINESS: FOOTBALL’S CORRUPTION AND THE HISTORY OF TECH

      Remember what our friend said after trying to work with a revered English football institution: ‘I can do business with stupid people, and I can do business with crooks. But I can’t do business with stupid people who want to be crooks.’

      Crookery has always been part of the football business. Powerful older men – working alone, or with friends – have traditionally run clubs and federations.

      Their personal status encourages a sense of entitlement. The sums of money they handle have grown fast. They still mostly make decisions quickly and secretively. Their organizations have rarely had serious regulation. That creates opportunity.

      Some types of corruption are eternal. However, each era also generates its own new crimes. The nature of football’s scams has changed over time as technology changes. Here’s a quick history of football crookery, and our views on why it has proved so hard to stamp out.

      Before television discovered the game, football was a cash business. Every week, thousands of people would pay a few pennies each at the turnstiles, leaving the club with a large pile of cash on Saturday evening to be taken to the bank on Monday morning. This was a perfect opportunity for a money launderer. He might be a criminal who ran protection rackets, or perhaps a local business owner (a restaurateur, say) who didn’t like paying tax. All the launderer needed to do was deposit as much cash as he wanted into the football club’s account, claiming it was the gate receipts. If he was the chairman or some other club official with the power to sign cheques, he could then use the club’s account to pay himself or an associate a sum for services. Hey presto, the money was laundered. And since most football clubs were unprofitable, they didn’t pay much tax.

      Clubs therefore attracted some unsavoury characters (not to mention egomaniacs) as well as the close attention of the tax authorities. Still, this was mostly small-time crookery – a few thousand pounds here or there. The club’s business was limited by the size of the stadium. The amount of cash deposited in the bank had to be credible.

      * * *

      Then, in the 1970s, TV entered football. The device’s first big impact was on the finances of FIFA. The global authority had always been a tinpot outfit. It had little power over clubs, which were mostly regulated by national federations. All FIFA had was the World Cup, and for decades that only generated peanuts. In 1970, the year of possibly the greatest World Cup ever played, FIFA’s total declared income from all sources was just 1.5 million Swiss francs (then a little over £150,000).

      But television transformed football. Between the early 1970s and 1990, the number of TV sets multiplied twenty times in Africa, ten times in Asia and four times in Latin America, writes David Goldblatt in his history of football, The Ball Is Round. The World Cup grew into arguably humanity’s biggest party, watched from the Cook Islands to Iceland.

      And so the rights to screen and sponsor the World Cup became ever more valuable. But the tiny FIFA set-up of the 1970s lacked the nous to market them. When João Havelange became FIFA’s president in 1974, the organization’s Zurich headquarters employed just twelve staff members. Horst Dassler, whose father had founded the boots manufacturer Adidas, a much larger operation, bought many of the rights directly from FIFA. Dassler paid Havelange kickbacks, and the Brazilian flew suitcases of cash first-class between Rio and Zurich. Nobody troubled him. Few journalists covered sports administration. Switzerland continued to treat FIFA as the sort of little not-for-profit sports association that it used to be, almost like a village hunting club. No wonder dozens of other sports federations right up to the International Olympic Committee found Switzerland a pleasant place to do business. Many of them became as corrupt as FIFA, albeit with less money.

      The beauty of FIFA’s business is that it’s a monopoly. There is only one World Cup (nobody has ever credibly attempted to start a rival event) and only one global football association. Moreover, FIFA generally recognizes only one national association per country, and so in a sense it’s a monopolistic association of monopolies. And a basic principle of economics says that monopoly creates profitability.

      FIFA’s revenues from TV and sponsors rose from $308 million in the four-year cycle to 1998, to $5.7 billion in the four years to 2014. This happened not because FIFA was run by geniuses, but because in an interconnected world ever more people from Shanghai to San Francisco wanted to watch World Cups.

      What to do with all this money? FIFA has few costs of business, beyond the first-class flights and traditionally secret salaries of its officials. To organize a World Cup, it needs to do little more than let the host lay on some football matches. The host pays for the stadiums; FIFA takes almost all the income from TV and sponsors. That’s what you call a business model.

      So the FIFA president’s main challenge is to get himself re-elected. His main weapon: FIFA’s revenues.

      In 1998, when Havelange retired, FIFA’s congress in Paris elected Joseph ‘Sepp’ Blatter as his successor. The president of each national football federation has one vote in congress, Montserrat in the Caribbean (population: 4,900) the same as China. Many presidents proved corruptible. David Yallop, in his 1999 book How They Stole the Game, recounts how the emir of Qatar (then a little-known country) flew $1 million in cash on a private jet to Paris, where twenty voters each seem to have been handed envelopes stuffed with dollars.

      That election set the template for Blatter’s rule. He passed on chunks of TV money to national and continental football barons. This was typically veiled in the language of ‘development’: a grant, often handed over personally the night before a FIFA presidential election, was supposedly meant to fund facilities in the official’s country. But if the official slipped the money into his jacket pocket, nobody would complain. In return, the happy officials voted for Blatter. Corruption was FIFA’s system.

      The organization’s bribe-taker-in-chief was the Trinidadian Jack Warner, an alcoholic’s son who had risen from college teacher to global football powerbroker. Warner put together a block of thirty-one mostly tiny Caribbean national associations. In a congress of a little over two hundred countries, this was often the swing vote. And so Warner and his friends filled their pockets. Banned for life from football, he lives prosperously in Trinidad while the FBI battles to have him extradited to stand trial in New York.

      His biggest paydays came when FIFA’s executive committee (Exco) got to choose a World Cup host. Indeed, for many Exco members, bribes were the main point of choosing a host. The tradition of exchanging hosting for bribes probably goes back to the mists of time. However, we know that Germany in 2006, South Africa in 2010, and multiple bidders for the 2018 and 2022 World Cups paid members of Exco to vote for them. (Only Brazil in 2014 didn’t have to stump up, simply because there were no other bidders.) The Exco members who took bribes didn’t necessarily do what they had promised, but that’s the risk every bribe-payer runs. In 2010, Exco chose Russia as host for 2018 and Qatar for 2022. Of the twenty-two men who voted on those bids, as of July 2017, seven had been charged or accused by US authorities of criminal wrongdoing; another, the German hero Franz Beckenbauer, is under criminal investigation in Switzerland and Germany regarding his country’s 2006 bid; Spain’s Angel Villar was arrested in an anti-corruption investigation; and five others have been sanctioned by FIFA’s own ethics committee. Meanwhile Havelange resigned as FIFA’s honorary president at age ninety-seven after new revelations about kickbacks. He died in 2016, aged one hundred.

      Qatar undoubtedly sprinkled money and