You Are Part of a Criminal Enterprise!

I love the smell of freshly-laundered $$$.

Have you ever bought a kit directly from your favorite club's website? Have you ever purchased tickets to a match? Have you ever donated money to the supporters' club? I have bad news for you - welcome to a RICO trial!



A report released last week by the Financial Action Task Force (FATF) has some strong words for football:

"[F]football is at risk from criminals buying clubs, transferring players, and betting on the sport [and] tax evasion...human trafficking, corruption, [and] drug trafficking..."

Well, that certainly seems like it could be a problem. Apparently one of the more common methods currently is for a player to sell his image rights to a 3rd party, and then have the club pay the latter for those image rights as an indirect salary to the player. Since it is not a direct compensation to the player, he does not pay taxes on that sum and the 3rd party funnels the money back to him discreetly. Even more damaging is the increasing dollar (Euro; pounds; etc) amount of international transfers and the often obscure machinations they entail.

However, the most insidious version of criminal activity comes when shady investors put money into a club, either as shareholders or as outright owners:

"The report cites several examples of clubs in financial difficulties whose deficits were funded by suspected criminals. Investors may get their 'laundered' funds back by selling the club's equipment and services at inflated prices, or via sales of media rights, tickets, players and merchandise."

Investigators claim to have already prevented the takeover of one Italian club by a criminal enterprise, although Berlusconi seems to have avoided their attention. The appeal of football clubs to large-scale criminal organizations is high when money gained from drug trafficking or gun-running needs to be laundered. We've already discussed the case of Mexican club Mapaches, who acted as a front for the Gulf Cartel.

In the world of competitive sport, moving money into and out of businesses worth hundreds of millions of dollars is surprisingly easy, and incredibly lucrative for criminals. The key is simply to have individuals or other businesses (essentially "shell" corporations) act as a go-between. When a business is used, there are typically so many layers of obfuscation that no one is aware of who is really behind the purchase of a football club (when asked for comment, Roman Abramovich simply replied "In Russia, money launders you!"). When individuals are used, they are typically making transactions that are smaller so as not to trigger automatic FINCEN (or similar agency) monitoring in a process known as "smurfing."

So really, whenever you spend money on your favorite club you may be doing an international criminal a favor. Why do you hate America?

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Hey Look, Financial Windfalls

Despite the heavy debt loads of some individual clubs, soccer's governing body is swimming in cash. From the AP:

FIFA said Wednesday that it turned a $184 million profit in 2008, remaining 13 percent under its own budget and not losing any money on assets during the year. FIFA collected $957 million in revenue, mostly off additional television and marketing deals struck for the 2010 World Cup.

The sport's governing body had revenue of $957M on expenditures of $773M. The profit was summarized by FIFA president Sepp Bladder Blatter thusly: "We are in a sane, one could even say comfortable financial position."


So even as credit is hard to come by and consumer spending has been negatively impacted by the zeroing of pools of CDO's, people still pony up for football. Keep in mind that the GFM didn't really start until late in the year (circa October) and that the subsequent impact on revenues might not take full effect until this year.

Even as Blatter proclaims FIFA are in good shape, it's a bit of white lie. They are already projecting a $560.4 loss for next year as costs for the World Cup kick in. Additionally, most of the revenue (primarily from television) has already been booked.

And there are additional worries for FIFA with respect to the World Cup which could widen the budget gap next season, particularly the specter of commercial partners not meeting contractual sponsorship obligations. FIFA made no specific comments on those partners during their Bahamian getaway. In fact they were so thin on specifics about 2010 that Dutch delegate Harry Been objected to advanced material as it contained just one single page on next year's budget.

But as corporations look at their budgets and look for places to cut corners, lavish sports sponsorships are going to look pretty tempting. Bank of America has already come out and said they are considering not renewing sponsorship of US Olympic Committee.

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This Man Hates England

That's Culture Secretary Andy Burnham and he wants English clubs who collect buckets of cash from their Champions League success to give it to shitty clubs.

Burnham has got shitty club Wigan chairman Dave Whelan on his side:

It is not a Premier League at the moment. There are the top four, some in between and the rest at the bottom struggling to stay in the division. We need an equal distribution of finance for the health of the league. We have to be fair because we are all in the same league and we all appear on the television. Manchester United or Chelsea need somebody to play on the television, so we are as entitled as they are to the money that comes.

Whoa, whoa... the English are socialists? When did this happen?

There are actually two issues here. One is the redistribution of Champions League money, the other is that of television money.

Currently 50% of the TV revenue is split evenly between clubs. The remaining 50% is then split evenly into two pools of 25%. One pool is paid out depending on the previous seasons' finishing spot. The other is paid out according to how many times a club is shown on live TV.

The distribution of £900M in TV money, that might be something for the clubs to look into if they feel it is not being equitably divvied up. But Burnham actually wants to curb the dominance of the Big 4.

We can't figure out if he's either an idiot or an asshole. So, should parsimonious Arsenal give money to Manchester City because the latter's multi-billionaire owners insist on having an overmatched manager (should have played Elano more, Sparky)?

We should add we think revenue sharing in the NFL was a stroke of genius and it's one of the reasons that the NFL is king in the US. But there is a massive difference between American football and world football. Nobody but Americans play the former. So, the US holds a monopoly on leagues. If the NFL wants to cripple the Cowboys to help the Panthers, that has no additional repercussions on the world's sports stage.

England doesn't have a football monopoly. If they want to force United to give money to Stoke so that Stoke has a better chance of beating Untied in the future, that's quaint but it would wreck English football in the medium term as less money for United means they will have a harder time competing with F.C. Barcelona and A.C. Milan going forward.

Each of the last three seasons, the EPL has had three of the four Champions League semi-finalists, unless Burnham can also get Spain and Italy (and Germany, and the Netherlands, and Portugal, and so on) to similarly redistribute wealth the English can say goodbye to that type of dominance. And that ultimately hurts the Premier League more than it helps Stoke.

Just our $.02, but, full disclosure, we're also largely supporters of Big 4 teams here (Arsenal, Liverpool, and a rogue Chelsea fan). Oh, and note to Whelan: it doesn't matter what you do with money, you're always going to have four teams at the top, some in the middle and then some teams fighting to stay up.

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Hey Big Spenders....

WOW WOW WOW....

Man City appear to have been taken over by a Middle Eastern company called Abu Dhabi United!

The ink is barely dry and City have launched an audacious bid to snatch sulky Bulgarian bench bum Dimitar Berbatov from under the nose of rivals Manchester United. A 30 million quid bid has been made.

How can we all keep up with the roller coaster that is Manchester City these days.

Former Thai President Trashcan Sinatra has managed to negotiate the new position of 'honoree President' at the second club in Manchester. Will this allow him to hunker down at the City of Manchester stadium and avoid jail time in his homeland? Questions, questions, questions!!

Like...Why did Manchester City sell Corluka to Spurs at the crack of dawn this morning if they just hit the jackpot with a budget that makes Chelsea look like paupers!

One thing is for sure it's an exciting time for the blue half of the City. The new owners have declared that City WILL be participating in the Champions League next season. Really? Next year? Well there IS seven and a half hours left to spend, spend, spend before the transfer window slams shut of City's nouveau riche fingers!

Tick, tick, tick...

-Bigus.

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More Salary Bullshit

[Ed. Note: Sorry... this post has nothing to do with Arsenal/Liverpool from yesterday. We could easily open up a thread after this just for random griping. You know you want to.]

FutebolFinance.com has been busy of late, releasing all sorts of salary Top 10s from around the world, and this one for highest-paid players worldwide is just fucking hilarious.

Enjoy this top 10, as it teaches you one very important lesson: when you're at the top of your game, sign a massive fucking contract before the downward spiral begins.

Looking at the list: Kaka has had a rough year, Ronaldinho's injured again, Terry's been hurt, Thierry's been hurt, Lampard's been ghostly on the pitch, Ballack's not getting enough starts, Shevchenko.... well let's just move on, and Gerrard's suffered a dip in form and influence this past season.

It's really no coincidence that there are 4 Chelsea players on this list, because let's face it, they're the fucking kings of overpaying for players. They do it every year [I can still hear the laughter as they paid 16 million pounds for Juan Sebastian Veron AFTER he'd already flopped massively in the EPL for Manchester United], and this list has to make tough reading. Look at those awkward contracts you'll be paying for quite some time.

The sting is of course lessened by being just 2 points back from Man U in the two-horse title hunt, but still: if you fall short, look at all that guaranteed money flying out the door. It's a fucking miracle, almost 30 million pounds going into the pockets of 4 players [3 of whom aren't worth a fraction of it], but hey, that's the game nowadays, isn't it?

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A post where I attack Beckham again for no reason

Slow news days are the best, because you get to focus on people and teams that you can't stand, writing all sorts of blithering hate about them.

David Beckham is just one of these people, and although this story isn't really that eye-opening, I couldn't resist.

Despite the average MLS salary rising 12 percent to $129,395, David Beckham still makes 50 times that, and twice as much as the league's next highest player.

Fucking old overrated bastard.

Chicago's Cuauhtemoc Blanco, another fucking old overrated bastard, clocks in at $2.667 million a year, while DC United's Marcelo Gallardo earns a paltry $1.874 million.

From the article:

Forty-six players earn the league minimum of $33,000. Among developmental players, 30 make $17,700 and 43 make $12,900.

The median salary — the point at which an equal amount make above and below — was $61,273 for the 333 players listed. That is up 16 percent from last year's median of $52,965.

And Beckham makes how much? $6.5 fucking million a fucking year? It's a disgrace! He turns 33 in 3 weeks, he's mediocre and ineffectual for the national side, he's unable to corral his fellow mercenaries to win consistently in Los Angeles, and yet he's destroying the delicate balance of the MLS with his ridiculous old contract.

This is why the MLS will never really compete as a world league. The longer that they continue to reach out for aging once-marquee names and tether them to long, expensive contracts, the longer the league will struggle. The MLS is desperate to stand shoulder-to-shoulder with other big domestic leagues around the world, and yet it still hasn't found its identity.

At a cursory glance, the MLS is a blend of fresh-out-of-college prospects and 30-something itinerants, most of whom have retired from their national teams.

I desperately want the MLS to work, and I'd love to be corrected if I'm way off base, but articles like this exhibiting the glaring chasm between Beckham's pay check and everyone else's doesn't help matters much.

Beckham, if you want to help the Galaxy, give them some of that money back to use elsewhere. It's not like you need a third pool in your fourth summer home.

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Spray tan comes to Loftus Road

Would you buy a car from this guy?

The Guardian ran a story today about Flavio Briatore and his new toy, Queen's Park Rangers. It was framed as your typical fish out of water story. You know, glamorous Italian buys lower league club, brings style to the bottom of the Championship. The piece also plumbs the depths of naivety on occasion. Pretty women with big sunglasses in the directors box! Rich people wear nice clothes! Flavio impregnated Heidi Klum! After the jump, what Flavio & Co are really up to, and why other London clubs should be worried.

QPR are a West London club with a mildly illustrious history, winning a League Cup in 1967, and a reputation for a bit of hooliganism. They also had a Lou Dobbs moment last year and brawled with the Chinese U-23 national team. At times in the 1980s and 1990s they were probably on par or better than most of their local rivals, notably Chelsea. They finished fifth in the inaugural season of the Premiership in 1992. After they were relegated in 1996, QPR slid all the way down to what is now League 1. The club's finances mirrored the shoddy state of play on the pitch, and QPR even went bankrupt in 2001.

Into this environment came Flavio Briatore, Bernie Ecclestone, and recently Lakshmi Mittal. Flavio is one of slimier team bosses in F1, which is quite an accomplishment given the shark pit that is the modern pit lane. He was actually running Benneton's retail operation in the United States in the late 80s when the Benneton family took over the struggling Toleman team. Briatore became team boss in 1990, enjoying great success thanks to Michael Schumacher, a bunch of cheating, and the death of Ayrton Senna. Flavio was sacked in 1997, but returned to the team when Renault took over in 2002. He then won two more titles due to the fine driving of Fernando Alonso. Flavio, at the very least, has a well deserved reputation as a pretty good talent spotter, taking both Schumacher and Alonso under his wing very early in their careers.

The day job: models in Monaco.

These days, running an F1 team isn't enough for the perma-tanned Italian. Thanks to the fortune he has somehow managed to accumulate from his time in Formula 1, Flavio now owns a ridiculous game lodge in Africa, a new clothing line, a night club in Sardinia, and god knows what else. He has also engaged in a bit of model sportfucking, having relationships with Naomi Campbell, Heidi Klum, and others.

In August 2007, Flavio teamed up with Ecclestone, who has managed to trouser a couple billion pounds from his shrewd exploitation of F1's tv rights (picture Roger Goodell, but if half of the NFL's tv rights revenue went directly into his pocket), to buy QPR. The cost was somewhere around 14 million pounds, which is like couch cushion change for these gentlemen. Lakshmi Mittal, multibillionaire owner of the eponymous ArcelorMittal steel empire, has since bought 20%. In combined financial might, the trio blows Roman Abramovich out of the water. Like many of his previous business deals, Flavio is the frontman for richer financial backers.

The new regime installed Luigi de Canio as manager before the start of this season, and he has QPR playing some attractive but inconsistent football. QPR beat Championship leaders Stoke 3-nil on Sunday at Loftus Road and currently sit 15th in the table. Obviously they won't be pushing for promotion this year, but our rather wealthy protagonists didn't buy QPR for the midweek fixtures at Leicester City.

What is it with Italians named de Canio and salutes?

Flavio told the Guardian that "'[w]e have to take it slowly, step by step. I don't want to go up to the Premiership and come straight down again like an elevator. Little by little. That's the way to become a protagonist in English football." So clearly they are gunning for promotion next year! If they do make the Premiership, it wouldn't be surprising to see them open up the purse strings a little more. After all, what's the point of owning a club if you can't impress your billionaire friends with your all-Brazilian $200 million midfield. There are also rumors that the new owners are looking to either renovate Loftus Road or move to a new stadium. Either way, it would be exciting/terrifying if another club with wealthy backers had delusions of glory and really splurged on the transfer market.

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Chelsea's bank balance is fun

Remember when I stabbed you in the back so Roman could bring in his boyfriend? Yeah... good times...

[On a slow news day, you take what you can get]

Chelsea FC, the team I lovingly remember as the team that broke football*, is in the news again for their remarkable finances.

Yesterday saw the club release their financial results, revealing a record group turnover but also a 75 million pound loss for the year before June of 2007. D'oh.

In spite of this, they still expect to break even on schedule by the 2009/10 season, making the world erupt into laughter.

[* I will not digress from this even though Man Utd were the ones who paid 28 million for him in 2001... as Chelsea signed him in 2003 for 15 million anyway!]

Chief executive Peter Kenyon drank the Kool Aid, and it's tasting good:

"Our long-term target of operating profit break even by 2009-10 remains ambitious but we are determined to meet it or get as close as we can. In the meantime, we have made good on our pledges of last year, hitting all of our aims. We have expanded globally as a club, we have reduced our salaries as percentage of turnover, we have continued to be successful on the field, we have increased sponsorship revenue and we continue to invest in our academy and reduce our reliance on transfers."

They do have a lot of money coming in, but it's going to take quite some time to dig out of the hole that their absurd transfer market dealings have put them in.

Chelsea's transfer magic:
- 15 million on Nicolas "I have the attention span of about one season" Anelka
- 10 million on Chris "What the fuck happened" Sutton
- 15 million on Veron
- 16 million on Adrian Mutu
- 6 million on Glen "I love going out on loan" Johnson
- 31 million on Sheva
- 7 million on Khalid Boulahrouz
- 20 million on Ricardo Carvalho
- 9 million on Ivanovic
- 13 million for Paulo Ferreira
- 6 million for Geremi
- 17 million for Damien Duff

Chelsea will be "self-sustaining" at some point. Just not by 2009/10.

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