FIFA and UEFA must learn from the Russia and Qatar experience

Football was warned about Russia and is being cautioned over Qatar. For a game that goes to great lengths to virtue signal whenever it can and attach itself to causes, from rainbow laces to food poverty, not to mention the black lives matter campaign, football can be pretty naïve sometimes. Or maybe it is simply seduced by money and bullied by professional politicians?

The latest threat to football’s sanity – and credibility – is crypto currency, snake-oil salesmen are pitching up with their beards, tattoos and baseball caps, calling everyone “guys” and promising to make fans beneficiaries of possibly the greatest example of smoke and mirrors since Danny Kaye sang about a Danish king being in the “altogether”.

But this is merely part of a trend of delusion that has engulfed football for some years. Football’s governing bodies have shown they are more than capable of being attracted to shiny things, such as buckets of money from sponsors or backers that will use the world’s most popular sport to launder their image (if not their money).

FIFA were lambasted for awarding the 2018 World Cup to Russia, UEFA were criticised for allowing Russia’s Gazprom for having such an influence on European football. The Gazprom logo became ubiquitous, their strange, partly-animated TV ads were somewhat ominous for as well as lighting up the Champions League, they also had the power to switch off Europe. The willingness to jump into bed with anyone willing to bring along their wheelbarrows full of cash, not only paints people as foolhardy, it also suggests procedures such as due diligence and reputational risk are severely lacking. Notwithstanding the stupidity of continually expanding competitions, increasing fixture lists and greasing-up to nations with dubious human rights records, most of the sensible world has told FIFA and UEFA, repeatedly, they are making very damaging misjudgements.

Football does have a track record of ridiculous errors. It also swims in a sea of hypocrisy and if footballers in England and other countries were really as savvy as they portray, they would walk away from a winter World Cup in Qatar. But equally, the governing bodies allow themselves to be manipulated and no matter how much they try to talk-up 2022, they have miscalculated the impact Qatar (and indeed, Russia), will have on the long-term reputation of FIFA and football.

Football has to think more about reputational and concentration risk. Two World Cups have damaged the governing bodies but also highlight the game’s habit of easily shelving its values.

Gianni Infantino’s message to Russia after 2018 now looks as pollyanna as Neville Chamberlain’s “peace in our time” demonstration. “You welcomed the world as friends and those bonds of friendship will never be broken. This is not the end, it is only the beginning.” Poor old Gianni, he must be very red-faced when he reads that today. Four years later, Russia is at war with Ukraine and millions of people are suffering.

Sadly, there are precedents to consider, such as the 1936 Olympics where Adolf Hitler’s Germany greeted the world. Three years on, Germany invaded Poland and life was never the same. In 1934, Italy was host nation for the World Cup and a year later, invaded Abyssinia. In 1978, a Junta-led Argentina won their own World Cup and in 1982, took over the Falkland Islands and then went to war with Britain. In the case of Russia, everyone was a little nervous about the 2018 World Cup but equally, came away believing the country had embarked on a charm offensive.

The subsequent events in Ukraine have shown that Vladimir Putin was as genuine as Hitler in his outward displays of affection. As a result, Gazprom has been removed from the FIFA partnership group and Schalke 04 are no longer sponsored by the Russian energy company. The impact of the war has extended to British football, most notably with the sanctions on Chelsea’s former owner Roman Abramovich. While the story has moved on and Chelsea are now in US hands, there should be few complaints about the removal of an owner whose links with the Russian regime are well documented. He helped Gazprom’s growth by selling his stake in Sibneft to the Saint Petersburg-based company.

Gazprom are 51%-owned by the Russian state, so their involvement in football around Europe represents a back-door route into expanding their footprint. Putin’s government has exercised systematic control over many aspects of Russian business, namely banks, petrochemicals and infrastructure. Gazprom does not sell gas to consumers directly, it sells its offering to governments and as the world’s biggest natural gas company, it is accountable for 17% of global production and around 8% of Russian GDP. Conversely, Gazprom is one of the biggest producers of Carbon Dioxide emissions, a fact that has made them unpopular with many people, as evidenced at a football match between Basel and Schalke 04 when a huge banner was unfurled sending a message to the Russians – “Don’t foul the Arctic”.

But Gazprom’s strategy in football has actually been quite transparent. Schalke 04, who Gazprom began sponsoring in 2007, are based in the Ruhrgebeit, an area in Germany that produces vast quantities of coal. Gazprom were involved in negotiations with Germany over the constructions of a Russian-German pipeline. Having dealt with that project, Gazprom looked further south and bought a controlling stake in Naftna Industrija Srbije, Serbia’s state-owned and gas company.  From 2010, they also sponsored Red Star Belgrade, saving the club from bankruptcy while strengthening links in Serbia.

UEFA and FIFA have both embraced Gazprom with such eagerness they must be questioning their practices, such was the scope of their sponsorship that you have to wonder about concentration risk. If Paris Saint-Germain and Manchester City (and Newcastle United will come under more pressure with regards to their Saudi Arabian ownership) are highlighted for being state-run or controlled, then surely the governing bodies must face similar criticism. Notwithstanding the World Cup bidding process and how Russia and Qatar won their rights, the involvement of Gazprom must border on a form of state-controlled involvement? If nothing else, it also smacks of concentration risk to have such a presence from one company.

Going forward, both UEFA and FIFA will need to implement far greater intensity around their compliance operations and the basic principles behind placing trust in suspect regimes. This is, after all, not just a case of holding a football tournament, FIFA’s reputation is at stake, and no amount of money can buy a good name once you have lost your credibility. Football needs a strong regulator, robust and value-driven leadership and a clear understanding of what right and wrong look like. In an era of mistrust and scrutiny of business, social and political practices, football should be no different.

Javier Tebas has a point about state-owned clubs, but is there an agenda?

JAVIER Tebas doesn’t like state-owned clubs, but here’s news for you, Señor, not many people do. They unsettle the playing field still further and although their wealth may level-up clubs alongside those who have been at the top for decades, their presence makes imbalances even worse. In other words, they might create greater competition for football’s hierarchy, clubs that feel their place is at the forefront of the game, but they cast-off so many who simply cannot compete anymore.

As president of La Liga, Tebas has to do the bidding of Real Madrid and Barcelona, among others. This is no easy task, you would assume for these clubs like being the Alpha males of European football and don’t enjoy seeing their position threatened. So Mr Tebas undoubtedly comes under pressure from all directions, but he will surely be aware that a successful Real Madrid does more for La Liga’s marketability than any amount of advertising spend. And ultimately, football is an industry where growth is mostly achieved “organically”, mergers are not really part of the equation. As long as clubs stay within their defined financial boundaries, they can go hell for leather in building their global footprint.

Tebas has launched a few clumsily-guided verbal attacks on Paris Saint-Germain and Manchester City, questioning many different aspects of their operations. It is not out of the question that some legal action may be coming in the opposite direction, but the simmering conflict between Tebas, PSG and Ligue 1 will do nobody any good, and it could even drive a wedge between top European leagues and reignite the European Super League project. Let’s not forget PSG were not among the clubs advocating the ESL and City were quick to withdraw when PR turned nasty. But Real Madrid, Barcelona and Atlético Madrid were all willing partners to the end. Tebas may actually be sitting on something of a powder keg – if European football becomes more divided, opportunists may decide the big clubs really do need their own party.

PSG were not advocating the ESL but Real Madrid, Barcelona and Atlético Madrid were all willing partners.

Tebas has, in the past, spoken negatively about the Premier League and its broadcasting fees. La Liga have made a lot of positive modifications to their own model in recent years, but it’s a fact their blue-riband clubs, Real Madrid and Barcelona, are not as influential as they once were. They may still have enough clout to remain among the elite and Real’s Champions League victory this past season demonstrated they are always capable of winning the major prizes. And while they keep winning the trophy that is most associated with their history, the state-owned clubs have yet to lift it themselves. Of the “new money” clubs, only Chelsea have won the Champions League (in 2012 and 2021).

Are PSG and Manchester City ruining European football as Tebas suggests? Certainly they have artificially raised the bar in both England and France, although in the case of PSG, their extraordinary financial power does make them the ultimate flat-track-bullies. Tebas was very direct in his criticism, which comes after Real Madrid were gazumped by PSG’s huge new deal for Kylian Mbappé. “Listen, Nasser (Al-Khelaifi, PSG’s President), what you are doing is screwing football. It’s as dangerous as the Super League project.”

The news reports claim La Liga understands that the irregular financing of these clubs is carried out either through direct injection of cash or through sponsorship contracts that don’t make sense. As well as the Mbappé deal, Tebas cites the Manchester City signing of Erland Haaland. Interestingly, Real Madrid and Barcelona were both interested in Haaland at some stage. PSG, aware of the concerns around the Mbappé contract, commented: “The first person who needs lessons on conflicts of interest, financial management and market distortion is Javier Tebas.” Furthermore, Al-Khelaifi responded: “Tebas is afraid of Spanish top flight clubs being inferior to Ligue 1 in terms of quality.”

Ligue 1’s Vincent Labrune called Tebas’s outburst “disrespectful smears” and reminded him Real and Barca have broken the world transfer record six times and their salaries remain huge. Although Tebas may feel he is doing the right thing in “calling out” PSG and City, it also sounds like a case of sour grapes given the position some of his clubs have in football’s hierarchy.

That said, Tebas will have significant support from across the football world for being outspoken. Losing out on both Haaland and Mbappé wasn’t just a blow for the clubs willing to buy him, it was also a setback for La Liga, who are eager to replace the Ronaldo-Messi dynamic that has now gone. Over more than 10 years, these two players represented the face of La Liga. Mbappé and Haaland are the next generation, but they are now plying their well-compensated trade in France and England.

And there’s more to come. Newcastle United are likely to fall into this gilded category in the next year. Saudi Arabia’s sovereign wealth fund is behind the consortium that now owns the club, so in theory, they are the richest, or one of the top three richest, in the world. Tebas has already remarked the Saudi takeover was a case of “stealing football”.

The only way anyone can control this type of investor activity is through a type of governance that becomes the antithesis of the free market. Football is, all said and done, a competition and despite the claims the current set of uber-clubs make for an uneven playing field, the game has never been about a level field of play. The more money that is poured into football, the higher the stakes when investors are looking to buy a club. The obscenely-rich come in small numbers, so there’s no way the top 20 or 30 will all be bought by the type of owner PSG and Manchester City have. Levelling up would create the type of league that exists in the US, and that would not sit comfortably in Europe. Salary caps and transfer limits may well have the desired impact, but they, in themselves, would have drawbacks. However opponents of elite football couch it, there’s no easy way to change the status quo. Taking the very rich out of the competition and creating their own plaything may actually help the rest. The inauguration of a super league, perhaps? Whoops, we’re back where we started.

Newcastle United’s calm before the storm

AFTER AROUND a dozen games of the 2021-22 season, Newcastle were being written off as relegation certainties. In their first 11 fixtures, they drew five and lost six. They were scrambling around at the bottom of the Premier League, the fans hated the club’s owner and they were urging on the controversial sale to a group of investors led by the Saudi Arabian sovereign wealth fund.

It was widely believed Newcastle, while a big club in the eyes of their fans and many others, had fallen too far behind the competition. The Geordies get tired of hearing about their lack of success and the fact their glory days are now a very deep sepia, and they’ve had plenty of false dawns since 1969 when they last won silverware.

Their 2020-21 finances revealed their total turnover was £ 140 million, a fraction of the Premier’s top clubs and 8% down on the 2019-20 season. Newcastle under owner Mike Ashley were run prudently and invariably made a profit – over the past 10 years, only four clubs (Tottenham, Manchester United, Liverpool and Burnley) have made a higher consolidated profit than Newcastle’s £ 48 million.

Despite this achievement, a lack of continued investment and, it would seem, a big shortage of ambition, created a stagnant club with disillusioned supporters.

Inevitably, Newcastle are being linked with dozens of players as the 2022 season ends.

In 2020-21, Newcastle made a loss for the second consecutive season, although their pre-tax deficit of £ 13.6 million was modest compared to some of their Premier bedfellows. For a club that can pull in crowds of 50,000-plus, Newcastle’s income is definitely on the side of underachievement and is only a quarter of Manchester City’s and less than half of Tottenham Hotspur’s £ 360 million. The potential is very significant, but will surely require a complete overhaul of the club’s commercial strategy as  the new era gathers momentum.

Newcastle’s commercial revenues fell by 29% in 2020-21 to £ 21 million, underlining one of the key areas where the club is punching well below its weight. Matchday income was almost wiped out, but broadcasting rose by 12% to £ 119 million. When Ashley took over the club, their income was among the top half dozen in the league, but since then they are well below halfway. Clearly Newcastle’s decline has been on and off the pitch.

Newcastle’s wage bill for the season was £ 106.8 million, representing 76% of income. The ratio actually fell in 2020-21, but two seasons ago, it was 55%, despite a rise of only £ 10 million in actual wages. In that time, the club’s turnover has gone from £ 176 million to £ 140 million. Covid-19 has cost the club some £ 40 million, a figure that is actually less damaging than some Premier clubs, notably Everton, who believe the pandemic has had a negative effect of some £ 170 million.

The club shaved £ 25 million off operating expenses, which limited the overall loss for the season, but was also helped by taking advantage of the UK government’s furlough scheme during the pandemic. Ashley used the programme in both covid-affected seasons. However, when the new owners took over, they were shocked at the low level of wages among non-playing staff, and have since raised salaries.

Since buying the club, the new owners have pumped in £ 167.9 million and Mike Ashley has been paid back his £ 107 million loan to Newcastle United. As at the end of 2020-21, their net debt was £ 94.5 million, which was £ 50 million higher than 2019-20.

The January 2022 transfer window saw the club spend heavily to avoid relegation. In November 2021, Steve Bruce was sacked and Eddie Howe installed as manager. The January transfer window saw the club spend heavily to avoid relegation with short-to-medium term signings such as Chris Wood (Burnley £ 25 million), Kieran Trippier (Atlético Madrid £ 12 million), Dan Burn (Brighton £ 13 million) and Bruno Guimarães (Lyon £ 33 million). Howe’s record was enough to keep Newcastle in the Premier, 13 wins and five draws from 27 games taking them to 11th place.

There is expectation the club will spend big in the summer of 2022, although they will have to be wary of Financial Fair Play issues. Inevitably, they are being linked with dozens of players, including the sought-after 22 year-old Uruguayan Darwin Núñez of Benfica and Lyon’s Brazilian striker Lucas Paquetá.

In theory, Newcastle United became the richest club in the world after being bought by Saudi Arabia’s Public Investment Fund, so some fans will expect an instant transformation. At the same time, the debate about human rights and the regime in Saudi Arabia will refuse to go away, so they will have to endure ongoing criticism and plenty of questioning.

The owners have a target of title contention within five years, a sensible aspiration because the football world has changed since Chelsea and Manchester City were bought by Roman Abramovich and Abu Dhabi respectively. It is that much harder to play “fantasy football” and sign everything that moves in today’s environment. Nevertheless, that won’t stop St. James’ Park being the centre of attention in the summer of 2022.