English football for sale!
By Samuel J. Vinck & Jonathan Himpe *
The Daily Telegraph’s undercover investigation
English football has become more than just a game. It has become a multibillion-pound business in which, over the next three seasons, a £5.136 billion television deal (for live broadcasting rights, not taking into account the equally lucrative sale of overseas rights) will be divided amongst the twenty English Premier League clubs. Not surprisingly, many stakeholders (such as players’ agents, (offshore) business concerns, managers, and players) try to get involved and grab their piece of the cake. A mission for which good business relations are often indispensable.
Quite ironically, it is through such a business relation that undercover reporters from the British newspaper, The Daily Telegraph, got to film several high-level football personalities (among whom, at that time, the English national team manager Sam Allardyce) discussing a possible collaboration with a fictitious Middle Eastern investment fund, which was said to be interested in getting a foothold in the lucrative world of English football.
Besides Sam Allardyce, the undercover reporters also filmed several players’ agents (such as Pino Pagliara), Leeds FC owner, Massimo Cellino, QPR’s manager Jimmy Floyd Hasselbaink, Barnsley’s assistant head coach, Tommy Wright, and Southampton’s assistant head coach, Erick Black.
Under the heading “Football For Sale” The Daily Telegraph recently published, for several days in a row, various first-page articles, alleging to have uncovered widespread corruption in English football. Whilst on its website only short clips of the undercover investigation were published, the The Daily Telegraph commented that full tapes were handed over to the British police, in order for them to investigate the matter more thoroughly. The newspaper, however, refused to remit the full tapes to the clubs of the “exposed” managers and assistant head coaches.
In summary, at least three allegations were made by The Daily Telegraph. First of all, the filmed managers were accused of having agreed with the fictitious investment fund to deliver, in return for a significant fee, a keynote speech for an undefined audience in Singapore. Secondly, Sam Allardyce and Massimo Cellino were charged because they were advising the fictitious fund on how to get around the transfer rules, especially the ban on third party ownership of players. The third accusation involved managers accepting kickbacks (so-called “bungs”) for supporting transfer deals.
First accusation: public speaking at events
In the clips shown by The Daily Telegraph, some of the managers are filmed whilst negotiating financial terms for acting as a keynote speaker at an event in Singapore organised by the fictitious Middle Eastern fund.
As the clips show, the discussed speaking fees ranged from £55.000 to £400.000, equalling the average speaking fees charged by Hillary Clinton before the launch of her US presidential campaign.
The clips, however, do not reveal to whom and about what topic the managers would have to speak exactly. Also, Allardyce mentioned that the speech would require prior consent of the English FA, his employer at that time.
The negotiations held by Allardyce with the fictitious investment fund (which he believed was seeking to invest in football players) were undoubtedly incompatible with his well-paid position as England’s national team manager. After all, it is not unthinkable that – once his relationship with the fund would have become more established – players of the alleged fund would possibly get preferential treatment when he was making the national team selection.
As a matter of fact, the same goes for all other (club) managers: is it not so that, by receiving exorbitant speaking fees from an investment fund, a manager might later on influence the decision-making process of his club by supporting the signing of a player of that fund?
To conclude this section and to set things clear, we believe it is not that much of a problem when a manager is invited for a keynote speech at a certain event, even if he would be generously remunerated for this performance. In that context, we remember a splendid fifteen-minute speech of Louis Van Gaal to an audience of Dutch entrepreneurs right before the 2014 World Cup in Brazil, in which he was comparing his job as the Netherlands’ national team manager with that of CEO of an enterprise.
What in our opinion, however, is incompatible for football managers is that they, in return for an exorbitant speaking fee, would deliver a keynote speech for a football investment fund. In such situations, the speaking fee could easily be considered as a sort of “disguised bribe” paid by a stakeholder in the football industry with a view of obtaining an advantage in eventual future dealings where the manager concerned would directly or indirectly be involved.
Second accusation: advising on how to get around the transfer rules
The next allegation brought up by The Daily Telegraph is that Allardyce and Cellino advised the representatives of the investment fund on how to get around the transfer rules. More particularly, both men were filmed informing their interlocutors on how to avoid FIFA’s ban on third-party ownership (TPO), which came into force on 1 May 2015, and which is, in our opinion, clearly aimed at securing that most of the money of, inter alia, the lucrative television deals remains within the club-circuit.
FIFA’s ban on TPO provides that “no club or player shall enter into an agreement with a third party [such as an agent, investment fund, etc.] whereby a third party is being entitled to participate, either in full or in part, in compensation payable in relation to the future transfer of a player from one club to another, or is being assigned any rights in relation to a future transfer or transfer compensation” (Art. 18ter RSTP).
As advised by Allardyce, the investment fund could easily get around the transfer rules just by “making sure they get the ownership and the agent, so they own the agent”. By nature, many agents will influence their players’ decisions in transfer matters for their own financial sake, but that is regarded as the players’ problem. Whether or not there is a fund behind the agent is dismissed as irrelevant: it is up to the player to choose his agent wisely and to get well-informed about whether or not a third party (investment fund) holds shares in his agent’s company.
Cellino, on the other hand, was filmed soliciting an investment in his club. Simply by buying stakes in the club, the alleged investors would be able to profit from a future sale of its players (since, that way, they would co-own the economic rights of players through the co-ownership of the club).
The fact that getting around TPO rules does not seem to be too difficult and, moreover, that it appears to be a common phenomenon, highlights the failure of these rules. For a more nuanced discussion and critique of the TPO rules, we refer to an earlier article (see GSLTR 2015/1, p. 27-30).
To conclude this section, it is not really that much of a problem to advise someone on how to get around certain rules, provided the methods that are used are not against the law. The real problem in the case at hand, however, is that Allardyce was advising on how to avoid rules, which were set by his own employer, the English FA. Consider the following parallel: unlike a tax advisor, a tax inspector should not advise on “tax avoidance” measures to minimize taxes (albeit being a legitimate activity in contrast to “tax evasion”), as such activity is diametrically opposed to the interests of his employer (the State).
Third accusation: accepting kickbacks for transfer deals
In The Daily Telegraph’s report, accusations were made by Italian players’ agent Pino Pagliara that, at least eight, former Premier League managers have accepted kickbacks or bungs for supporting transfer deals. For legal reasons, The Daily Telegraph decided not to publish any names.
Asked for a reaction after publication of the Telegraph’s report, Pagliara claimed that he had invented the bribery claims as he believed that this bragging would facilitate his talks with the fake investors.
In any case, The Daily Telegraph stated that the full tapes were handed over to the British police so they can conduct a thorough investigation into this matter.
Be that as it may, it is still illicit and unacceptable for managers to accept kickbacks for supporting transfer deals, but – if the allegations of Pagliara would appear to be real – we doubt that any specific new rules are needed to fight this phenomenon. A restructuring of their transfer operations and organizational structure would, in that case, be a more effective measure for clubs that are faced with managers accepting kickbacks.