By William Echikson
Soccer's World Cup these days looks like the money machine that won't quit. A decade ago, the Cup generated less than $100 million in television and marketing fees. Next year's event in Korea and Japan will pull in about $1 billion, a powerful sign that soccer's appeal just keeps growing. Unfortunately, the lure of all that cash has spawned a financial scandal that highlights the dangerous amateurism of the Cup's owner, the Federation of International Football Assns. (FIFA). The only good that could come of this mess is the chance for soccer's top governing body to submit to a long-needed overhaul.
Unfortunately, FIFA seems intent on ducking reform. At an emergency meeting on June 12 held at its headquarters in Zurich, FIFA President Joseph S. Blatter avoided a no-confidence vote for his dealings with International Sports Marketing and Merchandising Group (ISMM). Blatter played a crucial role in what competitors charge was a flawed bidding process that awarded the Swiss company marketing and TV rights for the 2002 and 2006 World Cups. It was a poor choice, at least in retrospect. After piling on an estimated $560 million in debt, ISMM filed for bankruptcy last month. What's more, at least $50 million of the money ISMM received from Brazilian broadcaster TV Globo for World Cup rights was not deposited in a specially designated bank account. FIFA says that more money could be missing and has asked the Swiss police to investigate.
The Blatter brouhaha is merely the latest manifestation of FIFA's unprofessional behavior. Like the International Olympic Committee (IOC) prior to its own scandal-induced reforms, FIFA is a secretive nonprofit organization based in Switzerland. FIFA also gets close to its commercial partners--too close, perhaps. ISMM, for example, was set up in 1982 by Horst Dassler, son of the founder of Adidas-Salomon, the German sporting-goods maker that is also a major World Cup sponsor. Coincidentally, Blatter, now 65, began his career working out of an Adidas office in Strasbourg, France. He then spent 25 years at FIFA's Zurich headquarters before being elected president in 1998.
The suspicion among FIFA's critics is that ISMM won the bidding for World Cup rights in 1996 because of Adidas' long ties to the organization and to Blatter. Rival bidders, such as American sports-marketing competitor International Management Group (IMG), complain that there were no clear rules of the game. "The whole process was never explained, and when I made an offer, I would only receive vague answers," says Eric Drossart, IMG's European president. FIFA spokesman Andreas Herran says the bidding was conducted according to its bylaws and that the choice of ISMM was approved by its executive committee.
"FINANCIAL ASSISTANCE." FIFA could certainly benefit from more openness in its internal affairs. In FIFA's 1998 elections, Lennart Johansson, a reform-minded Swede, unsuccessfully challenged Blatter by running on a platform of greater transparency. Numerous press accounts at the time described envelopes stuffed with thousands in cash finding their way into delegates' hotel rooms on the night before the vote. Andrin Cooper, a former FIFA spokesman, says the payments were not to buy votes, but were "financial assistance" to national soccer federations. The delegates chose Blatter, the inside candidate.
The time is ripe for new leadership and playing rules at FIFA. "FIFA is run by men in blazers, picked for their politics, not their talents and management skill," says Chris Gratton, an economics professor specializing in sports at Sheffield Hallan University in Britain. For starters, Blatter should not run for reelection next year, even though he wants to. And to prevent a repeat of the ISMM fiasco, FIFA should manage marketing and TV rights itself, as the IOC does. Barring that, FIFA should institute true competitive bidding among sports agencies.
Most important, FIFA must release more detailed financial accounts. Even now, the body won't disclose Blatter's salary or expenses, and Blatter is not helping. "I have no requirement to disclose details," he said at a June 13 press conference. Perhaps such secrecy was acceptable when soccer was a truly amateur sport. But these days, kicking around a football has become big business. It should be run like one. Echikson covers European sports from Brussels.