Part Two of this series looked at the legal challenges FFP has faced in the five years since the controversial ‘break even’ requirements were incorporated. Those challenges to FFP’s legality have been ineffective in defeating the rules altogether; however, there have been iterative changes during FFP’s lifetime. Those changes are marked by greater procedural sophistication, and a move towards the liberalisation of equity input by owners in certain circumstances. In light of recent statements from UEFA President Aleksander Čeferin, it is possible that the financial regulation of European football will be subject to yet further change.

FFP from 2010 to 2015 

FFP was integrated into UEFA’s licensing requirements in the Club Licensing and Financial Fair Play Regulations Edition 2010.  In the 2010 Edition, implementation of FFP was to be overseen by the UEFA Club Financial Control Panel. Disciplinary action was carried out by the UEFA Control and Disciplinary Body, whose decisions could be appealed to the UEFA Appeals Board.

In the Club Licensing and Financial Fair Play Regulations Edition 2012, the oversight and disciplinary procedure of FFP was amended. The functions of the Club Financial Control Panel, Control and Disciplinary Body, and Appeals Board were replaced with a two-tier Club Financial Control Body (CFCB). The two chambers of the CFCB are the Investigatory Chamber, which actively monitors FFP compliance; and the Adjudicatory Chamber, which levies sanctions for non-compliance.

Under Article 53.1 of the 2012 Edition rules, the CFCB “carries out its duties as specified in the present regulations and the Procedural rules governing the UEFA Club Financial Control Body” (the Procedural Rules). The bespoke Procedural Rules establish a framework for the composition of the CFCB, the decision making processes of both the Investigatory and Adjudicatory Chambers, and the rules applicable to the whole proceedings. Like the Club Licensing and FFP Regulations, the Procedural Rules have gone through iterative changes (2014, and 2015 editions).

The Procedural Rules are a welcome development to FFP, ensuring the independence of the CFCB (Articles 6 and 7); bestowing broad investigatory powers upon the Investigatory Chamber (Article 13); and setting clear parameters for disciplinary action and process, including setting out potential disciplinary measures (Article 29). Overall, the Procedural Rules increase the legal sophistication of the end-to-end FFP process, and in doing so reduce the risk of irrational or arbitrary outcomes.  This protects clubs and UEFA; clubs who are in breach of FFP have clear guidance on the process that will be followed; clubs who adhere to FFP are reassured that those clubs who breach the rules will be put through a sophisticated investigation and (if necessary) disciplinary process (and additionally, pursuant to Article 22, where third party clubs and member associations are affected and have a legitimate interest in joining proceedings before the Adjudicatory Chamber, may do so); and UEFA, in having a clear and detailed rules governing procedure, helps to insulate FFP from legal challenge.

(By way of aside, in light of the changes to the procedure governing FFP sanctions, it is noteworthy that Bursaspor, in CAS 2014/A/3870 Bursaspor Kulübü Derneği v. Union des Associations Européennes de Football, argued that Control and Disciplinary Body and Appeals Board were “not professional on financial subjects”, although the Turkish club was unsuccessful in its appeal, and UEFA’s rebuttal was to highlight that the Club Financial Control Panel was made up of “financial and legal experts” and that the creation of the CFCB was “principally motivated by a desire to streamline the process”.)

Amongst the Procedural Rules, Article 33 stipulates that decisions of the Adjudicatory Chamber are to be published (subject to redaction to protect confidential information or personal data), which has the effect not just of increasing the transparency of UEFA’s decision making, but also of increasing the transparency of the financial affairs of European club football.

Settlement Agreements

One of the more dramatic changes implemented by the Procedural Rules was the implementation of ‘Settlement Agreements’, which are “aimed at ensuring that clubs in breach of the break-even requirement become compliant within a certain timeframe and are designed to be effective, equitable and dissuasive.”

Settlement Agreements have been described as “basically a plea bargain”. Redolent of the settlement procedures in many competition law or white collar crime regimes, Settlement Agreements are consensual agreements entered into between a party who has breached FFP and the CFCB, which avoid the need for a breach to be referred to the Adjudicatory Chamber (Article 15.1).   Settlement Agreements have been viewed by the CAS as effectively giving clubs a ‘second chance’ to comply with FFP (CAS 2016/A/4692 Kardemir Karabükspor v. UEFA), albeit with more stringent conditions applied.

Settlement Agreements may include sanctions and timeframes for compliance (Article 15.2) and are monitored by the CFCB Chief Investigator (Article 15.4). If there is a breach of a settlement agreement, the matter is then referred to the Adjudicators Chamber.

FFP from 2015

The next major changes to FFP were implemented in the Club Licensing and Financial Fair Play Regulations Edition 2015.

Introduction of Voluntary Agreements 

In contrast to the ex post compliance approach of Settlement Agreements, Voluntary Agreements are an ex ante mechanism for clubs to derogate from the normal FFP standards, with the ultimate aim of complying with the break-even requirement. Voluntary Agreements are defined as being “a structured set of obligations which are individually tailored to the situation of the club, break-even targets defined as annual and aggregate break-even results for each reporting period covered by the agreement, and any other obligations as agreed with the UEFA Club Financial Control Body investigatory chamber” (Edition 2015, Annex XII A.5). They can last for up to four reporting periods (Annex XII A.3).

In order to enter into a Voluntary Agreement, a club must adhere to certain procedural requirements. These include submitting a long-term business plan “based on reasonable and conservative assumptions” (Annex XII B.2(a)).

On the face of it, the concept of the Voluntary Agreements–allowing clubs with new owners to incur debts on the promise of future FFP compliance–sounds like a recipe for sort of financial peril FFP was created to avoid.  However, in order to be allowed to enter into a Voluntary Agreement, there must be put in place “an irrevocable commitment(s) by an equity participant(s) and/or related party(ies) to make contributions for an amount at least equal to the aggregate future break-even deficits for all the reporting periods covered by the voluntary agreement” (Annex XII B.2(c)).

Break Even Limit Increase

Another significant change implemented by the Club Licensing and Financial Fair Play Regulations Edition 2015 was a variation to the quantum of the break even limits in certain circumstances. The limits were increased from €5m to €45m for assessment periods 2013/14 and 2014/15, and €30m for assessment periods 2015/16, 2016/17 and 2017/18  “if it is entirely covered by a direct contribution/payment from the club owner(s) or a related party” (Article 61.2).

This balance between short-term losses, guaranteed in the event of financial failure (per the Voluntary Agreement process) or offset by owner input, against long term sustainability are superficially congruent with the objectives identified by UEFA for its licensing regime, which include “to introduce more discipline and rationality in club football finances; to encourage clubs to operate on the basis of their own revenues; to encourage responsible spending for the long-term benefit of football; and to protect the long-term viability and sustainability of European club football” (Article 2 (c)-(f)).  But this takes a somewhat narrow view of the impact of spending in football. A club’s spending affects not just a buying and selling club in a market transaction for a player’s registration, but affects the overall market in football players.

Inflation in the market for player registrations far outstrips inflation across the broader economy (by one estimate, inflation in football transfer fees runs ten times higher than inflation in the “normal” economy – and those figure were calculated before Paris Saint Germain doubled the record transfer fee with the purchase of Neymar in the summer of 2017. Player wage growth runs at over 10% per annum. Voluntary Agreements and increased owner investment may contribute to this vertiginous inflation. This runs in contrast to some of UEFA’s messaging around FFP. For example, it has previously been stated that FFP was intended to “decrease pressure on salaries and transfer fees and limit inflationary effect”.

Of course, it should be borne in mind that there is nothing inherently wrong with inflation where it is sustainable; but when considered in an environment where capital is accruing to the wealthy elite (top 15 European clubs) at a quicker rate than the rest of the market (see UEFA’s Financial Fair Play Regulations and the Rise of Football’s 1% by van Maren for further analysis), there is a risk of bifurcation of the financial capabilities of football clubs, with inflation marginalising the non-elite.  European clubs have seen revenue growth at over 9% per annum on UEFA’s figures, although since 2009, the average English Premier League club has added “five times more revenue than the average Italian Serie A or French Ligue Un club”. Inflation, if not intrinsically problematic, certainly has the potential to cause problems; and UEFA, in administering and approving Voluntary Agreements, and in weakening its stance on owners offsetting losses, should consider the impact on inflation and stability. Voluntary Agreements and financial input by owners are potentially gateways to the elite level; however, this should not be at the expense of those who do not have wealthy owners or pre-existing wealth.

Perhaps more significantly, there is a normative dimension to the introduction of Voluntary Agreements and the relaxation of financial input from benefactors. The message behind FFP was one of “revolutionising European football”, with then President of UEFA Michel Platini saying that UEFA would “never [be] going back on this.” Quite conversely, the changes brought about by the 2015 Edition of FFP were welcomed with a message of FFP being “eased”. This is disappointing because, on UEFA’s own figures, FFP has had a considerable positive impact on the European football financial landscape. On one view, allowing equity input from owners is a pro-competitive encouragement of exogenous investment; on another, it is rowing back from a positive and successful policy initiative at the expense of those not fortunate enough to have a benefactor owner.

The impact of FFP

In defence of its loosening of the restriction on loss-making, UEFA would doubtless point to the positive impact the FFP has had to date,^[1] which, perhaps, creates financial latitude that once did not exist.

As a part of FFP, the clubs under UEFA’s direct jurisdiction report standardised, audited, financial information. UEFA publishes annual benchmarking reports, which draw upon the information clubs submit. Since the introduction of FFP, there has been a general positive trend in European clubs’ finances.

For example, UEFA’s 7th Benchmarking Report, covering the financial year 2014, showed wage growth to have slowed to its “lowest rate in recent history” at 3%. Overdue payables (essentially debts that clubs owe but have not paid on time) had reduced by 91%. The most recent report published by UEFA, its eight Club Licensing Benchmarking Report, covering the financial year 2015, indicates that clubs “have generated underlying operating profits of €1.5bn in the last two years, compared with losses of €700m in the two years before the introduction of [FFP]”; whereas “Combined bottom-line losses have decreased by 81% since the introduction of [FFP]”.

Of course, there are methodological problems in ascribing the improvement in European clubs’ finances exclusively to FFP when in reality there are a combination of factors at play. However, what we can comfortably say is that there is an evident correlation between FFP and the stabilisation of the football financial landscape.

There is also a second-order effect of FFP at play. UEFA, in its position as the game’s regulator, in introducing FFP, has had a hegemonic influence on the governance of the game at national level.  For example, in England, domestic iterations of FFP have been instituted in the Football League, and the Premier League has introduced its own Short Term Cost Control Measures.

Thus, by setting the tone of sustainability expectations, UEFA has influenced the financial stability of clubs outside of its jurisdiction. This is highlighted neatly in the following passage from UEFA’s eight Benchmarking Report:

“The centrepiece of financial fair play, the break-even rule, may not directly address small and medium-sized clubs with costs and incomes below €5m, but financial fair play has other direct and indirect impacts on these clubs. Direct in that UEFA and the Club Financial Control Body pass their eyes over detailed financial data from all clubs competing in UEFA competitions and in particular take careful, regular note of all overdue payables. And indirect in that financial fair play has resulted in a significantly higher level of scrutiny of club finances and the actions of club owners and directors. In addition, some countries, such as Cyprus, have introduced their own versions of financial fair play, tailored to their clubs and the scale of their financial activities.” 

So, whilst UEFA can legitimately point to the more secure position across the financial landscape as a good reason that Voluntary Agreements or wider economic input from owners will do no harm, it should continue to reflect on the message this loosening of FFP may send to the wider football market.

FFP Exemptions

One area of change for which UEFA should be applauded is in its use of certain exemptions from the FFP ‘break even’ calculation. These include areas such as infrastructure and youth football, both essential to the game’s long-term sustainability. By exempting these areas from the break even calculation, clubs’ owners are incentivised to invest (by equity rather than debt) in the game’s future, without an impact on short-term competitiveness.

More recently (from 2015), UEFA has moved to exclude expenditure on women’s football from the break-even calculation (Annex X C(i). Again, UEFA should be praised for taking positive steps to encourage growth across less wealthy areas of the game.

The Future of FFP after Neymar

Over the summer of 2017, public interest in FFP has reignited. The rules are now becoming synonymous with Neymar and his new club, Paris Saint Germain, after the Brazilian player’s reported €222m release clause was activated, doubling the world record fee for a player transfer.   This move, followed by French player Kylian Mbappe joining Paris Saint Germain from Monaco for similarly large fee, has upset some in the game.

These events pose a significant problem for UEFA. It is not yet known whether PSG are in breach of FFP (and, of course, it is conceivable that they have sufficient financial capabilities to fund the purchases without any breach of the rules); however, the transactions have raised questions, including La Liga President Javier Tebas stating that he believed PSG were guilty of “infringing on UEFA regulations, financial fair play and EU laws”, and Arsenal manager Arsène Wenger saying that “it looks like we have created rules that cannot be respected…there are too many legal ways to get around it.” 

The public grievances around FFP precipitated by PSG’s spending do, to an extent, seem to conflate simply spending large sums of money with breaching FFP. The rules do not prohibit spending large sums on transfers or otherwise; rather, they limit how much debt can be incurred by a club, assessed over a three year rolling period, with only limited equity input from an owner. The rules were not designed to prevent a €222m transfer per se (with the fee amortised across the length of the contract period, as is standard practice in the football industry); rather, they were designed to ensure that any such spending was sustainable, and did not put clubs at risk.

However, FFP is a reactive, not a proactive tool. Clubs report spending after the event; they are not required to seek permission from UEFA to make a capital investment. This ex post approach does perhaps reveal a flaw in managing any egregious short-term infractions that should arise, the impact of which will be felt by other clubs before UEFA, through the CFCB, can have its say.

The broader problem associated with PSG’s spending is one of opacity. PSG is owned by Oryx Qatar Sports Investments, which is an investment vehicle for the state of Qatar. There were contemporary (unconfirmed) reports that the deal would be structured to take place off of PSG’s accounting books, with Neymar being paid the value of his release clause directly for agreeing to become an ambassador to the Qatar World Cup, so that he could in turn pay his own release clause.  If true, this would notionally take the release clause fee off of PSG’s books, but would almost certainly qualify as a related party transaction with the meaning of FFP’s Annex X F and thus remain examinable by the CFCB. Similarly, it was reported that PSG’s loan-come-purchase of Kylian Mbappe was “complex”. While complicated transfer arrangements are to be expected in a game that is going through increasing commercial sophistication, there are evidently some suspicions that PSG are attempting to circumvent FFP (or, more colourfully, ‘peeing in the pool’).

However, UEFA anticipated clubs employing ‘creative’ tactics to superficially comply with FFP, and gave the CFCB jurisdiction to consider “at all times…the overall objectives of these regulations, in particular to defeat any attempt to circumvent these objectives” (Article 72.1). (At this stage, one can only speculate as to what, if any, FFP objectives PSG may have breached, but the CFCB will surely consider Article 2.2 (a) and (c) - (f)).

UEFA has publicly stated that it is investigating PSG’s FFP compliance, saying “The investigation will focus on the compliance of the club with the break-even requirement, particularly in light of its recent transfer activity”. Of course, this should not be particularly surprising given the CFCB annually examines the finances of each club that enters into UEFA competitions under the standard FFP procedure, but it will be interesting to observe how CFCB’s investigation progresses, and, if PSG is found to have breached FFP in letter or in spirit, what punishment is meted out to PSG. 

Whether PSG’s aggressive spending was emboldened by UEFA’s weakening of the more restrictive elements of FFP will remain unknown.  Similarly, one can only speculate as to whether the dilution of FFP, through changes such as the implementation of Settlement Agreements and Voluntary Agreements, came about as a result of legal challenges already brought and defended by UEFA; or whether UEFA is insulating itself from further legal challenges; or whether UEFA is simply altering the rules for the good of the game. As detailed in Part One of this series, the legality of FFP will rest on its proportionality. These changes have moved FFP towards a more flexible, and arguably more proportionate, proposition; but, given the public exposure that PSG’s spending has precipitated,UEFA will surely wish to ensure that FFP is not seen as a paper tiger.

The matter is on UEFA’s agenda. Even before the events involving PSG in the summer of 2017, incoming UEFA president, Aleksander Čeferin, spoke about the possibility of a fixed wage cap and closing the gap between the game’s haves and have nots. Such changes would certainly make FFP more congruent with its name. FFP is not about being ‘fair’ in the sense of being egalitarian or introducing a level playing field. It is a gentle brake applied to the rate of growth in the game, aimed predominantly at reducing long-term loss making and insolvency. Perhaps the rules might have been less controversial from the outset, and might not have been a mechanism for the frustration ventilated by sum following PSG’s purchase of Neymar and Mbappe, if instead of being called FFP, the rules were called ‘financial management rules’, and absolved themselves from the pretence of ‘fairness’.

Alternatively, UEFA could revisit FFP, implementing a genuinely egalitarian set of rules – a hard salary cap, a luxury tax, the abolition of the transfer market, or some combination of those things and others. This would, however, undoubtedly engender its own set of legal challenges, as we have seen with FFP. 

Whilst the challenges to various aspects of FFP have been largely ineffective in defeating FFP (see for example CAS 2016/A/4692 Kardemir Karabükspor v. UEFA; CAS 2016/A/4492 Galatasary v. UEFA; CAS 2014/A/3870 Bursaspor Kulübü Derneği v. UEFA; CAS 2014/A/3533 Football Club Metallurg v. UEFA; CAS 2013/A/3067 Málaga CF SAD v. UEFA; CAS 2012/A/2824 Beşiktaş JK v UEFA; CAS 2012/A/2821 Bursaspor Kulübü Dernegi v. UEFA; CAS 2012/A/2702 Györi ETO v. UEFA ), the rules have, against the backdrop of repeated disputes about their legality, iteratively changed, including a move towards greater liberalisation in respect of equity input into clubs by owners. 

And so UEFA finds itself at a crossroads. FFP, bombarded with legal challenges (which it has to date ridden) has gradually developed and liberalised as financial stability in European football has improved. Now, with the transfer market having escalated, the efficacy of the rules has come into question. UEFA must decide on the path it wishes to take; whether to liberate the market altogether,  whether to institute a truly ‘fair’ system, or whether to continue on FFP’s current centrist ground. Aleksander Čeferin, a lawyer by extraction, is certain to face a legal and political struggle in whichever direction he turns.

^[1] For further discussion on the efficacy of FFP, see Neil Dunbar (2015) "The union of European football association’s club licensing and financial fair play regulations - are they working?" ISSN 1836-1129 http://epublications.bond.edu.au/slej/27

Editor’s note: Chuck Blazer declined our official interview request but thanks to some trusted sources (the FIFA indictment and Chuck’s testimony) we have reconstructed his likely answers. This is a fictional interview. Any resemblance with real facts is purely coincidental.

Mr Blazer, thank you for agreeing to this interview, especially considering the circumstances. How are you doing?

I am facing ten charges concerning, among others, conspiracy to corrupt and money laundering. But apart from that, I am doing great (laughs)!

It is good to know that you have not lost your spirit. And since you’ve been involved in football, or as you call it soccer, for years could you please first tell us what was your career at FIFA and its affiliates like?

Let me see… Starting from the 1990s I was employed by and associated with FIFA and one of its constituent confederations, namely the Confederation of North, Central American and Caribbean Association Football (CONCACAF). At various times, I also served as a member of several FIFA standing committees, including the marketing and television committee. As CONCACAF’s general secretary, a position I proudly held for 21 years, I was responsible, among many other things, for negotiations concerning media and sponsorship rights. From 1997 to 2013 I also served at FIFA’s executive committee where I participated in the selection process of the host countries for the World Cup tournaments. Those years at the helm of world soccer were truly amazing years of travel and hard work mainly for the good of the beautiful game. I might add that I even managed to document some of my voyages on my blog. I initially called it “Travels with Chuck Blazer” but Vladimir (Putin) convinced me to change the name to “Travels with Chuck Blazer and his Friends”. You should check it out.

Sure, but you ended up facing corruption and tax fraud charges in the US. What happened?

Concerning the charges I am currently facing, I pleaded guilty to participating in a conspiracy to corrupt FIFA and its related constituent organizations through various bribery schemes. In addition, I acknowledged taking part in money laundering process, violation of certain financial reporting laws, and tax evasion. But please keep it quiet. My family was devastated when they heard about this. After all, they know me as a kind-hearted and giving type, especially if you consider that, given my appearance, I’m always Santa Claus when Christmas time is around.

Concretely, around 1992 and together with other representatives of the soccer world, I agreed to accept a bribe in connection with the selection of the host nation of the 1998 World Cup. Together with other FIFA executive committee members I also accepted illegal payments concerning the selection of South Africa as the 2010 World Cup host. Simultaneously, since approximately 1993, still with the same bunch of soccer executives, I accepted bribes connected to the award of broadcasting and other rights to the 1996, 1998, 2000, 2002 and 2003 Gold Cup, a tournament analogue to the Copa América, featuring member associations of CONCACAF.

I know it’s wrong. But at FIFA a lot of people were doing it and it was just a common practice at that time. Money was flowing in my bank accounts and it felt right. We were working so hard to organize those tournaments, you know.

How come the US authorities’ ended up investigating you and FIFA?

I am not completely sure. When I testified back in 2013 the judge indicated that FIFA and its attendant or related constituent organizations were identified as a RICO enterprise, that is, a Racketeering Influenced Corrupt Organization if I remember correctly. I was terrified, it sounded very intimidating at first. Now I guess I got used to the sound of it. I am even thinking about calling my next cat Rico (laughs). I also recall that the Department of Justice’s involvement in the case was due to the fact that we used the US financial system to funnel the money. In hindsight, it was a very bad idea.

Could you give us some more details on how the corruption mechanism actually worked in practice?

In general terms there were media and marketing rights to be sold. Those rights, and often their extensions, were awarded in exchange for bribes, sometimes via intermediaries. The sports marketing companies engaged in the schemes were then able not only to profit from the acquired rights themselves, but also to accept illegal payments for passing on some of those rights to sponsors.

(Long pause) Take for instance Copa Libertadores. The tournament developed and gained popularity which sparked sports marketing companies’ interest in acquiring marketing rights to the competition. Around 2000 an entity affiliated with one of the sports marketing companies was awarded sponsorship rights for the tournaments which took place between 2001 and 2007, with a subsequent renewal of the contract in 2007 and 2012. In the early 2000s Nicolás Leoz, acting as the president of Confederación Sudamericana de Fútbol (CONMEBOL) and a member of its executive committee, sold his support to award the rights to a specific company. What is more, not only did he receive the money, he also gave instructions to forward approximately $2 million to his personal bank accounts, a sum which was owed to CONMEBOL itself based on the awarded sponsorship rights’ contract. The Copa Libertadores was only one of the many affected soccer competitions.

And what were the other tournaments affected?

I am American so please excuse my accent, but besides Copa Libertadores, also Copa América, Copa do Brasil, Gold Cup, and the World Cup qualifiers games. I might also add that corruption affected at least the FIFA 2011 presidential elections, the voting process concerning the hosts of the 1998 and 2010 World Cups, and Brazil’s national team’s sponsorship.

Who would you identify as the main players in the corruption schemes?

Except myself you mean (laughs)? Well, definitely a number of FIFA officials that you hear a lot about in the news lately. I can easily mention a few of my colleagues, like Rafael Esquivel who served as the president of the Venezuelan soccer association and a vice president on the CONMEBOL executive committee. There was also my good friend Eugenio Figueredo, a former president of the Uruguayan soccer association who was a member of FIFA’s executive committee, a vice president at FIFA, a member of various FIFA standing committees, and a vice and then president of CONMEBOL. Surely you know of José Maria Marin and Jeffrey Webb. The former was the president of the Brazilian soccer association, and sat on several FIFA standing committees. The latter was the president of Cayman Islands Football Association and a member of the Caribbean Football Union’s (CFU) executive committee. He was also appointed as the president of CONCACAF and a FIFA vice president. The funny thing is that Webb took these positions in order to clean up after the corruption scandal which led to the resignation of Jack Warner.

Jack Warner, you mean the former president of CONCACAF and the vice president of FIFA?

Correct. But do not forget that he was also the secretary and then a special advisor to the Trinidad and Tobago Football Federation (TTFF), and the president of the CFU. Jack is probably the most corrupt soccer official I ever met.  Personally I did not like him, he just couldn’t get enough. Already in the early 1990s he began exploiting his position for personal gains. In this regard, he did not only treat the assets of the organizations he served as his own, but also actively solicited bribes in connection with for example the 1998 World Cup. Hundreds of thousands of dollars in bribes were also paid to him with regard to the award of commercial rights to several editions of the Gold Cup. Moreover, acting as the president of the CFU and a special advisor to the TTFF he orchestrated the sale of media rights to World Cup qualifying matches which the national members of the CFU decided to sale as a bundle. Following negotiations Traffic, a sports marketing company, acquired the rights to 2002, 2006, 2010, and 2014 World Cup qualifier matches. A substantial part of the value of the contracts concluded by Warner on behalf of the CFU was automatically transferred to accounts under his personal control. He was also involved in a $10 million bribe related to the award of the 2010 World Cup to South Africa. I could go on and on.

You mentioned Traffic. Could you tell us more about it?

Of course. Several of these sports marketing companies were involved, but to my knowledge Traffic was one of the biggest players. This multinational company was based in Brazil and comprised of subsidiaries operating around the globe including the US where it commenced its operations around 1990. The US branch alone was engaged in a number of bribery and fraud schemes in connection with their efforts to obtain various rights from soccer organization and federations in the region. The beneficiaries of these schemes included, among others, Jack Warner, Nicolás Leoz, and Rafael Esquivel. Traffic’s main goal was to expand its operations through developing ties with soccer governing bodies. I remember that in 1991 during Nicolás’ term as CONMEBOL’s president Traffic acquired exclusive commercial rights to three editions of Copa América. Nicolás then threatened to walk away. He claimed that Traffic was about to make a lot of money out of the deal and that it was only fair for him to get his share of the pie. With each of the new editions of the Copa América, Nicolás would demand fresh bribes, a personal business of his which, to my knowledge, went on until 2011. Additional payments were made by Traffic based on their subsequent profits. Esquivel also benefited by requesting bribes in exchange for his ongoing support for Traffic’s position. As I said, bribery at FIFA was often the result of the initiative on the part of its officials. But coming back to Traffic, their involvement is best described in numbers. Out of the twelve bribery schemes I know of, Traffic was involved in nine of them. However, if we disregard the schemes concerning FIFA elections and the voting process for the World Cup hosts the share is nine out of ten. You also need to keep in mind that a former employee of the US branch of Traffic involved in the corruption scheme went on to serve as a general secretary of CONCACAF. On a side note, I think I was a much better general secretary than he ever was. I still receive birthday cards from my former colleagues at CONCACAF.

You stated that several companies were involved. How did they share the rights acquisition between themselves?

I’m not entirely sure about the exact mechanisms involved. What I know, however, is that sometimes conflicts emerged between the different companies seeking to secure contracts for themselves. On other occasions they were able to join forces, for example with the media and marketing rights to Copa América. At first, CONMEBOL entered into a contract with Traffic on the basis of which the latter was awarded the exclusive rights to, among others, the 2015 edition of the tournament, and an option to retain those rights for the next three editions. But in 2010 CONMEBOL signed another agreement, this time with Full Play, on the basis of which Full Play was granted media and marketing rights to several editions of the tournament, including the 2015 edition already sold to Traffic. As you can imagine, Traffic was not happy. They decided to sue CONMEBOL and Full Play. In the end the companies came to an understanding and formed Datisa, a new entity which was to obtain and exploit the commercial rights to the Copa América. In return, Traffic was to shoulder a share of the bribes offered to CONMEBOL officials.

I also recall that there were tensions between Traffic and another company established by a former employee of Traffic who, after bribing Brazilian federation’s officials in order to acquire a contract for the rights to Copa do Brasil, was accused by Traffic’s owner of stealing his business. But they also managed to solve the issue by combining their “efforts” and by sharing the financial burden of the “investments” made to acquire the rights.

And what sums are we talking about?

Not so much, really (laughs). Concerning Datisa the company agreed to pay between $100 and $110 million in bribes to CONMEBOL officials all of whom worked also at FIFA. The FBI told me that they estimated that the “business” generated approximately $150 million in bribes, an amount which may increase if new information come to light. In the end, I did not get so much out of it compared to some of my dear colleagues. Sometimes I think that I should have been more firm during the “negotiations”. For a long time I have been dreaming about having an additional apartment in the Trump Tower. I remember that when I got the first one it almost seemed as it came from some divine intervention.

Wow, that’s a lot. How did they manage to conceal it?

As I already mentioned the “business” was sometimes conducted via intermediaries. Jose Margulies was one of the prominent ones. He was the brother of an old friend of the owner of Traffic, and often used accounts in the names of offshore corporations in order to makes payments on his behalf. In addition, he tried to conceal the bribes by using accounts at Swiss banks, made recourse to currency dealers, destroyed documentation, and discouraged the corrupt soccer officials from using accounts in their own name in order to avoid detection from law enforcement bodies, an advice which was not always taken seriously. People like Nicolás Leoz for example did not hesitate to have sums being paid to their personal bank accounts on the basis of “consulting contracts”. As I already mentioned, Jack (Warner), for his part, concluded a double agreement in the name of the TTFF concerning rights to World Cup qualifier games. He first sold the TTFF’s rights as part of a bundle, and later on sold them again, but this time separately. There was also the famous $10 million paid by South Africa’s authorities to the CFU in order to “support the African diaspora”, a payment which was in fact made in exchange for votes regarding the 2010 World Cup host. This money was diverted back into Jack’s pockets via a number of tricks. Using family members’ accounts was another way of deception. Lately, the business of taking bribes was getting more and more complicated, prompting officials to look for new complex schemes. In fact, the attempts to conceal illegal payments made in connection with the rights to the World Cup 2018 and 2022 qualifiers caused a lot of headache to Jeffrey Webb in his capacity as a high level CFU official. One of the companies with whom Traffic was to make payment to Webb had difficulties finding the right way to discretely transfer the money to him. This led to long negotiations between Webb’s associate and the company’s executives in order to find a clean method to make the outstanding payment.

Thank you so much Mr Blazer for your time and your invaluable insights!

You’re welcome. I am a big fan of the ASSER International Sports Law Blog so anything for you guys.