A football match in 2030 – a geopolitical competition?

It is the 25 May 2030, the day of the PepsiCo European Super League™ final that takes place in Guangzhou, Evergrande’s 1.6 billion euro stadium, officially presented and marketed by Infront Sports and Media (Dalian Wanda Group Co., Ltd.) and is played between Qatar Sports Investments (QSI) owned Paris Saint-Germain and Saudi Arabia Public Investment Fund (PIF) owned Newcastle United. Or, as it is called by football fans across the world: “El Gasico”.

Another type of crisis response

Not at all realistic? Let’s look back for a moment to the current year 2020 in order to comprehend this vision of ‘modern’ football in the future. The overcoming of COVID-19 is widely seen and proclaimed as a chance for the global football consortium to shape a more sustainable future path in terms of stronger collaboration, fanbase centricity and community outreach. In March, even FIFA boss Gianni Infantino, who is not known for his modest character and momentarily facing a compliance investigation due to an unjustified private jet trip in 2017 that cost the federation a six-digit amount, told Gazzetta dello Sport that „maybe we can reform world football by taking a step back”. Ironically, this ‘step back’ is regarded by other people as a business opportunity, for instance by GACP Sports, a subsidiary of Miami-based private equity firm General American Capital Partners (GACP) that is run by American businessman Joseph DaGrosa. The same guy led a €75 million takeover of Girondins Bordeaux in November 2018, but probably overvalued the club and overstated how profitable it could become.

He has already sold its stake in the Ligue 1 club to co-investor King Street Capital Management last year, after roughly one year of medium success. In Forbes magazine, DaGrosa claimed that the financial impact of the Covid-19 pandemic would provide a window to acquire football clubs at a discount of between 50 and 70 per cent. In this regard, he plans to move “fairly quickly” to “recreate the best aspects” of City Football Group (CFG), which is 77 percent owned by Abu Dhabi United Group, an investment vehicle owned by Sheikh Mansour bin Zayed al-Nahyan, the brother of the ruler of the United Arab Emirates and currently lists the following ‘portfolio’:

• Manchester City F.C. (100%), since 2008
• Melbourne City FC (100%), since 2014
• Montevideo City Torque (100%), since 2017
• New York City FC (80%), since 2013
• Mumbai City FC (65%), since 2019
• Lommel S.K. (>50%), since 2020
• Girona FC (44.3%), since 2017
• Sichuan Jiuniu F.C. (28%), since 2019
• Yokohama F. Marinos (20%), since 2014

The success story of the City Football Group

Alongside the 77 percent stake, a Chinese consortium led by the media and entertainment conglomerate CMC is a minority investor (around 13 percent), whereas just over 10 percent were sold in 2019  to the American investment group Silver Lake Partners for $500 million. United Arab Emirates, China and America unified in a football project across four continents – is this modern sports diplomacy? Maybe, but generally, there is just too much money involved to not invest in the CFG. But where are we heading when DaGrosa sees a window of opportunity of 24 months to recreate the City Football Group model “at a fraction of the cost”? This ‘model’ is based on the buy-in of an anchor club, before adding a number of satellite clubs and academies across Asia, Africa and South America. Talent and other value-generating assets, mostly regarded as young academy players, are scouted and brought to the anchor club first. For instance, Angeliño, who is currently on loan for German side RB Leipzig, had a long transfer history since joining Manchester City at the age of 16 from Deportivo for 4.5 million euro. Then, he was on loan for New York City FC (belongs to CFG), Girona (belongs partly to CFG) and NAC Breda (partner club of CFG). 

The player itself is seen more as an investment than an individual, who will probably never play for the first team of the anchor club Manchester City, but traded with a profit in the end. James Powell, CEO at Carteret Capital (specialises in ‚front office‘ investment banking), calls it a „pyramid of shop windows“, showcasing talent at increasing higher levels and adding to their market value. It is the establishment of a global pyramidal structure with each team in the group assisting the other. Unfortunately, it is often not a win-situation for the player involved. In 2019, Manchester City agreed an £11m deal to sign Pedro Porro from sister club Girona. Other clubs such as Real Madrid, Atletico Madrid and Bayern Munich had an interest in him before his move to Girona in 2017 and more recently, Watford and Sevilla have been linked with the defender. Only four days after Man City signed Porro, they sent him straight back out on loan to Real Valladolid including a purchase option. This is not a business invest, this is modern slavery! Or is it the ‘new normal’? 

On a side note: UEFA’s independent financial control body decided on 14 February to exclude Manchester City from all European competitions for the next two seasons on the grounds of „serious breaches“ of financial fair play. A fine of 30 million euros was also imposed on the club. Manchester City’s appeal against the European Cup suspension imposed by the European Football Union (UEFA) will be heard by the International Court of Justice for Sport CAS in Lausanne from 8 to 10 June.

The perks of being part of a global energy drink strategy

20 September 2018: RB Leipzig plays against FC Red Bull Salzburg, the duel takes place in the Red Bull Arena in Leipzig, the return match in the Red Bull Arena in Salzburg. The UEFA guidelines prohibit that two clubs of the same owner play against each other in a European competition. After examining the operational structures during June 2017, UEFA declared themselves satisfied under their regulations that the two clubs (especially Salzburg) were suitably independent from the Red Bull corporation, and sufficiently distinct from one another, for both to be admitted to their competitions. Formally speaking, Red Bull was then only the main sponsor of Salzburg and the fans – including those of the two clubs – have no choice but to believe that the result will be achieved in a purely sporting manner. And not through a pecking order, known from the Red Bull team in Formula 1. Since 2012, a total of 16 players have now moved their jobs from the Austrian branch to Germany. Is this a fair competition? The strategy of Red Bull with a portfolio consisting of FC Red Bull Salzburg (Austria), FC Liefering (Austria), RB Leipzig (Germany), New York Red Bulls (USA), Red Bull Brasil (Brazil) is evident: Getting eyeballs on the brand is crucial – every club in Red Bull’s portfolio carries its logo on their shirt, are wearing the red, white and yellow colours, and play at their own Red Bull Arena. These clubs are an advert for Red Bull every time they kick a ball. 

Soft power made in Qatar

Football advertising is not only restricted to brands – advertising can even change the conversation about a country, getting people to think about a country in a different way, de-mystifying certain aspects of the political agenda. Football clubs can enable regimes to exercise a form of ‘soft power’ in order to attain political standing or more advantageous business positioning. Besides, soft power initiatives are designed to build a nation’s image, create a platform for dialogue, and engender trust in relationships with others.The use of football club soft power can also apply when entering new markets abroad, as one of the newer examples of the Qatar Sports Investments (QSI) shows: Nasser Ghanim Al-Khelaifi has served as chairman of QSI since 2011 and is currently chairman and chief executive officer of beIN Media Group in Qatar and president of Paris Saint-Germain Football Club in France. beIN Media Group is an independent global sport and entertainment network founded on 1 January 2014, headquartered in Doha, Qatar. They acquired rights in France for the Uefa 2020 European Championship which are reportedly worth €38 million, to secure live coverage of all 51 games from Euro 2020. Before, Uefa and BeIN in France already agreed upon the exclusive rights in the country to the Champions League between 2021 and 2024. These entanglements are worthwhile getting their own article and a special interest of competition authorities. After being widely accused of human rights violations in the site construction process for the World Cup 2022 in Qatar, Paris Saint-Germain, as the European football flagship, successfully promoted the tourism resorts of Doha and pursued ‘reputation laundering’.

Sporting success that counts more than human rights

The correlation between football and tourism in the Gulf states is not accidental: By 2030, the aim is for tourism to contribute up to 10% towards Saudi Arabia’s GDP, compared to just 3% today. Football plays an important role in promoting those regions in the Eastern hemisphere. Also, when it comes to the downplaying of the human rights record. The planned £300m takeover of Newcastle United by the Saudi Arabia Public Investment Fund (PIF), controlled by the Saudi crown prince, Mohammed bin Salman, is raising questions around the world. Organisations such as Human Rights Watch and Amnesty International have condemned the kingdom to deploy ‘sports washing’ its human rights abuses. This takes place not only two years after the assassination of Jamal Khashoggi – a Saudi dissident, journalist for The Washington Post on 2 October 2018 at the Saudi consulate in Istanbul, Turkey, by a 15-member squad of Saudi assassins. Turkish investigators, as well as investigations by the New York Times, concluded that some of the 15 members of the Saudi hit team were closely connected to Saudi Crown Prince Mohammed bin Salman, and that the team had traveled to Istanbul specifically to commit the murder. Hatice Cengiz, the fiancee of murdered Saudi journalist Jamal Khashoggi has even reached out to Newcastle United fans in an open letter to oppose a proposed Saudi takeover of the football club. Nonetheless, the fans of Newcastle United on Social Media seem to care more about the enormous amount of money that could be pumped into the club while talking down the responsibility of the regime and discrediting Hatice Cengiz.

An open letter to the Fans of Newcastle United Football Club: I implore you all to unite to protect your beloved club and city from Crown Prince Mohammed Bin Salman and those around him. Stop this takeover before it’s too late. #NUFC #nufctakover pic.twitter.com/kTk2bf3oEv

— Hatice Cengiz / خديجة (@mercan_resifi) May 13, 2020

During the coronavirus crisis, bin Salman has been consolidating power. In recent years, he was known for a slightly more open approach with reforms that strengthened for instance the rights of women, but in March 2020, he arrested 298 government employees, including three senior members of the royal family, under the guise of fighting corruption. What message will this takeover of a historical football club send to the world?

What now?

Football is a global business and this article is not a general big slam against the whole industry. But all the present talks about changing the system for the better are just meaningless if money is the main investment reason and human rights, ethics or sustainability are seen as annoying background noises. All the talks about the so-called ‘decade of change’ until 2030 are also meaningless if there is no radical change that starts rather yesterday than today. A change that oversees the whole supply-chain of commercial football enterprises and challenges of a globalized and after Covid-19 also changing world economy. Social initiatives such as Common Goal, where members pledge 1% of their earnings to a central fund to advance the United Nations Global Goals are honorable – but it does not start at the heart of the problem. Simply put, it is about how you generate your profit and not how you spend it. To conclude, I want to come forward with some constructive proposals with regard to the further development of the game we all love. The selection of possible interventions presented below makes no claim to be complete:

1. Analysis of the whole supply chain: Clubs are accountable for actions and decisions concerning the production, sourcing, product design, or distribution. They should professionalize their supply chain management by qualifying suppliers, integrating quality/sustainability labels and good governance as well as the consideration of human rights. They should seek independent consultancy firms that will help fill the knowledge gap for these operations.
2. Boost the importance of community schemes: More money must be allocated to the charitable foundations, social departments or Community Trusts of the clubs. Given the importance of the clubs in the direct community (simply check ‘Sunderland ‚til I Die’), and how often this importance is marketed by the clubs, there is a huge gap between aspiration and reality. For instance, UEFA allocated simply 0,18 % of the total revenue generated last season to Corporate Social Responsibility (CSR) activities.
3. Questioning the role of football mega events: Themes such as „faster, higher, further“ have become obsolete. Basic human rights are often being trampled underfoot, for instance through the relocation of people for the World Cup 2014 in Brazil, not to mention Qatar 2022. Progress has been made with the new FIFA requirements on human rights in bidding and hosting the 2026 World Cup and could raise the bar for future sports events. New infrastructure must always come with an ecologically and economically sound concept for subsequent use.
4. Orientation to the triple bottom line: The integration of a social, economical and environmental balance, also defined as the triple bottom line, is important for the business case of CSR because it highlights a philosophy for business engagement with social and environmental issues. Football clubs are corporations in a changing socio-economic context where human beings should be at the core and not the pure profit maximization. Before thinking about the addition of a new 4k digital perimeter signage system for the stadium, there might be other vital concerns that need to be addressed first.
5. Rethink club ownership models: A club should never be seen as an investment for the portfolio of a business consortium. A football club is often the only pride of a community and holds a huge importance for every social class there is. It is not a speculation object that is pushed off after missing sporting success. A holding company that administers association football clubs should be prohibited, also with regards to the fair competition on and off the pitch. Potential owners should be selected carefully and have a strong track record of promoting human rights. The German 50+1 system, where a club must hold a majority of its own voting rights (although the effectiveness of the rule has also been brought into question), is a workable approach.

So where will we be in 2030? It is hard to tell, but the discussed development in recent years and the current crisis seen as an investment opportunity, thus “playing offence when the rest of the world is playing defence” (DaGrosa), is revealing and something to fear. Ultimately, one can only speculate about the vision of the future, and one football foundation manager I interviewed a year ago, draw a scenario that can certainly be regarded as realistic:

“I sometimes think that the football world in Europe will divide into two kind of football clubs: the big ones, the really big ones that I think will create some kind of Disney Football League with glamour and glitter and a lot of money and on the other side the community-based football clubs”.