Reforming a political system that has been tarnished by corruption is a practical problem. Amidst all the grandstanding and impassioned rhetoric, a reform process may or may not be implemented. To read much of the comment on the FIFA scandal(s), one might think it was simply a question of the good guys riding to the rescue and then living happily ever after. That is not a policy for reform. It is clearly the case that corruption touches every nation on the planet, making it unlikely that FIFA will, uniquely, eliminate all wrongdoing. The practical issue at stake is to identify a reform policy that can accepted as legitimate on all sides.
The challenges of formulating that reform policy were made evident by the almost two thirds majority achieved by President Blatter in the immediate aftermath of the US Justice Department indictments. A majority of those who lead the football national associations around the world feel that Blatter is a man who has done good things for football. In the US and much of Europe, public opinion is largely behind the opposition to FIFA. In the developing world, especially in Africa, public opinion often seems supportive of Blatter. This piece by Colin Udoh provides some useful context for those not familiar with the issue, as does this one by Peter Alegi.
The core of the problem is that, especially in Africa, FIFA was seen as neo-colonial project run by Europeans who still wanted to play football with apartheid South Africa in the 1970s. The election of first Joao Havelange and then Blatter created a new dispensation which promoted the development of football in Asia, Central America and especially Africa. This not only channeled funds into development, but also promoted their participation in the World Cup and, arguably, has had a real effect on the standing of these nations in football. In a nutshell, football has advanced far more rapidly in Africa under FIFA than the continent’s economies have under the western dominated IMF and World Bank. We could argue if that is a fair comparison, but it strikes a chord.
My conclusion from all this is that practical reform must preserve the mission developed by Havelange and Blatter to promote football in the service of the developing nations, while minimizing opportunities for senior football administrators in FIFA and in the football federations to line their own pockets. My proposal is a separation of powers- to separate the charitable purpose of FIFA, spending money for the development of the game, from the business activity of generating the money that funds the charity.
Why separation? First, most of the corruption identified in the Justice Department involved taking kick-backs from contracts for the rights to events. Sports administrators should not be involved in the process of selling rights. They are not meant to be promoters of specific events but promoters of the game as a whole. They are meant to govern, not to sell. Indeed, they are conflicted if they promote a specific football event over another- since they are meant to represent all. A sports federation is a bureaucracy organized to ensure the fair application of rules and regulations, to oversee disciplinary procedures and to adapt the organization to the needs of its members. The skills required are essentially diplomatic and judicial. Beyond this, the main task of FIFA is to ensure that the proceeds of its most valuable asset, the World Cup, are used wisely for the benefit of the global game. Hiving off the World Cup as a commercial entity would give FIFA’s Congress and Executive more time to focus on ensuring that these duties are carried out effectively.
There are many ways to separate the World Cup from FIFA, but in my view the most sensible option would be to create a for-profit corporation, floated on the stock exchange. This business could then set about maximizing revenues, especially from the sale of broadcast rights and sponsorship. In setting up the company FIFA would make it a condition that a fixed percentage of all profits were returned to FIFA precisely to fulfil its developmental mission. For example, it might specify 90% of the profits go to FIFA – 10% should easily be enough to provide incentives for a well-run business. FIFA would also hold a golden share to ensure that this rule can never be changed, as well as a rule specifying that no single owner can own a majority of share in World Cup Inc.
I’ve floated this idea a few times in the last week and here are some common objections I’ve encountered so far:
This won’t end corruption- private business is just as corrupt, look at Enron, the banks, etc
No, it won’t end all corruption- but then I don’t think there is any reform that could. The right policy for FIFA is to try to minimize opportunities for corruption, and separation would help to do that. World Cup Inc would be subject to the reporting requirements of the stock exchange on which it was listed- if in London or New York then this would be a considerable improvement on current reporting requirements. It is common sense that corruption is not only morally wrong, it is inefficient. Shareholders will want maximum profits, and so will want as much transparency in corporate dealings as possible to make sure the executives are doing the right thing. There will always be opportunities for shady deals, but the environment in which public corporations operate tend to make this more difficult. Nor are these complex business operations such as those that involved the banks- running a World Cup is a much simpler business operation.
Isn’t there already too much commercialization in sport?
This is a matter of personal preference, but my opinion is that it is right for FIFA to profit from the World Cup to generate development funds. Taking sponsors out of the World Cup serves no purpose in my view. Many countries have regulations that limit the amount that FIFA can make from selling broadcast rights, to make it accessible on TV, and that would not change. Ticket prices are more controversial, but then this is already an event primarily reserved for those with a huge amount of disposable income compared to the average – or a friend in high places. Giving away tickets on social merit is fraught with all sorts of difficulties, not least the incentive to resell those tickets at a profit. Whatever is done, for most of us the only way to see a World Cup will continue to be on a screen.
It would be possible for FIFA to impose other operating conditions on the corporation- but in my view these should be kept to minimum. Of course, if FIFA gave itself an open mandate to change the rules on an ad hoc basis we would be exactly where we are now. This is a good way to understand my proposal. The more FIFA stands back and lets the corporation operate on a commercial basis, the fewer opportunities for kickbacks.
Won’t FIFA lose control preventing it from fulfilling its mission?
As I have argued, this model would enable FIFA to focus on its core mission- promoting the game using the proceeds from the World Cup to fund development, rather than running a commercial business. The one right that FIFA would inevitably reserve for itself is the choice of World Cup host. This is the focus of a lot of the discussion about the indictments, but it should be noted that in fact most of the indictments do not relate to this issue. Moreover, I believe the decision already taken by FIFA to shift the decision from a vote of the Executive Committee (24 members) to the Congress (209) has significantly reduced the scope for corruption. Buying 13 votes in secret is one thing, buying 105 is quite another. It would be very unlikely that any bidder could pull off the feat without getting caught. No doubt the same kinds of safeguards as those implemented by the International Olympic Committee in the wake of the Salt Lake City scandal are required, but that should be enough to ensure the integrity of the process in future.
Stefan, have you written anything about the idea to reform FIFA by making the national FAs operate like public trusts? Here’s a NYT magazine article about the idea:
I think your “separation” idea would be a huge improvement for FIFA, but it would still result in a behemoth FIFA “charity” responsible for distributing a whole lot of money, which is still a recipe for corruption (even if that corruption doesn’t take the form of vote-buying). Supposedly World Cup Inc could scrutinize the FIFA charity, but in the real world it’s just very difficult to hold an organization like that accountable, especially from the top.
Making the FAs into public trusts would ensure downward accountability, which is what the whole system lacks right now. Corruption or incompetence would be seen (correctly!) as a crime against the dues-paying members of the associations, and they’d be empowered to “throw the bums out” when such situations arose.
It seems to me that reforming the FAs along these lines could either be an alternative or a complement to your “separation” idea. On its own, it would be a huge improvement on the FIFA status quo. It could also be done in tandem with your separation idea, in order to guarantee that the spun-off FIFA charity function more accountably.
What most sane people want is to find system where those who run FIFA do so in a way that represents the broad interests of football. There are two problems : (i) people differ on what those interests are and (ii) insiders have opportunities to engage in corrupt practices because outsiders find it difficult to see what is going on. Redefining the roles can only solve these problems to a limited extent. The concept of a “a public trust” is slippery. FIFA would already meet most of the criteria to describe it as a trust- legally, it is already a charitable foundation! The example in George’s article are neither of them “public trusts” in a legal sense – Green Bay is a limited liability company- the normal legal structure adopted by businesses. Barcelona and Real Madrid are “clubs” in the same sense as a tennis or golf club – but such organizations are famous for having corruption problems. My own view is that we need as much transparency as possible, given the difficulty in finding honest people to manage these enterprises.