Has Increased Money in the Football Industry Led to Increased Corruption?

In this essay I intend to examine whether the level of corruption within the football sports industry has increased since huge sums of money have been invested within the industry, meaning that the potential financial rewards through corruption and dodging laws are now huge.

I also want to examine if money is the main incentive for corruption in football or whether there is another cause for corruption in the football industry.

I have decided to write my essay on this particular subject because it is a topic I find very interesting and engages me to research and provide an opinion. This topic combines skills from two of my current A levels, which is using history skills to look back at events around football and determine the cause and effects they had on the football clubs and the fans. I will also be using business skills as I research the different ways football clubs make money and their methods to get around regulations to bring in extra revenue or gain a competitive advantage for sporting success.

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Football is the most popular sport in the world which means the are huge gains to be made in business through football. FIFA predicts approximately 3.5 billion people watched some of the World Cup with at least 1.12 billion watching a minute of the World Cup final.[1] The champions league is the most watched annual sporting event globally, with more than 400 million viewers from over 200 countries[2] and the premier league is the most popular sports league in the world, with the German Bundesliga in ninth, and so football is the only sport with 2 leagues in the top 10[3]. This demonstrates the number of people and potential consumers football clubs and organizations can exploit.

There are three main ways football clubs can make money. These three main ways are through commercial income, broadcasting income and match-day income. From the start of professional football through to around 1992, match-day revenue was the main source of income for the top clubs, but due to the hillsborough disaster on 15th April 1989 when 96 Liverpool fans died, the Taylor Report was established in January 1990, and recommended all stadiums in the top 2 tiers of English football should be all-seater. The football league brought in these regulations. This meant many attendances fell as less people could now fit in the grounds and many stadiums had to be updated, rebuilt or completely demolished and a new stadium be built. That meant clubs in the top tiers have been more reliant on broadcast revenue and commercial revenue.

Since football gained professional clubs, the first being Sheffield fc in 1957,  a written set of rules in 1963, clubs, cup competitions and leagues have been founded all over the world. Since these early years in the football industry, money has slowly increased and is continuing to increase now. It is difficult to find an exact point where money completely increased to billions now seen in the industry today. The best point to show the new era of football, at least in England, is the beginning of the premier league and the £190 million deal agreed. From 1988 to 1992, ITV held exclusive rights to live football league matches for £44 million over that 4 year period[4]. When the premier league was formed in 1992, BSkyB, now known as Sky Sports, agreed a £330 million deal over 5 years although they it was later reduced to 190 million. This means there was an increase of 400% in broadcast revenue, the largest in English football history of such a large scale. This is a defining moment when the potential financial gain in football was available. From this point the finances in football rose at an incredible speed and in 2001 it hit the 1 billion pound mark as Sky paid the premier league £1.2 billion. In 2013 that figure had nearly tripled as Sky and Bt Sports paid a combined £3.018 billion[5] and they have now agreed to a new deal from 2019-2022 worth £5 billion. Add this to the overseas broadcast revenue and you have a combined £9.2 billion of broadcast revenue[6].

The third way of making income is commercial revenue. This source of revenue is where corruption is most often used through when it occurs. From summer 2013, Uefa enforced financial fair play. This is where clubs cannot have money pumped into them by their owners and clubs had to at least break-even. This was enforced due to 50% of clubs losing money. From this point clubs looked for illegal methods to get around the regulations, and this is one example of modern corruption to improve the clubs chances of on-field success.

Since the start of financial FairPlay, two European clubs have been accused of working they’re way round the financial fair play regulations. One club is the English club Manchester City FC, owned by Sheikh Mansour bin Zayed Al Nahyan, a prince in the Abu Dhabi royal family, deputy prime minister of the United Arab Emirates and is owner of the Abu Dhabi United Group who won Manchester City as well as football clubs in USA, Australia, China, Japan, Spain, Uruguay[7] and India[8]. The other club is the French club Paris Saint-Germain, owned by Nasser bin Ghanim Al-Khelaifi, owner of Qatari Sports Investment, a minister of the Qatari government and placed their by the Emir of Qatar Sheikh Tamim.

Sheikh Mansour has put around £1.3 billion into Manchester City since 2008[9], the majority of that coming within the first 3 years when it was legal. Qatar Sports Investment (QSI) took over Paris Saint-Germain in 2011 and since then they have invested over €1 billion on players[10], and paid the two highest transfer fees of all time, €145 million (+€35 million in potential add-ons) for Kylian Mbappe and €222 million for Neymar[11]. All this investment in new clubs worried the traditional elite as it gave an uncompetitive sporting advantage to these two richer clubs and so is likely to be the main reason financial fair play regulations were introduced by UEFA, as well as stopping other clubs lose money. This meant owners could no longer bankroll their clubs.

Yet in July 2011, Manchester City announced a £400 million deal over 10 years with Etihad to sponsor their shirts, stadium and new world class training ground set to be called the Etihad Campus. This was the largest sponsorship deal in the world and was absolutely huge compared to other English teams. Arsenal’s deal with the Emirates, Arsenal being a much more attractive club to sponsor, was worth £90 million over 15 years[12], meaning Arsenal earned £6 million a year from their shirt and stadium sponsor whereas Manchester City would earn £40 million a year. In 2010/11 Manchester City recorded losses of £189.6 million, yet one year later they had managed to just about halve that to £93.4 million[13], just as they got their new Etihad deal. Manchester City’s losses continued to decrease each year until 2014/15 where they posted a net profit of £10.7 million[14]. It is likely received a lot more than the £160 million they were owed by Etihad as they needed the money to comply with the new financial fair play regulations. Manchester City were punished for not quite meeting financial fair play self sustainability as their losses were to big, and were given sanctions. They were fined £49 million in fines, although £32 million were suspended fines, they were not allowed to increase their wage bill and had to reduce their champions league squad size from 25 to 21[15]. However, this was a small price to pay as the fines were not excessive and they had not been banned from European competitions, and so Manchester City have now become a self sustainable club at the top of European football and make the 2nd largest commercial income of English football clubs behind only Manchester United, and have had little punishment for the regulations they broke to get there.

Paris Saint-Germain did a similar act in 2012 when they signed a 4 year deal worth £200 million a year with Qatar Tourism Authority[16]. This sponsorship deal is massive and makes the Manchester City Etihad deal look small as this one is twice as big overall. The connections in Qatar is clear that Paris Saint-Germain are gaining an uncompetitive advantage through this deal. Paris Saint-Germain were given similar punishments as Manchester City as they had their champions league squad reduced from 25 to 21, they weren’t allowed to increase expenses, such as wages, for two years, they could not make expensive signings in the transfer market for two years and would have to pay a €60 million fine[17]. Yet after these sanctions they have been allowed to continue playing in the UEFA Champions League and they make the two most expensive signings ever, so clearly these sanctions have not done anything to stop PSG, and they have virtually received no punishment from breaching the rules.

Yet at the heart of these corruption scandals circling these two clubs, the increased financial rewards in football does not apply in these cases. The owners of these two clubs, Sheik Mansour and Nasser Al-Khelaifi, have both put in over a billion pounds into their clubs, and even though they are now popular enough globally to be self-sustainable clubs, they won’t make back the profits for decades, and could lose money if they don’t have continued success on the pitch. This proves that this commercial sponsorship corruption is not about making money even in this billion pound industry. The purpose of this corruption is to improve the overall image and brand of the two countries the owners are from, the United Arab Emirates and Qatar.

Sheikh Mansour is a prince of Abu Dhabi, and so by using his company and the states wealth, they are trying to build a successful brand within football and with Manchester City. The City Football Group has ownership of clubs in 5 out of the 6 populated continents, it owns Manchester City in the most successful league in the world and it owns a stake in Girona in the Spanish La Liga, the second most popular league in the world, and it has football clubs in the two most populated countries in the world in India and China. This network means it is easy for the City Football Group to move players around,attract fans of their 8 clubs to support each other, mostly Manchester City as their main club, and when Manchester City and other clubs are successful, the United Arab Emirates are associated with this success and so more companies want to be connected with UAE increasing the country’s economy and also increasing tourism to the country.

Qatar is trying to perform a similar project with PSG. They have grown it into a global brand and have attracted two of the most marketable players in Kylian Mbappe and Neymar. It is also known that QSI are trying to buy an English club to expand their brand.

Both clubs are in the top 10 most richest clubs in the world now, Manchester City in 5th and Paris Saint-Germain in 6th[18]. This has shown their corruption has brought them success and the only thing left for each team now is to try and win the UEFA Champions League as it is the most watched annual sporting event with around 400 million viewers. This would bring them extra tv revenue, new fans, more merchandise sales globally and more brands want to be associated with them and so their countries benefit as companies open up offices in the United Arab Emirates or Qatar.

However Qatar has managed to go one step further for global recognition as it won the right to host the 2018 World Cup. This is a major achievement for the country as it means the world’s most watched tournament brings the country, its culture and attractions a lot of attention and new people. 3.5 billion people tuned into the 2018 World Cup at some point during the tournament, and so it is likely this number will have increased by 2022, all being exposed to Qatar. Qatar’s main motives of hosting the tournament are to improve international relations and to ‘put it on the map’[19]. They can prove they are useful even as a micro state and they can demonstrate this through they’re futuristic looking stadium designs and their new state of the art cooling system for fans who struggle with the intense heat in Qatar.

Although Qatar is hosting the World Cup in the aim of improving their worldwide reputation, they have received a lot of negative press around the world. First, Juilo Grondona, a senior vice-president at FIFA and head of the Argentinian FA, told a witness, before his death in 2014, that Qatar owed him money for him voting in favour of Qatar to host the tournament.[20] The witness, Alejandro Burzaco, was the former CEO of Argentinian sports marketing executive. Burzaco had caught Grondona talking to Qatari officials saying they owed him up to $80 million for his vote. In total 3 members of the South American football federation CONMEBOL were caught taking bribes to vote for Qatar. Burzaco is on trial himself for as he admitted to paying 6 senior officials of CONMEBOL so that his TV company could have live coverage of the region’s major tournaments[21]. This has led to deep investigations of corruption within FIFA and CONMEBOL.

Another accusation Qatar has received about the World Cup is they’re breaking of human rights towards migrant workers. Qatar has gone under a construction boom and 1.9 million migrant workers have moved to the country. A majority of these workers have come from Nepal, India, Pakistan and Bangladesh. These workers often bought one way tickets and are building the roads, stadiums and hotels in preparation for the tournament.

[1] More than 3.5 billion people watched 2018 World Cup, says Fifa | The Independent

[2] These Are The 5 Biggest Sporting Events In The World | Pledge SportsPledge Sports

[3] Top 10 Most Popular Sports Leagues In The World

[4] Full text of "The Times , 1991, UK, English"

[5] • Premier League TV broadcasting rights value 1992-2019 | Statista

[6] (Statista, 2018)

[7] Our Story

[8] Manchester City owner makes Mumbai City the eighth club in global portfolio | Football | The Guardian

[9] (The Irish Times, 2018)

[10] PSG Have Spent €1.17Billion On Players And Still Haven't Got Past Champions League QF's - SPORTbible

[11] The 100 most expensive football transfers of all time | Goal.com

[12] Manchester City bank record £400m sponsorship deal with Etihad Airways | Football | The Guardian

[13] BBC News. (2012). Man City losses halve in 2011-12. [online]

[14] Manchester City move into profit for first time since 2008 - Manchester Evening News

[15] (BBC News, 2012)

[16] Paris Saint-Germain sponsorship deal eclipses all rivals but opens questions about Financial Fair Play regulations - Telegraph

[17] Uefa.com. (2014). [online]

[18] BBC News. (2019). Real Madrid tops football's rich list. [online]

[19] Qatar 2022: A reputation irrevocably damaged, what has a minor Gulf state to gain from hosting the World Cup? | The Independent

[20] (Laughland, 2017)

[21] (Laughland, 2017)