Chapter 14
The End Game?

In the meetings at FIFA headquarters in the weeks before the Baur au Lac raid, the Arsenal chief executive Ivan Gazidis had made a special request to the ruling body's legal chief Marco Villiger. Gazidis, an American with a friendly manner and annual compensation of £2 million, said it was “imperative” that investors and funds should not be able to buy small teams to enable them to carry on seeking profits in the transfer market. It appeared a call in vain. In England, where even third-tier clubs could attract 20,000 supporters to matches, fan pressure might help prevent this but in some parts of the world it was another matter. There was no rule in football that a club owner must chase trophies rather than financial profit.

Traffic executive Jochen Lösch freely admitted that the primary goal of the three teams they owned was financial gain. Desportivo Brasil played in the fourth tier of a regional state championship, posting clips on YouTube so that scouts of first-division clubs could track the progress of the teenagers. Despite having no fans, a framed Manchester United shirt above the reception desk and Nike swooshes adorning the two-bunk bedroom doors showed that the sports industry was watching carefully. Lösch explained to us Traffic's 2008 agreement with Manchester United. “The idea was, we scout players together, we put them in Desportivo, we share the costs and then we see how they develop,” Lösch said. “It makes no sense to bring the players to England at 14. It's illegal and stupid.”

Traffic spent about $4 million a year on the education and welfare of hand-picked teenagers ranging in age from 14 to 18. United could sign the players after their 18th birthday for fees already written into contracts with Traffic, Lösch said. For Traffic it was a way to make money. For United it was a means to bypass sky-high transfer fees and hefty payments to intermediaries.

Desportivo began winning regularly in Brazil, defeating the youth team of Santos, which had nurtured Pelé and Neymar. Sporting braces on their teeth, cheeky smiles and fluorescent yellow and orange Nike boots, Desportivo Brasil's Under-16 team swept to the Milk Cup title in Ballymena, Northern Ireland in 2012. Cutting through defences with slick passing, they downed Benfica 6-0 and finished off Newcastle United 3-0 in the final. After collecting the trophy, the Brazilian teenagers took a few slurps of milk from the silver cup and doused each other with the rest.

But the transition from teen prodigies to adult stars was more difficult. Lösch had experienced this with Traffic's investment funds that bought the transfer rights of teenage Brazilians. About 80% of them didn't make it. Finding the next Neymar in a country of more than 200 million people was not easy. “The player just turns out to be not as good as you had thought,” Lösch said.

Desportivo left-back Rafael Leão was loaned to United in late 2011 and striker Bruno Gomes met Alex Ferguson two years later, but neither secured a deal with Manchester United. Another Desportivo player, Guilherme Delatorre, had a four-month loan stint at Queens Park Rangers in 2014 but did not feature in a single game.

To help make the transition to European football easier for the young Brazilian players, Hawilla bought Portugal's Estoril Praia in 2009 for €200,000 when it was in the second division. Hawilla sent over a dozen players from Desportivo Brasil, housing them in a slightly shabby whitewashed apartment block across the road from the club's stadium. Although the Brazilians took time to acclimatize, in the second season they helped Estoril Praia win the second-division championship title and follow up with fifth place in the first division in 2013. Hawilla's team even finished the season ahead of Lisbon-based Sporting.

That finish was enough to qualify for the UEFA Europa League for the first time in the club's 74-year history. However, sticking to its business model, it traded seven of the club's best players, including defender Ismaily Gonçalves dos Santos, who went to Shakhtar Donetsk for a €5 million fee.

On a September evening in 2013, Estoril Praia made its Europa League debut at its 5,000-seat stadium against two-time champion Sevilla. One of the two stands was filled with Spanish fans waving flags and singing noisily. For the few hundred locals in the opposite stand, this was an unprecented occasion. Sebastião “Seba” de Freitas Couto Jr., a 21-year-old striker, one of six Brazilians in the squad, crossed himself as he came out onto the field. With the match on television, this was a chance to make a name for himself and join a bigger club. Although Sevilla won 3-2 over two matches, Seba and his teammates were impressive against the team that would go on to win the tournament. Traffic's Portuguese team finished the season with a healthy €1.6 million profit and before long Seba would be traded to Olympiacos in Greece for a fee of €1.8 million.

It was the latest hit in the sprawling business empire of Hawilla. In the summer of 2014, he owned 19 companies with interests in shopping centres, golf courses and farming equipment, as well as football clubs on three continents. The revenue from around the world flowed offshore into Hawilla's British Virgin Islands-based company Continental Sports Marketing. In an article entitled “The Owner of Our Football,” a reporter from O Globo interviewed Hawilla about his successful 30-year career. When asked about rumours of cronyism and corruption in his football television rights business, he was imperious. “It's just half a dozen sports reporters” making those claims, he said. “It's more jealousy and dislike than anything because in the end they want a more professional game like us. Even if you work honestly, with transparency and dignity, as we've always done here, people gossip.”

Having managed to protect his reputation and enormous wealth by fending off rumour-mongers in this way for years, the FBI investigation had blindsided Hawilla, blowing a hole in his life's work. When Lösch visited the 72-year-old Brazilian in New York in 2015, Hawilla was a cooperating witness for the FBI and looked frail after cancer treatment. The Americans had required Hawilla to wear a wiretap during a meeting in Miami to try and implicate his colleagues when bribes were allegedly agreed upon for the 2015 Copa Ameria tournament in Chile.

One of them, Traffic executive Aaron Davidson, initially pleaded not guilty and was released on a $5 million bond by a court in New York. Out of nowhere, the investigation was a “Black Swan” moment for Hawilla. “Everyone hates him now and it's tough,” Lösch said.

As part of his plea bargain, Hawilla agreed to pay $151 million to the US authorities and to raise money was selling off his football clubs. He sold Fort Lauderdale Strikers to investors including former Brazil striker Ronaldo and Desportivo Brasil to Chinese Super League team Shandong Luneng for about $10 million. Manchester City, the then Premier League champion, began talks about acquiring Estoril Praia. City planned to use the team, which Lösch also valued at roughly $10 million, to develop players for its squad, but its interest came to nothing.

Just as Hawilla was selling his teams that had started to do well from the transfer market, there were signs his model was catching on elsewhere. On a cold day in December 2015, an Oxford University professor in his late 40s left his apartment in an elegant townhouse in the city and made his way past historic colleges and students on his way to a meeting in a hardscrabble town in Belgium.

The small border town of Mouscron is a 20-minute taxi ride from the train terminal in the French city of Lille, which in turn is a one-hour ride on the high-speed Eurostar from London. As you travel by car across the border, the landscape is dominated by humble terraced housing, litter-strewn roads and virtually no official indication that you are crossing from France into Belgium.

A few metres inside the town limits of Mouscron there are flashing neon lights attached to a cluster of shops on the same street. The signs say “Tabac Magic,” “Tabac Luxe” or “Tabac du Monde,” hawking their only ware: tobacco. Cigarettes in Belgium are cheaper than in France, and the town of 57,000 has 64 tobacconists – more than one for every thousand people. They lure French retailers and smokers looking for a bargain. A packet of Marlboro reds typically costs €6 in these Mouscron shops, €1 less than in France. Not a huge saving, but if you buy a couple of tubs of 620 cigarettes, the trek to this unremarkable town is worthwhile. Belgian police sporadically raid these tobacco shops, pulling them up for illegally staying open after 8 p.m., and locals complain about the noisy clientele.

The Oxford University professor's taxi zips past these shops and arrives at his destination: Le Canonniere, the glass-fronted stadium of Royal Mouscron, the smallest team in the Belgian first division. (The club, 500 m from the French border, has an average crowd of some 4,000 fans at home games in the 11,300-seat arena.)

Gil Zahavi, who teaches modern Hebrew at Oxford University's faculty of Oriental Studies, is the son of Israeli dealmaker Pini Zahavi. Zahavi Sr., the ally of transfer market investors for two decades, had led a takeover of the club a few months earlier for €2.5 million, just as FIFA was banning his main business. The acquisition was through a company called Gol Football Malta Ltd. Pini Zahavi put his son Gil and nephew Adair on the board of the club, and they arrive for a 10 a.m. board meeting on this December day, to be greeted by the club's president Edward van Daele and a few French directors.

Zahavi's son did not have any equity in the business, although his nephew did have a stake. Neither received any renumeration from the club. Pini Zahavi did not attend the board meeting himself, although he had turned up for a game a few weeks earlier, wrapped in a scarf and overcoat, with a cap pulled down over his forehead.

The 72-year-old Israeli, does not want to speak about why he has acquired this modest club, which has repeatedly struggled to avoid bankruptcy in recent years. He would only tell French newspaper L'Equipe that “we need time, we are in the middle of changing things”. According to Van Daele, Zahavi was attracted to the country by “interesting” financial rules. Under Belgian tax law, 95% of the club's dividends are tax deductible after one year because of the €2.5 million invested.

After signing off on a loss – for accounting reasons, according to the club's financial statement – for the previous year, Gil Zahavi and the other directors discuss mundane matters like hiring an extra groundsman and organizing language lessons for the multi-national squad. Since Zahavi's acquisition, Mouscron has signed 30 players, including seven in the hours before the 31 August 2015 transfer deadline. 70% of the squad are from outside Belgium. They come from Turkey, France, Portugal, the Czech Republic, Romania, Slovenia, Cameroon, Argentina, Israel, the United States and Brazil.

While Pini Zahavi would not discuss his interest in the club, it appears that he will use his contacts and knowledge of the transfer market to bring success and profit. Royal Mouscron's president, Van Daele, has won a pledge that the 93-year-old club's identity will not be damaged. The days of a local businessman ploughing in money have long gone, he told L'Equipe. “We did not have any offer from a captain of industry or financial institution saying we'll come and save you,” Van Daele, told the historic French sports daily that was started after the Second World War. “This is the reality of today. You can feel nostalgic about the football of your father's generation but you have to accept that it's over.”

The board meeting lasts a little over two hours before Gil Zahavi is free to leave this humdrum working-class town with its 64 tobacco shops and return to the spires and cobbled streets of Oxford.

As FIFA's ban on investors from the transfer market came into force, another veteran dealmaker made his next move. Juan Figer, the one-time chess champion, saw the so-called bridge transfers he pioneered in the 1990s increasingly under scrutiny in South America.

Uruguay's goverment lifted the tax rate on transfer profits to as much as 30% from 3% (although owning a club meant there were ways of reducing this). In 2016, a year after its chief José Maria Marin was arrested and extradited to the USA on allegations he was involved in the FIFA corruption case, the Brazilian football federation introduced a rule that banned transfers with “no sporting reason”.

In Argentina, the federal tax agency said it would take the unprecedented step of regulating the transfer market itself. From May 2016, all clubs had to declare transfer details to the tax agency which – taking a leaf out of FIFA's book – set up its own electronic database for teams to log information. New national legislation even gave the agency the power to estimate the transfer market price of each player and penalize clubs if it thought they were avoiding the 17.5% tax on player transfer fees.

Amid this changing landscape, Figer quietly took a 75% stake in Portimonense, a second-division team in Portugal using For Gool Co., the company which still did not list its shareholders even after the UK had changed its rules on company transparency. It was not the only one: according to Private Eye magazine, by the summer of 2016, more than 7,000 UK companies had not disclosed “significant” shareholders as required. The magazine likened the transparency project to a “chocolate teapot”.

So For Gool, based in the English town of Rochdale, next to buildings with bricked-up windows, now controlled a club on the Algarve coast. Like Estoril Praia further north of the country, and Royal Mouscron in Belgium, it was neither a big club, nor a succesful one. Portimonense had an average attendance of 3,800 supporters and had never won a trophy in its 100-year history.

In July 2015, the €2.8 million transfer of midfielder Danilo Pereira to FC Porto was routed via Portimonense, even though he did not play a game for the second-division club. Pereira had played the previous two seasons for Maritimo on the island of Madeira. Figer signed another up-and-coming star to Portimonense in January 2016 – Nigerian striker Musa Yahaya – three weeks after his 18th birthday. The teenager had been training with Tottenham Hotspur's youth team.

Like his peers, Nelio Lucas was also pursuing a new line of business. The Doyen Sports chief executive signed an agreement with struggling Belgian club Seraing under which the company would pay €300,000 to the second-division team in return for helping to acquire two players per season. When the players were traded, Doyen would receive 30% of the transfer fees. The plan went off course when the Belgian football federation blocked one of the transfers, accusing Seraing of breaching the new FIFA ban. The world ruling body followed up by fining the club 150,000 Swiss francs and banned it from signing players for two years. It was a sign that FIFA would enforce its new regulations, but this game of cat-and-mouse would soon be overseen by a new executive.

Just after lunch one afternoon in late July 2016, the FIFA transfer market chief Mark Goddard pinged a carefully worded email to dozens of his fellow staff. With no major FIFA-organized football tournament over the summer, many were on holiday and the office in Zurich was pretty much deserted; he received several out-of-office responses. The subject line said: “Goodbye All.”

The Australian was leaving the frontline of transfer market compliance after nine years and said he was looking for a new career challenge. Goddard wrote that he and his staff had made a “profound” difference to the transfer market and surprised many people in the industry with the progress they had made. If FIFA's transfer-monitoring system he had set up was a football computer game, he wrote, “I would have made it all the way to the World Cup final playing as Australia”.

Perhaps surprisingly, none of FIFA's executives, who were the ultimate guardians of the transfer market, were copied into the email. “The few regrets I have are the moments that I let a lack of courage stop me from driving change,” Goddard wrote.

For all the increased vigilance of the market from the authorites, it seemed that FIFA would continue to have a tricky job policing the grey areas that still existed around its transfer rules. Earlier that year a report published by Harvard University said that in soccer, there was a “deeply interconnected pyramid of money and transactions, dominated by a small elite and characterised by vast dark spaces, institutional voids and a profound lack of data”. FIFA, the report said, has banned “third party ownership of players” by investors “without an effective means to assess if and where it exists”.

We went along to the Rio de Janeiro offices of Eduardo Uram to get his view. Uram, who likes to wear silk shirts despite the tropical climate, has grown wealthy from the transfer market as an agent and investor over the last two decades. One of the leading agents in Brazil, he represents 120 footballers and among his ventures owns a third-division team called Tombense in the state of Minas Gerais, where Pelé was born.

Sitting in a cream-coloured leather chair in his office in one of the tower blocks that line Avenida das Americas in the Barra de Tijuca neighbourhood, he reflected on the evolution of the transfer market since Juan Figer, the first FIFA-approved agent in Brazil, “created the idea of economic rights of a player. What Juan Figer did was,” Uram said, “like bottling air and selling it”.

Uram wasn't so keen to talk about his ownership of Tombense, a team based 150 miles away in a state he had no apparent connection with. “I don't want to speak about my things,” he added. Later, he conceded that some of the players Tombense registers may not play for the team before they are traded to other clubs. That, he adds, also occurs at Chelsea. Roman Abramovich's club had 34 players on loan to other teams at the end of the 2015–16 season. English player union boss Gordon Taylor said the oligarch's team was “warehousing” talent it might never field.

As we chatted with Uram, Brazil was entering a recession and analysts predicted its economy could fall into its deepest trough for a quarter of a century. Exports from the port town of Santos, where first Pelé and then Neymar became famous half a century apart, had dropped off and property prices were tumbling. However, the value of the global transfer market continued to climb year on year, rising another 3% to $4.2 billon in 2015 after a spending spurt by Chinese clubs. Since 2011, the market has increased in size by a whopping 44%.

In the summer of 2016, Manchester United pushed up the transfer market inflation a notch by paying a world record €105 million fee to Juventus for Paul Pogba, breaking the mark set by Gareth Bale's move to Real Madrid. The Italian club used €90 million to sign Gonzalo Higuain from Napoli. Rob Steen, writing for The Guardian newspaper, was rattled by the size of the fees. “Money doesn't just talk in football,” he wrote, “it never shuts up.” Overall, the 20 Premier League clubs spent more than £1 billion on signing players that summer.

Uram's office is insulated from the traffic noise on the busy road below. He says that he is unfazed by Brazil's recession and the ban on investors from the transfer market. His business, after all, is driven by markets abroad. Asked about the impending gloom at home, he responds by taking out a premium Cohiba cigar from his drawer. “You ask what I think of the crisis” he says, as he lights the Cuban tobacco with a silver Zippo lighter and blows a puff of smoke nonchalantly into the air. “This is how much I don't feel the crisis.”

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