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Sepp Blatter and FIFA: looking back at what comes next

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Sepp Blatter
Sepp Blatter

Editor’s note: FIFA President Sepp Blatter announced his resignation from the international soccer governing body on Tuesday, just days after he won a fifth four-year term in the face of corruption allegations. Since then, US investigators have confirmed Blatter is at the center of their probe. We asked a few experts for their reaction to the news and what it means.

FIFA and the principal-agent problem

Thomas More Smith, Emory University

I was not surprised, even a little bit, when I heard last week that the top officials of FIFA were involved in bribery. In fact, my first reaction was “Of course.” Here is why.

The way FIFA is assembled and what they do is exactly the situation that would lead to corruption. FIFA is a governing body of arguably the most popular sport in the world. The organization chart is as follows. There are 209 different countries and member associations that are represented. Each member association has representatives in the FIFA congress, which elects members of the executive committee, a group of 24 people. The 24 are divided into three categories: one president, eight vice presidents and 15 regular members.

FIFA has placed the 209 countries into six different buckets known as confederations. The table below shows the confederations, some of the representing countries and the corresponding executive committee representation.


The problem with this organizational structure is that the executive committee has all the power and virtually no accountability. Consider the counterfactual – the National Football League. The creed of the league is “Protect the Shield” – the goals of the league and the teams within the league are to do everything they can to protect the value of the NFL. This makes sense for the owners of the team since their representatives comprise the various committees within the game. If the owners are protecting the shield and the league office is protecting the shield, everybody wins – everybody’s goals and objectives are aligned.

But, within FIFA, there is no “shield” to protect – the success or failure of the World Cup (whether teams are successful playing in the jungle of Brazil, for example) has no impact on football played in Kuwait or the Cook Islands. As such, the goals of Qatar may be completely different than the goals of Jamaica. We have a principal-agent problem.

This problem arises when the goals of the principal (the owner of, say, a convenience store) and the agent (the worker behind the cash register) are not aligned. The outcome of the principal-agent breakdown results in stealing from the till and giving all your buddies free microwave burritos. Or taking bribes.

Consider how this works. The vice president (VP) elected from CONCACAF (the regional group representing North and Central America) represents 41 different countries and territories. Within this group is the United States, Haiti and the Dominican Republic. The idea that a VP could represent the interests of these countries is a bit ludicrous – Haiti and the DR occupy the same island and their goals and objectives are hardly aligned.

What is the outcome if the VP doesn’t represent the group adequately? In the convenience store, the owner fires the cashier and hires another. But it’s not as easy to fire your VP or committee members. So the VP and the committee members take care of themselves. They take bribes and make decisions regarding the World Cup and other tournaments in such a way that they are compensated.

The solution to the principal-agent problem is to get outside participants to act as “watchdogs” for the owner. Ever notice those signs that say “If you don’t get a receipt, your meal is free” or “If you are asked to pay a different amount, please call 1-800-Get-Back (or whatever)”? These signs allow the customers to act in their best interest, which is more aligned with the store owner than the cashier.

The graft problem in FIFA will persist unless the goals of the confederations can become more aligned with the goals of individual countries. Given that the goals of the countries within confederations are not aligned, it is not likely that this principal-agent problem can be resolved.

Blatter’s departure spells trouble for Qatar

Kristian Coates Ulrichsen, Rice University

During Sepp Blatter’s tenure as president of FIFA, few incidents were as controversial as the awarding of the 2022 World Cup to Qatar. Human rights abuses and numerous concerns about Qatar’s capacity to host raised serious questions. But without Blatter, the country’s prospects of hosting may actually be in trouble.

Qatar’s race to host the World Cup, seemingly from nowhere, was a microcosm of its nuanced country-branding and painstaking creation of coalitions of regional and international support. Simply put, its leadership worked the political mechanics of vote-winning far more effectively than rival bidders in order to secure the support of enough of the 24 voting members on the FIFA Executive Board in 2010.

Qatari officials also pitched a very persuasive portrait of a nation using soccer to bridge very different cultures, from West to East and rooted in the Arab context, all encapsulated in its catchy bid slogan, “Expect Amazing.”

The creation of the Aspire Academy for Sports Excellence demonstrates the careful buildup of Qatar’s credentials in international sporting circles. Aspire was established in 2004 as a world-class training and development facility for young athletes across a range of different sports.

The complex combines the Aspire Dome — one of the largest multipurpose indoor arenas in the world — as well as tailored programs aimed at aspiring athletes from resource-poorer developing countries. After 2010, Qatar faced allegations it had targeted specific countries eligible to vote with Aspire programs and promises of support (as well as questions relating to the presence of Qatar’s Mohammed bin Hammam as the president of the Asian Football Confederation from 2002 to 2011).

Setting aside the veracity (or otherwise) of the allegations, it is undoubtedly the case that the Aspire policy of developing young athletes and returning them to their home countries fully trained won Qatar widespread support among international partners, especially in developing countries. This was a powerful element of the “soft power” that Qatari officials cultivated within FIFA. But that soft power may not be sufficient to prevent a reopening of the bidding process for the 2022 World Cup, for two reasons.

  1. Much of the construction of World Cup stadia and infrastructure has not yet started.
  2. Seven years — a normal “bidding cycle” between announcement of host and actual event — still remain.

For both of these reasons, Qatar 2022 is much more vulnerable than Russia 2018. There is, moreover, precedent: having been awarded the hosting rights to the 1986 World Cup at the FIFA Congress in 1974 (like Qatar, a full 12 years ahead), Colombia was stripped of the tournament in 1982 after eight years of delay and little progress.

Qatari officials will be hoping that history does not repeat itself without Blatter to defend them.

How Blatter stayed in power so long

Victor Matheson, College of the Holy Cross

Sepp Blatter — who announced his resignation just days after his reelection as FIFA president, shocking the soccer world – was able to maintain his control over the levers of power in international soccer for nearly two decades by commanding widespread support from the poorest soccer-playing countries in the developing world. While voting for FIFA’s president is done by secret ballot, it is widely believed that Blatter garnered nearly unanimous support from Africa’s 53 delegates as well as the overwhelming majority of Asia’s 47 votes in Monday’s election.

Blatter’s base of support in the developing world can be traced to at least two factors. FIFA generated US$5.7 billion in revenue during the last four-year World Cup cycle. While critics note that much of this money is used to support the lavish lifestyles of FIFA executives, significant funds are still made available and liberally sprinkled throughout the world to promote the development of soccer. In the world’s poorest nations, even very modest investments in sports infrastructure and training can go a long way to generate goodwill for FIFA and its (soon-to-be former) president.

In addition, under Blatter, FIFA began to award the World Cup to countries outside the traditional soccer-playing nations in Europe and Latin America. South Korea and Japan became the first Asian hosts in 2002, South Africa hosted the first tournament in Africa in 2010, and the Cup heads to Eastern Europe (Russia) and the Middle East (Qatar) in 2018 and 2022.

Of course, economic research suggests that hosting the World Cup, especially in developing nations, may be more of a burden than a privilege. And curbing the culture of corruption should lead to more of FIFA’s money making its way into fields and equipment rather than officials’ pockets. Blatter has been generous to soccer in the developing world, but FIFA can do much better.

(Authors Kristian Coates Ulrichsen is a Baker Institute Fellow For Kuwait, Rice University; Thomas More Smith is a Assistant Professor in the Practice of Finance, Emory University; & Victor Matheson is a Professor of Economics and Accounting, College of the Holy Cross. This article was originally published on The Conversation.)

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