Demonising Justin Gatlin
13th September 2015
The European Club Association (ECA) has elected Nasser Al-Khelaifi as its representative on the Executive Committee of the Union of European Football Associations (UEFA). His appointment to the Executive Committee is due to be ratified at the UEFA Congress meeting in Rome on 7 February.
Through his chairing of Qatar Sports Investments (QSI), Al-Khelaifi is Chairman of Paris Saint Germain (PSG). He is also Chairman of BeIn Media Group, which holds the media rights to France’s top division, Ligue 1.
It is understood that Al-Khelaifi is still subject to criminal proceedings in Switzerland. Also, UEFA’s Club Financial Control Body (CFCB) re-opened an investigation into whether PSG have breached its Club Licensing and Financial Fair Play (CLFFP) Regulations in September last year. These investigations concern whether PSG is being indirectly financed by Qatar.
In addition, it has been alleged that QSI made illicit payments to Pamodzi Sports Consulting, the company owned by Papa Massata Diack, son of former International Association of Athletics Federations (IAAF) President Lamine Diack. QSI and Al-Khelaifi were also named in the so-called FIFAGate trial in New York during 2017.
In October 2017, the Swiss Office of the Attorney General (OAG) announced that it had searched a number of properties after opening an investigation into former FIFA General Secretary Jérôme Valcke and Al-Khelaifi concerning the award of FIFA World Cup media rights. The OAG said that it was investigating Al-Khelaifi on suspicion of bribery, fraud, criminal mismanagement and forgery.
‘It is suspected that Jérôme Valcke accepted undue advantages from a businessman in the sports rights sector in connection with the award of media rights for certain countries at the FIFA World Cups in 2018, 2022, 2026 and 2030 and from Nasser Al-Khelaifi in connection with the award of media rights for certain countries at the FIFA World Cups in 2026 and 2030’, read a statement. In a November 2017 statement, BeIn Media Group refuted the OAG’s charges, however it is understood that its investigations are ongoing.
As the name suggests, UEFA’s CLFFP Regulations (PDF below) are designed to ensure financial fair play in football. A central pillar of the Regulations is that clubs operate on the basis of their own revenues. In other words, they are not permitted to spend more than the revenue they legitimately earn over a three year period.
However, there are caveats. If a club reports an aggregate deficit during a three year period, they must demonstrate that it is covered by a surplus from the two years prior to the three year monitoring period.
In addition, UEFA allows an ‘acceptable deviation’ of €5 million in losses for each three year monitoring period. It also allows this ‘acceptable deviation’ to be exceeded by €30 million ‘if such excess is entirely covered by contributions from equity participants and/or related parties’. In other words, clubs can report a €35 million loss over the three year monitoring period.
In May 2014, UEFA signed a ‘settlement agreement’ (PDF below) with PSG, after it raised concerns that sponsorship deals with ‘related parties’, slated to cover deficits, had been inflated beyond what it considered ‘fair value’. In 2013, Paris Saint Germain had agreed a four-year deal with the Qatar Tourism Authority (QTA), which it said was worth €200 million per year. Oryx Sports Investments, also known as QSI, had taken control of the French club in 2011.
UEFA considered QTA to be a ‘related party’ to QSI under the terms of its CLFFP Regulations. It therefore considered this deal to be a Related Party Transaction (RTP), which needed to be assessed to ascertain if its value had been overstated in order to allow money to be injected into the club.
It is understood that UEFA assessed the value of the deal with QTA to be half that stated by the club (in other words, €100 million per year). In other words, UEFA found that PSG, QSI and QTA had agreed to artificially inflate the value of the deal.
However, it has also been alleged that the €100 million per year represented a massive upscaling of UEFA’s initial assessment of the ‘fair value’ of the deal. It is alleged that sports marketing agency Octagon originally valued the deal between Paris Saint Germain and QTA at just €2.78 million per year. It is also alleged that the contract connected to the deal did not place any obligations on the club, and stated that the money was to be used to buy players.
It is further alleged that on 19 April 2014, a secret meeting took place at the French League Cup final, where it was agreed by UEFA that PSG could resolve the difference between the club’s stated value for the contract and UEFA’s ‘fair value’ assessment. This would be done through new sponsorship agreements with companies with Qatari connections, it is alleged.
PSG has said that it ‘firmly denies’ the allegations. ‘The club has always strictly complied with all applicable laws and regulations and firmly denies the allegations’, read a statement. ‘The QTA contract figure has been known to UEFA and to the general public since 2014. In 2014 UEFA confirmed that our contract with the Qatar Tourism Authority provided promotion and diffusion of the country. The principle of this contract is simple: today, the positive results of PSG are systematically associated with Qatar and directly benefit its image.’
UEFA has declined to comment on the exact focus of the renewed investigation into PSG opened in September last year. However Javier Tebas, President of Spain’s football league (LFP), accused the French club of being involved in State-backed ‘financial doping’ after it agreed a €410 million deal to sign Neymar in August 2017.
There has been speculation as to whether PSG’s revenue will cover the cost of signing Neymar. The club’s initial deal with QTA expired in 2016. A new deal was agreed and, in October of that year, PSG submitted to UEFA that it was worth €175 million per season – €75 million more per season than the value UEFA had given the previous deal.
PSG’s Settlement Agreement with UEFA expired at the end of the 2016/17 football season. UEFA’s CFCB has yet to indicate whether it accepts PSG’s valuation of the new QTA deal. This could also form part of UEFA’s renewed investigation into PSG.
Key to the 2014 Settlement Agreement was the following passage: ‘PSG agrees to pay a total amount of EUR 60 Mio. which will be withheld from the revenues it earns from participating in UEFA competitions commencing in season 2013/14. Of this EUR 60 Mio. an amount of EUR 40 Mio. will be withheld conditionally and will be returned to PSG if the club fulfills the operational and financial measures agreed with the UEFA CFCB.’
UEFA confirmed that PSG had complied with the terms of the settlement agreement on 21 April 2017, adding a €40 million boost to the €175 million per year it receives from the QTA deal. That would mean it had €215 million from the settlement agreement and the QTA deal to cover the cost of Neymar.
As well as a €222 million buyout clause payable to FC Barcelona, Neymar’s wages are understood to be €30 million per year over a five year contract, bringing the estimated total cost of signing him to €410 million over the duration of his contract. It is therefore possible that PSG has the revenue it needs to cover the signing of Neymar, but it would leave little money for anything else.
There is nothing in the CLFFP Regulations that prevents people with State connections from owning football clubs. However, as explained above, the Regulations do prevent club owners with State connections from inflating the value of commercial deals with State companies in order to allow them to inject more money into their club.
There are questions about whether QSI, the owner of PSG, is linked to the State of Qatar. QSI was founded by Sheikh Tamim Bin Hamad Al Thani, current Emir of Qatar, reports the BBC. His father, Sheikh Hamad bin Khalifa bin Hamad bin Abdullah bin Jassim bin Mohammed Al Thani, established the State owned Qatar Investment Authority (QIA).
It is understood that his son, Sheikh Tamim Al Thani, chose Al-Khelaifi to head QSI. QSI is understood to be an arm of State owned QIA, although reports which suggest that QIA bought 70% of PSG in 2011 – and not QSI – appear to have been wiped from the internet. PSG and QSI’s internet sites have no record of the deal.
A statement from Colony Capital, which sold 70% of its ownership in the French club in a 2011 deal, said that an agreement had been reached with a ‘Qatari investment company’. Shortly after the deal, State-funded Al Jazeera invested a large amount of money into France’s Ligue 1 through an increased TV rights deal. BeIn, which Al-Khelaifi Chairs, later took over the rights following its 2012 launch.
As The Sports Integrity Initiative reported in November 2016, QSI described itself as a ‘100% Qatari private shareholding company’ that is designed to generate revenues to be ‘reinvested into Qatar’s sport, leisure and entertainment sectors to benefit the community as a whole’. This description has been changed on the English version of its internet site, but is still available using the Arabic version.
Further evidence of an apparent link between QIA and QSI is provided by BeIn Media Group’s profile of Al-Khelaifi. The Arabic version of the site lists him as being a board member of the State owned Qatar Investment Authority (QIA) since 2015, whereas the English version neglects to mention this.
In 2011 after a voting process in Monaco, the IAAF selected London over Doha to host the 2017 IAAF World Championships. In November 2016, Le Monde claimed to have evidence of two bank transfers sent to Pamodzi Sports Consulting shortly before the vote.
The newspaper claimed that QSI sent US$3 million to Pamodzi on 13 October 2011, followed by a further $500,000 sent on 7 November, four days before the 2017 Worlds were awarded to London. The owner of Pamodzi is Papa Massata Diack, son of former IAAF President Lamine Diack, who was arrested by French police in 2015 on corruption charges. Papa Diack was banned for life by the IAAF due to corruption charges in January 2016.
In November 2017, the so-called FIFAGate trial in New York heard how the arrest of FIFA executives at the Baur au Lac hotel in 2015 halted QSI’s bid to take over Full Play, an Argentinean agency owned by Hugo and Mariano Jinkis. It is understood that QSI had planned to pay US$212 million for 51% of Full Play. As the telephone code for New York is 212, the deal was codenamed The New York Project.
The FIFAGate trial heard that QSI and Al-Khelaifi pulled out of the deal following the arrest of FIFA executives in 2015. An indictment published by the US Department of Justice (DoJ) accused the Jinkis brothers of setting up a joint company with Traffic Group called Datisa, which it alleges paid bribes to football officials in order to secure TV contracts in Latin America.
It would appear that Qatar is keen to put across the impression that a private investment company owns PSG, when the history of the French club’s takeover appears to indicate State involvement in the deal. Whether this is a problem depends on your point of view.
Javier Tebas appears convinced that PSG is State financed. It is easy to see how one might take the view that if contracts with companies connected to an oil-rich State are being artificially inflated, then this puts European clubs that are not in a similar position at a disadvantage. UEFA has already found that PSG artificially inflated the value of such contracts.
Given that Al-Khelaifi is still subject to criminal proceedings in Switzerland; that his club is subject to UEFA investigations; and that QSI are alleged to have been involved in corruption in football and athletics, it does appear odd that the ECA has recommended him as its preferred representative on the UEFA Executive Committee. Given the above allegations, the ECA must have known that his nomination would be a controversial choice, yet the ECA’s statement offers no information as to why he was selected. It will be interesting to see whether the UEFA Congress approves his nomination on 7 February.
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