FIFA Litigation Daily Update - November 13 & 14, 2017
The DOJ has obtained criminal charges against more than 40 defendants in connection with its ongoing investigation. More than 24 defendants have pled guilty. Three defendants are currently on trial. Their trial began on Monday, November 13. The three defendants are former presidents of South American football (soccer) confederations from Peru (Manuel Burga), Paraguay (Juan Angel Napout) and Brazil (Jose Maria Marin). The defendants are accused of accepting kickbacks and bribes from sports media companies in exchange for awarding lucrative media rights contracts to soccer tournaments. The trial is of great interest to many constituents in the sports world, as well as those clients interested in corruption trials more generally.
Stefan Szymanski is a professor of sport management at the University of Michigan who focuses his work and research on economics of the business of sport, with a particular focus on soccer. He testified as an expert witness for the government.
Szymanski testified that there are four categories of assets for soccer organizations: (1) broadcasting rights, (2) advertising and sponsorship rights, (3) licensing rights, and (4) ticket sales. Broadcasting rights are the most lucrative.
Szymanski explained the roles of the three players in the sale of soccer broadcasting rights: (1) the soccer organization, which owns the rights; (2) a sports-marketing firm, which purchases those rights; and (3) the television networks, which then buy those rights from the sports-marketing firm.
Szymanski testified that there are two ways that corruption can negatively impact revenue when it comes to the sale of soccer-broadcasting rights. The first is that a soccer organization that pockets some of the money from the sale of those rights is thereby depriving the soccer organization of what otherwise would be revenue. Secondly, corruption stunts the market for competition, where either the organization is not getting the best price (instead going with whoever will line the officials’ pockets most) or “clean” players are discouraged from entering the market and competing with “dirty” ones.
Read the full article in Lexology from Sidley Austin LLP here: https://www.lexology.com/library/detail.aspx?g=27f2cd33-f0ad-4540-88e4-b275cf50f3f9