Privatized Profits, Socialized Losses

How Commerce and Corruption are Destroying Football

/ by Klaus Zeyringer and Stefan Gmünder

From Raw Leather: How Commerce and Corruption are Destroying Football (2018).

 

On February 23, 2011, half a year after the World CupTM championships in South Africa, the African continental football confederation CAF met in Sudan. Even FIFA president Sepp Blatter took the trouble to go to Khartoum. One reason he attended was to bring the representatives of the various national leagues, some of whom had arrived from the poorest countries in the world, the happy news that FIFA had made a profit of 2.4 billion dollars (1.8 billion euros) off the tournament in South Africa. At the end of his speech, Blatter, who in his own words believes in God, himself and his lawyer, patronizingly remarked that Africa could be proud of itself.

On the southern end of the continent, where people had recently experienced first-hand the blessings of the FIFA world championship, not everyone saw it that way. Just four weeks after the tournament, one and a half million people took to the streets to demonstrate against social cutbacks, their own government, and the "THIEFA." There was no trace of economic recovery or the promised employment miracle in this country with an unemployment rate of thirty percent. According to a statement by Sonwabo Eddie Funde, who was South Africa's ambassador to Germany from 2008 to 2012, hosting the World CupTM cost South Africa five billion euros, compared to 386 million in revenues, mainly from tourism. As always, the so-called general public, that is, the taxpayers, are privileged to bear the follow-up costs and collateral damage of this major image-heavy occasion from which major corporations, FIFA, and other shady figures close to the government earn millions.

In Mbombela, formerly Nelspruit, at the edge of Krüger National Park, they now have a stadium that cost a hundred million euros. Except unfortunately, they don't have a club to play there. Today the empty 46,000-seat arena, built for four World CupTM games, stands where five thousand people once lived, who were forced to relocate for the sake of the world championship. They were moved to a place far away from the city and the nearest bus stop. In return, the government promised to build housing, and supply water and electricity.

None of that happened. Even the school that stood on the stadium grounds no longer exists. On top of that, it's possible that the contract was awarded under questionable circumstances, as Colleen Dardagan wrote in Die Zeit during the 2010 World CupTM. The city's mayor was killed and the murderer was never caught. But soon, the editor of the South African Mercury prophesied in her article, "the problems of this developing country will no longer bother Blatter. Instead, he will turn his attention toward Brazil, the next victim of the greatest fraud on earth, the FIFA World Cup of 2014."

In Cape Town as well, the taxpayers are being invited to pay, by deficit guarantee, for the horrendous operating costs of the new Cape Town Stadium. Its upkeep gobbles up millions of euros each year. The new building, with its views of Table Mountain, the ocean, and Robben Island, cost 500 million euros. According to a FIFA report, renovating the existing stadium in the Athlone district, which was previously notorious for its anti-apartheid riots, but is now considered a model township even among whites, was never contemplated, because "the billions of TV viewers don't want to see any corrugated-sheet-metal shanties and poverty on their screens." (It was renovated nonetheless, but only for training purposes.)

The commission for the architectural planning of the "Diva of Cape Town," as the new stadium is known, went in part to the Hamburg office of Gerkan, Marg and Partners (GMP). The Hamburg firm was also allowed to get at Durban and Port Elizabeth, even though as late as 2001, Volkwin Marg, who with his partners also built arenas for the World CupTM in Germany and later in Brazil, had called stadiums "hysteria bowls" that all over the world had fallen "from the sky, with no regard at all for urban structures and spaces." Marg further went on the record as saying that stadium construction for the commercial spectacle of football primarily has "the goal of skimming off staged mass hysteria for commercial purposes."

And there is a tremendous amount of skimming off anywhere the global football association hosts its World CupTM. Corrupt elites are profiting, as are multinational corporations with proportionate market power – from Germany as well. According to a press release from the company, MAN sold 110 buses for transporting the football fans in South Africa. The lighting of the stations of the controversial Gautrain, which connects Johannesburg and Pretoria on an eighty-kilometer railway line (of course, the large townships of Soweto in Johannesburg and Mamelodi in Pretoria are not connected), comes from the Osram division of the Siemens concern, which was able to book a billion euros' worth of orders.

It has become an open secret that primarily private commercial enterprises profit financially from the Olympic Games as well as the World CupTM and the European Championship. The IOC and FIFA are fond of claiming that these mega-events are mainly financed with private resources. The opposite is true. Thus the Brazilian football association promised that the 2014 World CupTM would consume less public money than any previous tournament. Ultimately, with estimated costs of 15 billion US dollars, it became the most expensive of all world championships ever staged.

The Heinrich Böll Foundation had a study by the Brazilian Instituto Políticas Alternativas para o Cone Sul translated into German and published it on the Internet shortly before the opening game under the title "Whose World Cup?" Using official figures, the study demonstrates that all of 0.4% of the expenditures came from private sources: "50.7% of the monies are being paid directly by the Brazilian government, and 49% are investments of public monies. To be precise: for every 100 euros spent, only 40 cents come from the private sector." In this context, it was especially frustrating "that Law 12.348 of 2010 made it possible for World CupTM construction projects to raise public outlays above the established limits – which other policy areas like health, education, and housing were not permitted to do."

Granted, an extreme example. However, in its concluding report on the 2006 World CupTM, the German federal government would not or could not "reliably calculate" the total costs of an estimated six billion euros. There is an old trick of identifying as many infrastructure costs as possible, for example the expansion of the autobahns in Germany for 3.7 billion euros, as not contingent on the World CupTM. It was similar in London, where, according to the news agency Reuters, the 2012 summer Olympic Games ran up to 15 billion dollars.

Taxpayers, to the extent that they still have something to say via plebiscites, have become distrustful. Thus, the citizens in Munich (Winter Games 2022), Hamburg (Summer Games 2026), and Tyrol and Graubünden (both Winter Games 2026) decided against the applications. Sion, Switzerland, which would like to apply for 2026, also has to take its case to the people. Of course, anyone who speaks out against it quickly gets labeled as unpatriotic.

Taxpayers also have to cough up for the rapidly proceeding expansion of surveillance and security measures, that is, governmental repression, at mega-events. The public-security business has been booming since 9/11 as it is. According to estimates, this line item wolfed down a billion and a half euros in the course of the Summer Games of 2004. In Beijing in 2008 it was three billion euros, and in London a good billion. In a report by Deutschlandfunk titled "Brazil's World Cup Surveillance Temple," Dennis Pauschinger of the University of Kent said that it is no longer just a case of "averting an actual danger. Today we must accept security as a commodity. There is a huge industry behind it with an interest in using athletic events as a catalyst for getting certain security policies put into practice."

The World CupTM in Germany meant the largest implementation of security since the Second World War. Countless surveillance cameras were installed. 7,000 German soldiers stood at the ready. 250,000 police officers and 20,000 private security people were on the job. 700 police were brought in from abroad as reinforcements. In addition, AWACS aircraft patrolled the German airspace. Not to worry, NATO paid for them, as the federal government said reassuringly in its final report.

Why government authorities permit the big teams to fork out fantastic sums for salaries and transfers, but make the public guarantee many of the expenditures that benefit the clubs is, generally speaking, a social scandal. The German police expend significantly more than two million working hours on assignments at football games. The security authorities indicate in their annual report for 2016-17 that for the first and second Federal Leagues alone, 1362 full-time positions were needed. A decision by the Higher Administrative Court in Bremen could finally usher in a turnaround in this regard: the court ruled in favor of the Hanseatic city, which had demanded that the DFL (German Football League) contribute to paying the costs of security deployments for so-called high-risk games.

 

The security efforts were especially drastic in Brazil, which had the privilege of hosting, within a short period of time, both a World CupTM (2014) and the Olympic Games (2016). 300 million euros was spent on the army alone, and more than a hundred thousand soldiers were present during the World CupTM. A special unit of 10,000 soldiers trained for deployment during mass protests was formed, and thirty-four used Gepard tanks from Germany were purchased. Social movements were categorized as "enemy forces," and strikes, riots, and street blockades were considered major threat scenarios.

Otherwise, Brazil presented the same pattern as South Africa: threefold cost explosions, suspension of labor laws, dead construction workers, the resettlement of thousands of families from the favelas – and stadiums that today are moldering away. The stadium, built by GMP, which was plunked down in Manaus in the rain forest for 200 million euros, is no longer used for football, and the plan to convert it into an open-air prison has been scrapped. The stadium in Brasilia (450 million, also GMP), like the arena in Natal, can now host mass weddings and serves otherwise as a parking lot for buses. When the legendary Maracanã Stadium in Rio was remodeled, not a stone was left standing. It too is crumbling. At 316 million, it cost 75 percent more than planned. The ventilation system alone turned out to be 1,275 percent more expensive than the cost estimate had earmarked, according to a report in the Swiss newspaper Tagesanzeiger. The Maracanã now belongs to the cats, writes the high-circulation Brazilian newspaper O Globo. This is partly because the main operator, the construction company Odebrecht, has been fighting for years with the 2016 Organizing Committee over follow-up costs, caused to some extent by the more than 81 tonnes of fireworks that were shot off in the stadium as part of the festivities.

In other ways as well, the World CupTM and the Olympic Games in Brazil have remained a topic of conversation to this day because of gigantic corruption scandals. The Observer, which got a glimpse into the records of Brazil's Supreme Court, reports that the former mayor of Rio, Eduardo Pacs (IOC President Thomas Bach praised him in 2016 as a "great leader"), is said to have received over four million euros in bribery money. Rio's former governor, Sergio Cabral, is also supposed to have accepted payoffs for awarding public Olympic and World CupTM construction contracts. Last year he was sentenced to fourteen years in prison. On top of that, it is said that a cartel of construction companies fixed prices – to the detriment of the taxpayers.

The accusation is based on statements from the family-owned Odebrecht Group, which, in the course of a corruption scandal involving the semigovernmental oil concern Petrobas, admitted under the weight of overwhelming evidence that it maintained an entire department that did nothing but arrange bribes. Through corruption, the company came into tremendous construction contracts, including some for the Olympic Games and the World CupTM.

Marcelo Odebrecht, the president of the concern, called the "Prince," was arrested and sentenced to nineteen years in prison. The United States Department of Justice was also investigating this global concern. Odebrecht, in return for a reduction of his sentence to ten years, decided to cooperate with the judicial authorities. He named names of those bribed, and declared he was prepared to pay a fine of 3.5 million dollars.

All of this is happening in a country where, according to UNICEF, 3.7 million children and youth between four and seventeen years old do not go to school. As the study translated by the Böll Foundation estimates, this is partly because there is a need for 5,917 preschools, 782 elementary schools, 593 expanded elementary schools, and 1,711 high schools. To build them would cost approximately 15 billion dollars. As much as the World CupTM.

And the health care system? To attain the number of hospital beds recommended by the WHO, an additional 1,964 hospitals with 150 beds each would be needed in Brazil. With the money for the World CupTM, a third of them could have been built. Long before the World CupTM, graffiti demanded "We want 'FIFA standard' hospitals and schools" or "FIFA, give us our money back. "Not everyone can be bought," others sprayed. Walls, the Uruguayan writer and football aficionado Eduardo Galeano (1940-2015) once said, "are the publishers of the poor."

The situation ultimately escalated at the 2013 Confed-Cup, hosted as something like a dress rehearsal for the World CupTM, when the fares for public transportation in Brazil were hiked by 20 cents. Thousands took to the streets, including the diaspora in New York, where, as Dave Zirin writes in Berlin's Dance with the Devil, some placards read: "Olympics: $23 billion. World Cup: $26 billion. Minimum wage: $320 a month. Do you still think it's about 20 cents?"

In Russia too, and in Qatar, where 45-billion-dollar Lusail City, replete with the 90,000-seat World CupTM finals stadium, is being wrested from the desert floor, few will cash in and many will pay. Some with their lives. But the governments of the two countries – which rank in 132nd and 136th place on the Economist's Democracy Index of 167 countries – can present themselves to the whole world as fabulous event hosts. "A time to make friends" indeed.

Not quite a year after the tournament in Germany, Karl Brenke and Gert G. Wagner of the German Institute for Economic Research studied the promised long-term "World Cup effect." In purely economic terms, the economists found, "no stimulus worth mentioning" emanated from the World CupTM. The impact was not so large that it was "economically detectable."

Touristically as well, the mega-event was a zero-sum game. Some tourists did come because of the World CupTM, but others stayed away because of it – flag-waving hordes are not everybody's thing. All the same, beverage sales did rise by 4.7 percent and the sales of electronic devices, especially the latest generation of flat-screen televisions, went up by 5.2 percent. These appliances provide the comfort necessary for self-delusion. At home, stretched out comfortably in front of the gadget, one can splendidly consume the images, monitored by FIFA, of good-humored masses in newly built stadiums. The silent cashing-in of the few remains invisible. Profit trumps human rights. Not just in football.

 

Excerpt from: Stefan Gmünder/Klaus Zeyringer: Das wunde Leder. Wie Kommerz und Korruption den Fußball kaputt machen. pp. 78-89. © Suhrkamp Verlag Berlin 2018.

 
Translated by Geoffrey C. Howes
....
Klaus Zeyringer

was Univ.-Prof. of German studies in France. He is a literary critic, active with Der Standard (Vienna) and a jury member for „ORF-Bestenliste“. His latest books are: Eine Literaturgeschichte: Österreich seit 1650 (2012); Fußball. Eine Kulturgeschichte (S. Fischer 2014; expanded in Tb 2016); Olympische Spiele. Eine Kulturgeschichte von 1896 bis heute. Bd. 1: Sommer (S. Fischer 2016); Bd. 2: Winter (S. Fischer 2018); (with Stefan Gmünder) Das wunde Leder. Wie Kommerz und Korruption den Fußball kaputt machen (Suhrkamp 2018).

Stefan Gmünder

was born in Bern, but lives in Vienna for the past 22 years. He has been active in the newspaper business for the majority of that time. In 1998 he joined the Viennese daily "Der Standard", where he now works as a literary editor.

Photo by Matthias Cremer


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