Professor Simon Chadwick on Russia, UEFA and football becoming a weapon in global wars

· by WFS2017

World Football Summit speaks exclusively with Professor Simon Chadwick about modern geopolitics rife in football. This interview features as part of the latest edition of WFS Digest, our new insider’s guide to the latest and most relevant thoughts and practises from within the football industry. You can subscribe to WFS Digest HERE.

Simon Chadwick is a tenured professor at EM Lyon business school and has devoted a good part of his academic life to sports; he actually wrote his doctoral thesis about sponsorships in football. He is currently focused on the geopolitical economy of sport”: in the last decade he has found himself “increasingly in spaces that were not in Europe, places where the government plays a very prominent role, and also in places with very high rates of economic growth. And I’ve started to observe that sponsorships seem different: Asian airlines, Gazprom, Visit Azerbaijan… You know, this is not McDonald’s, it’s not Coca Cola,” he explains during a conversation with WFS Digest. “There has been a drift towards the east, due to a variety of factors.”

“UEFA takes money from Gazprom; there are 130,000  Russian troops on the border of Ukraine right now, and one of the reasons for that is Gazprom.”

WFS: You have recently written that capitalism won the ideological war thirty years ago, and you describe a global political battle that is being fought currently. Can you expand on this?

Chadwick: What has apparently happened in these last 20 years, or 30, from the early nineties, is that capitalism won and communism lost, and that we live in this free market liberal world. However, this nowadays appears not to be true – Asia and governments are starting to rule. We can’t ignore the fundamental change of policy direction in China and the triumph of globalisation. China and some postcolonial nations suddenly found themselves able to make independent decisions about getting revenues from their oil and gas reserves. Qatar and Russia, for example, have accumulated huge wealth under the scheme that their national resources can be traded internationally. Those developments led to not only different kinds of sponsorship deals – Gazprom and the Champions League is an obvious example – but also led to Qatar making the decision that they wanted to invest their gas wealth into sport, football in particular, as a way of nation-building; essentially creating an infrastructure and an identity, while projecting an image.

At the same time, we have the Chinese government, where – especially after the arrival of Xi Jinpingwe’ve seen a very assertive and strong emphasis in sport. So there has been this drift towards the east, due to a variety of factors. For a while, I thought that America was dead, but certainly in football in the last two years we’ve seen that America is certainly not dead. The growth of private equity investments across Europe, the development of SPACS (special acquisition companies) like RedBird, which has a stake in Fenway Sports Group, which owns Liverpool, all these things. So there’s been a certain resurgence of the US, but that now stands in stark contrast with the rise of China, because ideologically, politically, they are diametrically opposed countries. Their view of business, sport, democracy, society is different.

Take the example of somebody like Eileen Gu, the freestyler skier, who was born in the US, has a Chinese mother, an American father, has been educated in the US, will go back to study university in the US, but has competed for China in the Winter Olympics. And after seeing some of the coverage around her, and the questioning of who she is and her origins, she seems caught in the crossfire of this global ideological war, which is about geography and politics, but also about business and sport. Her case is really interesting, because she’s got some big money deals with, for example, Red Bull. And my position on all of this is that football has become a means to an end. It’s almost like a weapon to be deployed in this ideological war between competing sides.

WFS: Do you say this from a purely academic standpoint, or are you also worried by this buildout?

Chadwick: I try to respect everybody and everything, understand rather than condemn. I’m a northwest European liberal, it is the way I like to live my life; but it doesn’t mean I disrespect others who choose to live their lives in other ways. And for somebody who doesn’t want to be fearful and likes rising up to opportunities, and to embrace what’s happening in the world instead of being scared, I say: what an amazing time to be alive!

Take globalisation, digitalisation, concerns about the environment, the geopolitical polarisation, lifestyle changes… it’s an incredible period in human history. So I try not to think in terms of fearfulness. I prefer to think in terms of adverse consequences of these changes. And my answer is yes, I am mindful of them. Based on the current parameters, in all likelihood, my football team, Middlesborough, is never going to win the Premier League. When I was a kid, there was always the chance that Middlesborough might win the league. That chance has gone now. And I engage with football not to witness the domination of the sport by a small number of teams, I engaged because there was always something very exciting about everybody having an equal chance of winning the league.

I’m also mindful about the adverse consequences of some digital developments. With NFTs and cryptocurrencies we’re seeing the new gold rush – and we see today how an organisation like McLaren in F1 has withdrawn from a cryptocurrency relationship. We’ve also seen some cryptocurrency businesses gone bust already. We must be concerned about the origins of some people involved in these businesses. But I have great respect for others, and I believe we’re all entitled to live equally, and clearly some of the nations who are becoming increasingly influential in the world don’t necessarily hold my principles. In sport, there’s fertile territory for some countries to grow into, and also for people questioning some of the people who manage certain organisations. If we look into the US, the hyper-commercialisation of sport driven by US is also of concern. Football destroyed my love of football, is what I say to people now.

WFS: We can therefore imagine you dislike the idea of a Super League…

Chadwick: Well, actually no. As a professional, what we’ve seen in industrial sectors across the world, in financial services, digital technology, and aircraft manufacturing, is industrial concentration, where a small number of very large organisations dominate your sector. I don’t see the Super League as being anything unusual or exceptional in the last 20-30 years. The kind of people who own or run clubs don’t like uncertainty. Businesses don’t like uncertainty. So I can see why those clubs had that idea. As a professional, the Super League follows a trend other industrial sectors have followed. Personally, I don’t care anymore. Sport is gone, football is gone. I feel much more passionate nowadays about other things. And I realise I have contributed to this ecosystem, analysing the market, the business, the geopolitics of sport.

WFS: Do you think the World Cup in Qatar will be a success?

Chadwick: A little part of my soul still simmers with the World Cup. And as an egalitarian, the Arab world has the same right to stage the World Cup as any other part of the world. They are entitled. And if you go to Saudi Arabia, the Riyadh derby, there are fifty-sixty thousand people attending the match and in Teheran 120,000, the greatest derby of the world. There are many fans in the regions. One of the unfortunate things is that the Middle East right to host the tournament became intertwined with some of the governance issues that FIFA was facing, and that was very unhelpful, and ensnared Qatar. I know Qatar is a small country, but there is a hardcore base of real football fans, they have positioned themselves as a regional tournament and many people will travel to the tournament from Asia and North Africa.

I think there are issues, like the treatment of migrant workers, but my experience in that country shows it’s a rather more open and progressive place that people imagine. Last year, the country that accepted more immigrants from Afghanistan was Qatar, And most people around the world do not know the country well enough to make a judgement about it. Equally, I don’t think Qatar has worked hard enough to engage audiences and explain who they are and how thy do business. There are many bad things happening in Qatar, but also quite a lot good things going down. As in England, Spain or Argentina. I try to adopt a balanced and hopefully more positive view about the Gulf region. The region is football-crazy and deserve to host the World Cup.

WFS: Talking about sponsorships, was the UEFA-Socios deal a surprise to you?

Chadwick: I’ve seen it all before, to be honest. I saw it in the mid 1990s with the dotcom boom: ‘Everybody has to have a website, every football club and governing body.’ But in 1995 nobody had a website! And suddenly there was this clamour, because people in sports, particularly football, were convinced by others that they could make huge amounts of money with a website. So they all built a website. And if you fast-forward ten years, the same happened with this new thing called social media. And they were told the same: ‘you will make huge amounts of money.’ A lot of clubs dived in and didn’t make a lot of money. During years and years, the discussion has been: how do you monetise social media? And I’m still not convinced that most football clubs have ever made any money out of social media. It’s almost like a third digital wave is coming, where exactly the same thing is happening, sports properties have been told ‘you must do this, if not you’ll miss out and you won’t make money,’ and there is this ripple effect where, because one or two have done it, the rest think they have to do it, and it results in organisations like UEFA signing a deal with Socios. Yes, I was surprised, because UEFA is normally very considerate in the way they do business. 

My sense is that UEFA wanted to capture the opportunity as they went by, rather than missing out. But with many NFTs and cryptocurrency businesses there are still many unanswered questions about their backers, their origins, the territory where they are located, the way in which they are changing the dynamic between clubs, fans, governing bodies and others. The positive side of my brain believes that this deal is a validation that this is here to stay and is legitimate. The negative side of my brain says: ‘Step back, reflect on this, wait and see.’ Some people have concerns about these businesses; it is unclear whether these are fan engagement platforms or investment instruments. And from a regulatory perspective this is really important; because if these are companies offering investment opportunities, they are obviously bounded by financial regulations in UK, the EU and elsewhere. But they are usually located in places where the governance of financial organisations is not as robust as perhaps it might be. I am surprised, I think it’s been very fast.

WFS: In this context of geopolitical drift toward the east and what you label as hyper-commercialisation of sport, what future do you envision for transnational governance?

Chadwick: My extremist answer is ‘Rip it up and start again’. Because as we’ve seen with UEFA’s Financial Fair Play (FFP) regulations, FFP 1 is proving not so effective as it was intended, and we’re in the middle of a review which will lead to FFP 2. My favourite example is always Manchester City and City football Group, an organisation which operates across multiple territories. Until recently, their headquarters was in one of the world’s biggest free zones in Dubai, where there is minimal scrutiny, reports, standards… I just wonder how a continental governing body of a sport in Europe can ever hope to effectively chase down an organisation owned by a government that has its registered headquarters in a free zone in the Gulf region. 

Sport governing bodies were created by and large in Europe by Europeans, for Europe, and are still located in Europe (FIFA, UEFA, IOC). They govern still like it’s the XXth century, except it’s not the XXth century any more… And so how to govern transnationally is a huge challenge. I don’t think these organisations are fit enough, lean enough, fast enough, to be able to keep pace. It’s a gross overgeneralisation, I know, it’ very easy for me to say ‘Rip it up and start again’, but I really can’t see how governing bodies as we’re known them for a hundred years can remain fit and purpose in a world where the Chinese government, the Russian government, the Qatari government, US private equity investors or African governments engage in sponsorships, buy clubs or invest in cryptocurrency businesses that  are partners of governing bodies. We mentioned the example of UEFA and Socios, but UEFA also takes money from Gazprom; there are 130,000 Russian troops in the border of Ukraine right now, and one of the reasons for that is Gazprom. It’s not the only reason, but it’s one of the reasons. 

Nasser Al-Khelaïfi sits on the UEFA executive council, is head of the European Clubs Association, president of PSG, and also happens to president of Qatar Sports Investment. That to me raises really serious questions about conflicts of interest and the basis of governance. We don’t talk enough about these things. UEFA is just one example and has some issues to think about it. But we’ve seen it in the UK and other countries. Starbucks doesn’t pay its tax bill, Amazon doesn’t pay its tax bill, Google doesn’t pay its tax bill… When the British government is questioned about this, their response always is: ‘Their head offices are located in territories that do not fall within our jurisdiction.’ This issue of transnational governance –not only UEFA or sports– is a global challenge, a battle that football is not winning at the moment. 

This interview features as part of the latest edition of WFS Digest, our new insider’s guide to the latest and most relevant thoughts and practises from within the football industry. You can subscribe to WFS Digest HERE.