Exclusive: As Fifa braces itself for the most crucial period in its 111-year history Dominik Schmid, who worked closely with the organisation’s president for 15 years, lifts the lid on what life was really like there and explains why this month’s proposed reforms are doomed to failure
On Easter weekend in 2002, I was having breakfast with my wife when I received an urgent summons to meet Fifa president Sepp Blatter’s adviser, Guido Tognoni, at a five-star hotel on the banks of Lake Zurich.
At the time, I was executive director of Fifa business with sports marketing company KirchSport, and there was panic in the air.
Fifa had been through a traumatic 10 months, with ISL Worldwide – the global agency that handled all its sponsorship and marketing – having crashed into bankruptcy.
The demise of ISL, founded by the late Horst Dassler, of Adidas, had been a disaster for the governing body, which relied on the company for most of its income.
I know because I had worked there, leaving in 1996 with other executives to form a new agency funded by Germany’s KirchMedia.
ISL spent ridiculous money trying to outbid us on sports rights and its inevitable collapse convinced Fifa to take direct control of its own sponsorship contracts, in the belief this route was more “secure”.
Sepp Blatter is facing criminal proceedings
Television rights and host-broadcast responsibilities – previously shared between ISL and KirchMedia – went by default to Kirch, at that time one of the biggest media corporations in Europe.
Almost a year on, and two months before the start of the first World Cup staged in Asia, KirchMedia was about to collapse as well, having also overreached itself.
But I had a plan. And, after sharing it with Tognoni, I was called to Fifa House to meet Blatter, his secretary general Michel Zen-Ruffinen, finance director Urs Linsi and Fifa’s lawyers, to hear my argument that global television rights should immediately be vested in KirchSport, the sports marketing subsidiary of KirchMedia. The company was solvent, with a team who knew the World Cup project inside out.
Linsi railed against this move – he hated sports marketing agencies, saw them as parasites and did not grasp the huge amount of work they carry out in the delivery of a World Cup. He actually thought it was a good idea to take all television-related matters in-house just two months before the tournament. Fortunately, the others saw the appalling chasm opening up at their feet and the rights were assigned before the parent company collapsed. It was one of the better decisions made by Blatter, who is not as intelligent as people have been led to believe.
Overnight, KirchSport – which was renamed Infront in October 2002 – became a multi-billion dollar company.
But it quickly became apparent Fifa had no intention of retaining our services, with its marketing and television rights becoming so valuable – largely thanks to our hard work – that it decided to go in-house at the earliest possible opportunity.
After our contract expired following the 2006 World Cup, agency involvement and influence over Fifa all but disappeared.
Untold wealth poured directly into the hands of an organisation riddled with cronyism, altruistic development programmes became levers for votes, and a whole raft of federation delegates found themselves making decisions in fields in which they were generally incompetent.
With the buffer we provided between Fifa and the commercial world all but removed, Blatter was also now signing every contract himself. And that is where his problems really began.
The warning signs were there from the start, a devastating verdict from a New York district court finding Fifa guilty of reneging on a contract with Mastercard by awarding World Cup sponsorship rights to Visa.
The man in charge of the negotiations, Jérôme Valcke, was fired as a result, only to return in the more senior position of secretary general six months later.
It was only a matter of time before Blatter personally slipped up and it was no surprise to see criminal proceedings opened against him over a World Cup television rights deal with disgraced former Fifa vice-president Jack Warner, which judging by the contract that was leaked last year was awarded at almost 30 times below market value (Blatter and Warner deny any wrongdoing).
There are likely to be plenty more skeletons in the closet but these two cases alone demonstrate the intrinsic weakness of the system at Fifa, which became a fertile hotbed for the mind-blowing developments that were to follow.
As year followed money-spinning year, Fifa convinced itself of its business genius, its self-satisfied arrogance causing it to forget the huge agency contribution to the creativity and success of its marketing programmes, which were the real bedrock of its multi-billion dollar empire.
The virtuous circle it inherited is firmly based on the InterSoccer 4 programme, developed by the British agency West Nally in 1979, which upped the value of sponsorship, raised the initial millions for Fifa and has set the pattern for sports marketing ever since.
The hugely successful Fifa video game was originally initiated and negotiated by myself and an ISL colleague in the 1990s. The Fifa Brand was developed by ISL, also in the nineties.
New president not the answer
Under growing pressure from an appalled football world, Fifa’s executive committee has finally been forced to read the writing on the wall.
Long-blocked reforms are being pushed through, with a whole package on the table for approval by the extraordinary Fifa congress on Feb 26, at which a new president will also be elected.
But when it comes to the reforms, there is simply not enough meat on the bone. Well-intended waffle about transparency and accountability, yes, but not enough substance.
Even a closer look at the committee which conjured up the reforms raises eyebrows. Are these really the right people to lead it towards a brighter, cleaner future?
Was one of the two representatives from the South American confederation, Gorka Villar, not accused of extortion only last year? (Villar denies any wrongdoing).
Fifa cannot be reformed from within. It must be dismantled and rebuilt from the ground up, with entirely new foundations. Simply electing a new president is not the answer.
But what is? The most informed Fifa-watchers and stakeholders cannot agree on the best solution, nor the many dedicated, full-time Fifa employees, who run its day-to-day business professionally and are profoundly demotivated.
In my view, the sport‘s governing body must be separated from the business side completely.
The proposed new Fifa council is designed to oversee strategic matters and to assume a supervisory role over committees and the general secretariat – in other words, the administration of the sport, technical and disciplinary matters.
But the proposals on the table suggest the Fifa council would also define the commercial policies and oversee the sales process. This is not change – it is a new disguise for the status quo. Business experts must be allowed to run the business side independently, without being subject to the ignorance and vested interests of the politicians.
The Fifa president must have far less control than now. Spreading power and introducing true checks and balances will make the system less susceptible to nepotism.
The distribution of funds must be subject to strict control mechanisms and independent supervision. There is ample reason to believe that existing development programmes were abused and money misappropriated.
Preferably, Fifa‘s commercial operations should be tendered to third parties under highly controlled circumstances. Independent industry and financial experts should decide.
I am talking about truly transparent tenders where the winner is chosen based on competence, professionalism and sustainability rather than favouritism.
Some Fifa tenders I witnessed in the past were a joke, to say the least.
The outcome was a foregone conclusion – I knew of one case where the preferred bidder was the lowest and the documentation almost non-existent, but they were the chosen ones for reasons one can only guess.
If tendering out rights is a stretch too far and if commercial operations are to remain under Fifa, this must be at arm’s length. No federation representatives should be allowed to make commercial decisions – only professionals who are independent. This suggests that a commercial monster like Fifa should really be a corporation; the association structure is no longer appropriate.
After the deeply suspect bid process for the next two World Cups, it is clear that future hosts cannot be chosen by political panels such as the ExCo (Executive Committee), with their myriad conflicts of interest. Blatter’s announcement that future hosts will be chosen by the entire congress is even more ill-starred – the same problem merely spread across a larger group.
Hosting a World Cup is an extraordinarily complex operation. Only experts can assess who is up for the task, taking into consideration all relevant factors. And their recommendations should be binding. Qatar should never happen again.
Fifa may be fatally damaged
If none of the above is adopted, if Fifa is fatally holed below the waterline, where does it end? I think there are two scenarios.
First, the legal process. The US Department of Justice prosecutions are being brought under Rico, the Racketeer Influenced and Corrupt Organizations Act of 1970, which was designed to prosecute crime syndicates that had taken over otherwise lawful organisations. Rico requires the existence of a criminal enterprise. At the moment, the DOJ is pursuing corrupt individuals and treating Fifa as the victim, but if it decides to label the entire organisation a Rico, it can take Fifa down.
Fifa, with £1.5 billion in current assets, would be bankrupt overnight. The Americans are in a hurry, with a change of presidency of their own on the horizon.
Second, world football finds its voice and unites behind a solution. It is on the apex of this great pyramid that Fifa rests, but the real power lies beneath, with the football associations, the clubs, the players and ultimately the fans. They do not need Fifa but Fifa needs them.
If this great constituency tells Fifa to go to hell; if Europe and South America, for example, say, “We don’t want a World Cup stuffed with 40 teams”, if a new cup is born, if the fans could be encouraged to coalesce behind change, then anything is possible.
No sporting organisation has a God-given right to exist.