Football has experienced so many revelations that its reputation, even its credibility, is being severely undermined. Problems are not confined to countries with endemic societal corruption. Indeed, there are currently ongoing investigations in a majority of FIFA member associations. A report from IRIS (2012) and the review by Forrest (2012) present depressing lists of scandals from just the last year.
The situation is tragic to those who see sport as representing fair play and decent endeavour. But it also threatens the revenue streams of professional football. If events become seen as manufactured rather than real, fans may stop attending and sponsors/ broadcasters may withdraw from involvement with a ‘disreputable’ activity. To illustrate: Buraimo et al. (2012) demonstrate sharp attendance falls at clubs implicated in Italy’s Calciopoli scandal; and in China, revelations of fixing led to withdrawal by the league’s major sponsor, Pirelli, and its official broadcaster, CCT. In fact, fixing scandals in China, and Albania, Malaysia and Singapore, so undermined these leagues that their existence was threatened. Contamination of most European leagues has not yet reached this extent; but there is a risk they could pass some tipping point beyond which revenue streams would fall catastrophically.
The Calciopoli scandal was an example of strategic fixing, where a fix is motivated by a club seeking to improve its position in a competition. E.g., a club facing possible relegation might bribe an opponent to underperform or, to worsen a rival’s prospects, pay off the referee in another relevant fixture. Italy, Malta, Rumania and Russia provide examples where such practices have been revealed. Hill (2009) documents corruption as so routine in Russia that ‘incentive payments’ emerged as a new instrument in response. Suppose club A would benefit if relegation-rival club B lost to disinterested club C. In the corrupt environment, club A assumes B will offer to pay C to play badly. Therefore A offers C a reward if it wins! So A and B compete to purchase the level of performance by C, each motivated by wanting to improve its chance of avoiding relegation.
Strategic fixing has been rumored often in football; but most recent cases have featured betting-related fixing. Here, events are manipulated to allow sportspeople or third parties to make betting gains. The continuing Scommessopoli scandal in Italy, where football insiders with Mafia connections are alleged to have ‘bought’ results for €400,000/€120,000/€50,000 (for first/second/third division matches) has yet to reach criminal proceedings and may become football’s most notorious case. However, the richest detail to date of how fixing works comes from the Bochum trials, concluded in 2011.
The Bochum Case
Football Perspectives give you an information about the defendants that were found to have fixed 320 matches in twelve European counties, the largest number in Germany, Switzerland and Turkey. 33 were club/country international fixtures. All levels of the professional game featured but matches in lower divisions disproportionately so.
German prosecutors allocated considerable resources to investigation and resulting evidence yields valuable insights into the nature of fixing. Several points may be noted and all are consistent with observations in other proven instances of fixing (IRIS, 2012).
- The crime is international. The criminals were Croatians, living in Germany, manipulating football across Europe, and making profit usually in Asian gambling markets.
- The conspiracy originated with organised crime (it was uncovered by police investigating drug and prostitution rings). As in other cases, it is evident that fixing has changed from a relatively petty activity to one so lucrative that organised crime has added it to its portfolio.
- Why organised crime has entered the field is evident from the profits made. In one year, the gang paid €12m in fixing bribes but still realised €7.5m net profit. One member had a previous conviction for fixing 24 German matches in 2004 and had made €2m profit from those.
- Such profits are enabled by extreme liquidity in Asian betting markets. High liquidity allows substantial wagers to be placed without attracting undue attention and without moving odds against the bettor. Liquidity was high enough for the gang to bet €36,000 on a Turkish fourth-division match. Much higher sums can be bet on still relatively minor European leagues (IRIS investigators were advised that more than €200,000 could readily be placed on a Belgian second-division fixture). Wins to such stakes enable gangs to offer bribes very high relative to the modest wage levels in lower-tier competitions.
- The betting markets used were on the final result and the total goals in a match. These are the most liquid markets. Highly specialized markets, such as on the time of the first yellow card, often relate to incidents that are easier to manipulate; but volume is too low to support bets that would make enough profit to interest organized crime.
- Means of fixing matches varied. Most commonly, bribes were to goalkeepers/ defenders, who can make small technical errors which nevertheless offer a high probability of an opposition goal. Sometimes referees were used, and the gang had an accomplice on the UEFA referee selection panel which will have aided it in respect of pan-European competitions. Members also staged friendly matches specifically to arrange results. One member purchased a financially-distressed Belgian second-division club, installing a management company which then transferred in players known to be willing to fix future matches. All these strategies have also been observed in cases involving Asia-based criminals active in fixing European football.
Clearly European football is vulnerable because of extraordinarily high liquidity in betting markets. Volumes have grown enormously for various reasons. In Europe online betting substantially eroded the ability of national operators to build high commissions into the odds. Forrest (2012) offers illustrative figures of dramatic odds improvements for bettors previously constrained to bet with state monopolists or, in other countries, with a bookmaking oligopoly (and in some countries there had been no outlet at all for sports betting). As expected from previous evidence of high demand elasticity, increased value-for-money provoked substantial demand growth. Simultaneously, Asian demand expanded because of strong income growth in China, disillusion with betting on Asian leagues following major fixing scandals, and increased television exposure to European football. In both regions, new betting products, notably in-play betting, also enhanced consumer experience and boosted demand.
So, European and Asian markets grew fast. As importantly, they became one globalized market. Online betting enables Europeans to access Asian operators and Asian operators to pass risk to European operators, ‘hedging their bets’. Now there is one unified market where large sums can be wagered readily.
Also relevant is that the larger sub-market is Asia where most bets are placed illegally. In the major countries, street bookmakers are very active despite prohibition of betting (just as in Britain before bookmaking became legal fifty years ago). They are too small to bear much risk themselves, so illegal bets get passed up, through a hierarchy of agents, to be placed finally with a legal trans-national online operator (licensed typically in Philippines). By this stage, bets have been amalgamated, to be placed by agents, and this facilitates hiding corrupt money. In any case, the trans-nationals hedge into European markets to dissipate risk in the event that a large amount is wagered on a particular outcome. This is why criminals can bet so heavily if they use Asian operators. Further, the trans-national operators, though offering high financial probity, are lightly regulated, with no traceability of funds back to those who placed them down in the hidden, illegal part of the market.
Given this story, football appears the victim of global betting market trends. But its vulnerability is heightened by weak governance. Poor financial control makes it quite common for player wage payments to be missed. A 2012 survey by the player union federation found that a disproportionate number of those who reported approaches from fixers also reported missed wages. Players who are not paid are susceptible to corruption by external criminals and by club managements (which may resort to fixing to win money to pay club debts). Again, financial fragility and failure to apply appropriate fit-and-proper-persons rules for owning clubs makes for vulnerability to takeover by gangs which plan to corrupt future games (examples- UR Namur, Belgium, AC Alliansi, Finland).
The article has attempted to outline why football is now vulnerable to fixing. “Solutions” are left to be considered another time; but it may be noted that the illegality and volume of betting in Asia is a structural feature, central to the problem and unlikely to change in the near future.