Red Card

by Ken Bensinger

  Hawilla told Blazer to forget about Mexico, which might be soccer mad but presented numerous logistical challenges. Instead, he said, the Gold Cup should be hosted only in the U.S., the world’s richest country, where maximum revenue and minimal organizational challenges presented themselves. Handled correctly, the tournament could be a big success, but, Hawilla said, the best course of action would be for CONCACAF to sell the Gold Cup’s broadcasting and commercial rights to a marketing firm with expertise and contacts in the business, rather than Blazer trying to do everything himself.

  In fact, Hawilla added, he might be interested in buying the rights, and he ultimately did just that, signing a contract in October 1994 to pay the confederation $9.75 million for the next three editions. When that deal expired, Hawilla signed on for two more tournaments, and the tournament steadily grew in both prestige and revenue.

  When Blazer, eager to boost his 10 percent commissions, decided to take the sale of CONCACAF’s rights in-house in 2003, refusing to renew with Hawilla, the Brazilian felt slightly betrayed. He had taken an essentially lifeless tournament that couldn’t even be seen on cable television and turned it into a reliable moneymaker drawing multinational sponsors. And now that it was self-sustaining, Blazer was taking it away.

  But Hawilla took the news in stride. For the most part, he busied himself with his much larger business in South America, where his primary company, Traffic, was based, and where he had been a pioneer in the field, building a sports marketing empire and making him a very wealthy man.

  He had helped the Gold Cup grow in value and prominence, but the quality of play was still fairly low, and soccer fans in North America seemed far more interested in watching tournaments from other parts of the world, featuring the planet’s best players. And it just so happened that Hawilla had for more than fifteen years controlled the rights to one of those tournaments: the Copa América, which was packed with stars from Brazil and Argentina, two of the greatest soccer nations in the world.

  Losing the Gold Cup was disappointing, but Hawilla wasn’t overly concerned. So long as he had the Copa América, his crown jewel, he would continue to be, as Brazilian soccer legend Tostão once called him, the “owner of the entire soccer world.”

  * * *

  When José Hawilla was an eager young sports reporter, clutching a hulking microphone and transmitter and racing up and down the sidelines of second division Brazilian soccer matches in the late 1950s and early 1960s, the business of soccer was a simple affair.

  Teams sold tickets and stadium owners rented space on a few billboards to local businesses, as well as charging radio stations to use a soundproof press booth and bring in equipment. There was no concept of an exclusive broadcaster, and for important contests, a half-dozen or more radio stations might compete for listeners.

  Enterprising journalists like Hawilla not only had to rattle off ninety minutes of play-by-play during matches, provide analysis at halftime, and interview players after the match, they also were responsible for selling advertising. There was no sales staff and no producers: in those days the reporters did everything.

  The energetic Hawilla was good at all of that, and to draw a larger audience, and thus more advertising, he developed a distinctive persona.

  He decided to go by only his first initial—J—and by the time he was twenty, he had moved to São Paulo from the remote agricultural town where he grew up. Soon J—which was pronounced Jota—had made a name for himself, and by the late 1970s was running the sports department at TV Globo, Brazil’s most important broadcaster.

  But after being fired for supporting a strike by sports journalists, Hawilla decided he wanted more financial security, and in 1980 he bought Traffic Assessoria e Comunicações, a small São Paulo company that sold bus stop advertising.

  By then, Hawilla had spent more than twenty years in soccer, and had become consumed with the idea that the sport, from a business perspective, was a poorly run farce. Brazil was the greatest force the sport had ever known, winner of three World Cups, and its fans were monomaniacal, thinking of little else but their teams.

  Yet the country’s professional clubs were perpetually saddled with huge debts, the leagues were crippled by poor organization and infighting, and the vaunted national team barely had enough money to pay for its own uniforms. Improving technology meant that it was increasingly easy for people around the world to watch the Brazilian national team, known as the Seleção, at home, yet little was done to exploit that demand.

  When selling bus ads didn’t turn out to be very profitable, Hawilla decided to test his theories about sports marketing. In 1982, Traffic signed its first deal with the Brazilian Football Confederation, known by its Portuguese acronym CBF, giving him exclusive rights to sell advertising space inside stadiums where the national team played.

  Soon, Traffic was branching into various aspects of Brazilian sports, buying the rights to promote Brazil’s professional volleyball league, for example, or signing a deal to overhaul the sports department at broadcaster Sistema Brasileiro de Televisão.

  Traffic’s big breakthrough, however, came in 1986, when Hawilla met Nicolás Leoz, the newly elected president of the FIFA-based confederation that oversaw South American soccer, known as CONMEBOL. The two men got along and, sensing an opportunity, Hawilla asked about buying the rights to the Copa América.

  One of soccer’s oldest tournaments, predating even the World Cup, the Copa América was created in 1916, when Argentina’s foreign ministry invited Chile, Uruguay, and Brazil to meet in a competition in honor of the 100th anniversary of Argentina’s independence. The event proved so popular that a Uruguayan journalist in attendance proposed forming an institution to regularly organize the tournament, and the world’s first regional soccer confederation was born.

  The tournament eventually fell into neglect. The most recent three editions prior to 1986 had been organized as round-robin tournaments with no fixed host, were largely ignored by soccer fans, and generated less than $25,000 for CONMEBOL. As far as Leoz was concerned, the Copa América was a dog.

  But Hawilla had a vision: the tournament would be held in a single host country on a rotating basis and he would oversee almost every aspect of running it for a lump sum paid to the confederation in advance. Traffic would offer a cash prize to the winner to motivate national federations to field their best players, and the sports marketing company would keep 100 percent of the proceeds from sponsorship, licensing, advertising, television, and radio.

  CONMEBOL, like most soccer confederations at the time, didn’t have much cash. Leoz, a lawyer and former president of Paraguay’s soccer federation, was delighted to let a third party pay to manage the thing and on October 3, 1986, sold Traffic the rights to the 1987 edition, to be held in Argentina, for $1.7 million.

  That first tournament was poorly organized and badly attended, and lost Traffic money. Nonetheless, Hawilla snapped up the rights to the 1989 and 1991 Copa América tournaments for a total of $3.9 million, and over time the event turned into a huge commercial success. Hawilla had correctly anticipated an explosion in television money for the tournament and had pushed hard to ensure the biggest stars from each country played in every edition.

  With interest in South American superstars booming and cable television becoming ubiquitous, networks and sponsors around the world began clamoring for a piece of the Copa América. By the late 1990s, Traffic was fending off entreaties from sponsors willing to pay millions of dollars for each edition, and in the run-up to the 2011 edition, it was selling television rights to the tournament in 199 different countries.

  The huge profits helped Hawilla expand into a wide range of other soccer rights deals, including youth competitions, World Cup qualifiers, and the popular Copa Libertadores tournament, which pitted Latin America’s best pro teams against one another every year. Closer to home, Hawilla bought rights to the Brasileirão, Brazil’s top professional soccer league, brokered sponsorship deals for the Brazilian national team w
ith Pepsi, Coca-Cola, Umbro, and Nike, and bought his own professional clubs in Brazil and Portugal, while creating an entire second-division professional league in the United States, the North American Soccer League, named after the long-defunct league that shuttered in 1985.

  Hawilla, the grandchild of impoverished Lebanese immigrants, grew enormously wealthy and bought several television stations, a pair of newspapers, and a production company in Brazil; he opened a soccer academy for promising youth, and managed the contractual and publicity rights to dozens of professional soccer players around the world. He owned farms near his hometown, had numerous houses in Brazil and one in South Florida, and of course, owned fleets of luxury cars, including, briefly, a $400,000 Bentley.

  Bald and bespectacled, Hawilla played lots of golf, had a share in a company that gave him use of a private jet, and appeared on Brazil’s society pages along with his wife and three children, the eldest of whom married a Vogue cover model. Glossy business magazines called on him at his opulent São Paulo offices to write glowing profiles, and he proudly told reporters his life story.

  “I’m daring,” he boasted to one journalist. “You have to know how to take risks.”

  But what Hawilla never mentioned in those interviews was the true price he had to pay for all of his success, the ugly reality of the modern soccer business that he played a fundamental role in creating.

  All of it was based on bribes.

  At least as far back as 1991 every Copa América deal included side payments. At first, the president of CONMEBOL, Leoz, began demanding money before he would sign the rights contracts. Then the presidents of the Argentine and Brazilian soccer associations threatened to keep their best and most popular players out of the tournament unless they got cash as well. And the bribes didn’t stop there. What started relatively small, as a few hundred thousand dollars paid once every few years, had become enormous, with millions of dollars going to soccer officials every year to ensure Traffic continued to receive the commercial rights it needed, as well as the superstar players required to make the tournament a commercial success.

  After a few years, Blazer and Warner, too, began demanding money on the side in exchange for Gold Cup rights. One payment, for example, of $200,000, was wired—through an intermediary with a shell company that had a bank account in Uruguay—in March 1999 to one of Blazer’s accounts in the Caymans; Blazer then sent along half of that to Warner’s accounts in Trinidad.

  Over time, these soccer politicians grew increasingly insistent, demanding more and more money with each new contract. It got to the point that Hawilla had to hire full-time intermediaries using phony consulting contracts so that he could make the payments while keeping them off Traffic’s books.

  It didn’t matter that Hawilla was the innovator, the one whose vision had turned the penniless, parochial world of Latin American soccer into a viable commercial enterprise followed by fans around the world, or that his sales staff were the ones doing all the hard work of brokering all those sponsorship and television deals, while these petty sports dictators did nothing but enjoy a gold-plated lifestyle. Without the payments, the soccer officials simply wouldn’t sign, and then everything would collapse.

  But as the commercial value of soccer skyrocketed, it became apparent that Hawilla wasn’t the only one willing to go to great lengths to acquire those rights.

  * * *

  Perhaps the first sign that Hawilla’s empire was under attack had come in the spring of 2005, when the Honduras soccer federation informed Traffic it no longer wished to do business with the company.

  Over the years, Traffic had locked up the broadcast rights to World Cup qualifiers for every soccer federation in Central America, as well as Canada and the entire Caribbean Football Union.

  The contracts weren’t by any means gigantic—a million or two dollars at most—but thanks to the large numbers of Central American expatriates living in the U.S., those rights could pay off handsomely when one of the national teams went far in World Cup qualifying. And they were particularly valuable when those teams played against Mexico or the U.S., matches with very large prospective audiences.

  Traffic had inked its first deal with the Federación Nacional Autónoma de Fútbol de Honduras back in 1997, and had renewed or extended the agreements several times since then. The federation’s refusal to sign again in 2005 mystified Hawilla’s Miami employees who believed they had a contractual right of first refusal, and the dispute ended up in court.

  The lawsuit revealed that a rival sports marketing company, Media World, had been trying to break into the World Cup qualifiers niche and, advised by a former Traffic employee who knew exactly how Hawilla kept soccer officials happy, had been secretly meeting with the Honduras federation for months. The litigation proved unsuccessful, and Media World retained the rights.

  Still, to Hawilla and his staff, losing a pipsqueak like Honduras didn’t feel tragic, and nobody got too exercised when competitors soon snatched away qualifier rights for El Salvador and Guatemala as well.

  It wasn’t until the 2010 World Cup in South Africa that Hawilla realized he had a full-fledged crisis on his hands.

  Most of FIFA’s top officials were lodged at the five-star Michelangelo Hotel in Johannesburg during the tournament. In a series of meetings, first with Nicolás Leoz, and then with a number of other South American soccer officials, Hawilla was informed that he was losing his contract for the Copa América and that instead the rights were going to be assigned to an Argentine sports marketing firm called Full Play.

  The news was shocking.

  As far as Hawilla was concerned, he had a valid contract, signed nine years earlier, giving him rights to the 2011 and 2015 editions of the tournament, as well as the first option to purchase the 2019, 2023, and 2027 editions as well. He had agreed to pay CONMEBOL $46 million for the deal, and had generously bribed several officials—including Leoz, who alone got $1 million—to ensure they signed the deal.

  Yet apparently it hadn’t been enough. In one meeting at the Michelangelo, the head of Ecuador’s soccer federation told Hawilla that he was losing the Copa América because he had bribed only the top three CONMEBOL officials, and not every single president of every single South American federation.

  The previous year, the Ecuadorian explained, six of the ten members of the confederation, none of whom had received Copa América bribes from Hawilla, had formed a unified bloc they called the Grupo de los Seis—the Group of Six. They then used the threat of their majority vote within the confederation to push Leoz for a piece of the action on a number of CONMEBOL deals. One of them was the Copa América.

  “The contract is ours,” Hawilla had protested. “You cannot come in and just tear up a valid contract and sign another contract with another company for the same product.”

  “I can,” the Ecuadorian replied. “And I’ve already done that.”

  Hawilla’s crown jewel was being stolen.

  * * *

  For decades, the presidents of the soccer associations from South America’s two economic and athletic powerhouses, Argentina and Brazil, along with Nicolás Leoz, the CONMEBOL president, had exercised total control of the sport in the region. Traffic negotiated its Copa América deals exclusively with those three officials, and paid bribes only to them.

  The rest of the continent—Ecuador, Paraguay, Peru, Chile, Colombia, Uruguay, Bolivia, and Venezuela—were mere afterthoughts. With little, if any, political power, the officials of those federations received none of the special benefits that were whispered about at congresses and in stadium luxury boxes.

  Full Play’s owners, a father-and-son team named Hugo and Mariano Jinkis, offered to change that system. They had been slowly breaking into the South American rights business over a period of years, snapping up World Cup qualifiers from a few of the continent’s smaller countries, and now were angling for bigger prizes. Starting with Ecuador, the Jinkises built close relationships with the presidents of nearly every one of the marginal
ized South American soccer associations.

  They hosted the officials at their vacation houses in Uruguay, plied them with pricey concert tickets, gourmet food and wine, and other gifts, and one by one convinced them they had been getting a raw deal and could do much better working with Full Play. The message clearly resonated; only the presidents from Uruguay and Chile seemed uninterested.

  Why, the Jinkises asked, was it fair for Julio Grondona, president of the Argentine Football Association, and Ricardo Teixeira, president of the Brazilian Football Confederation, to get what must be huge bribes from Traffic in exchange for the Copa América rights, while the confederation’s other top officials got nothing? Didn’t Paraguay play in that tournament as well? Or Colombia? Those countries may not have won the World Cup, but could the Copa América be played without them?

  On the other hand, the Jinkises said, if they signed with Full Play, each president would get $1 million under the table. That message spoke very clearly to the officials, and emboldened them. They pledged to ensure Full Play would get the tournament.

  But not quite yet. Since sponsorships and television rights for the 2011 edition of the Copa América had already been sold off, it would have been almost impossible for another firm to come in and take control of the tournament on such short notice, so Traffic still organized that year’s edition.

  Following the World Cup, both CONMEBOL and Full Play had made multiple public denials that they had a formal deal, and Hawilla used the 2011 tournament, held in Argentina, as an opportunity to make a last-ditch, in-person effort to salvage his rights to the 2015 and 2019 editions.

  He’d heard rumors about the bribes that Full Play was offering, as well as the above-the-board price the firm would pay CONMEBOL for the rights themselves, and he met with one federation president after another, desperately offering to match any competing payments.