4th September 2017

Money laundering and the Premier League

'Some people believe football is a matter of life and death. I'm very disappointed with that attitude. I can assure you it is much, much more important than that.’ Bill Shankly

And it would seem to be as true today as it was then, but for very different reasons.

A staggering £835m was spent in total by all 20 Premier League clubs during the August 2014 transfer window which was over 30 per cent up on the previous record of £630m which was recorded during the last summer window in 2013.

The August 2017 transfer window has just closed and as the transaction fog clears it seems that over £1.47bn has been spent by UK clubs on ‘buying’ players to ‘kick a ball about’.

Wages are of course on top.

In the 206/17 season some £2billion was paid to players in England’s Premier League, some 61% of turnover. The top five clubs account for half. Clubs like Manchester United, Chelsea and Liverpool have an average wage bill of over £200m.  

In any other business environment figures like this would doom any business to failure, and very quickly. But not football. And it would seem that the majority of clubs making a loss are ‘foreign owned’. 

According to the Financial Action Task Force (FATF) in the past two decades, “football has changed from a popular pastime into a global industry. With the growing economic importance of football along with other sports, the investment of money into the sector has increased exponentially, and some of this has criminal connections”.

The FATF recently completed a study to determine what makes the football sector attractive to criminals.

It is a globalised sport and some 250 million people play – according to FIFA the 2014 World Cup reached 3.2 billion viewers, one billion watched final.

Despite rapid growth and the very high level of global visibility the Premier League football sector has, UK’s football’s regulatory structure, and that of others in world football has still not yet caught up with some of the risks that come with these changes.

Europol, for example, recently dismantled a Russian money laundering exercise in Portugal.

It seems that the techniques used by the laundering community can be summarised in a simple four-step ‘wash and dry cycle’. I am sure these four simple steps will ring some bells and identify club examples near you. 

1. Find a football club in real financial danger of collapse
2. Gain access to the club boardroom, garner trust by making some short term donations or investments into the club
3. Then, after a while, buy the club using funds sitting behind a myriad of opaque holding companies often owned by offshore shell companies
4. Then you are off to the laundry. You get busy over or under valuing players on the transfer market, negotiate purchase structure of TV rights, engage in ancillary betting activities etc.

We live in such a highly regulated world. How is it that: 

1. buying a car,
2. getting a mortgage,
3. selling a house,
4. opening a bank account,
5. arranging a loan,
6. getting connected to a utility supply,
7. becoming a client of a financial advisory firm,
8. becoming a regulated firm with the FCA  (the list is endless)

the process can be so convoluted by time consuming checks and proofs? 

Yet a football club deciding to spend £75m on a twenty something football player (who in a gentler age Don Revie would describe as “When he plays on snow, he doesn't leave any footprints”, almost overnight on the 31^st August, is so ‘simples’.

Does anyone out there know?

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