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Christmas has come early for Richard Scudamore. And Santa has been exceedingly generous.

The Premier League announced last week that it will award its outgoing executive chairman £ 5m in “recognition of his outstanding work”. Not everyone is filled with seasonal goodwill at the news, to put it gently. The Football Supporters’ Federation, in particular, are playing Grinch. “Fans strongly oppose the ‘golden handshake’ and we urge clubs not to make a decision which is hugely unpopular with supporters,” it complained.

But actually the supporters’ group arguably has its terminology slightly wrong. For this isn’t so much a “golden handshake” as a “golden goodbye” – a perk for past services. Golden goodbyes present a bit of a problem for the usual justifiers of high corporate remuneration. The conventional argument in favour of showering bosses with humongous bonuses is that it incentivises them to do a good job.

One could fill a book explaining why this is analytically flawed and, generally, self-serving tosh. But it’s impossible to make this incentive argument, at least with a straight face, when the boss getting showered in cash is departing and, moreover, did not know about it in advance. Scudamore was reported to be “surprised and embarrassed” about the idea, but seems to have got over it.

The basic point is that the £ 5m, as a matter of logic, can’t incentivise Scudamore to work any harder because he won’t be there. Scudamore will, apparently, continue to “advise” the league. But this raises the question: why not continue to pay him as an adviser? And the clubs are really not trying very hard to conceal the truth, which is that this is a reward for past performance, not one conditioned on future hard work.

“He deserves everything he gets,” glowed the West Ham co-chair David Gold, fastening on his metaphorical Santa cap. The Premier League has, predictably, been highlighting all those blockbuster broadcast deals Scudamore oversaw while he was in charge as context for their generosity.

Three-year television rights when Scudamore took over in 1999 were worth £ 670m. Now they’re well north of £ 5bn. Explosive growth, unquestionably. But how much of that was personally due to Scudamore, rather than the environment in which he worked? Should we credit Scudamore for the fact that BT decided to enter a bidding war with Sky for football rights in 2013 because it saw live football as a means of luring customers over to its broadband services? And, in any case, is that really the main criteria we should use to judge his tenure? It’s an irony that, when it comes to sports, the Americans are much less blinded by primitive free market ideology than we are here in the UK.

American football has aggregate salary caps for players and a redistributive draft system – where the weakest teams have first pick of the best young talents in the following season – to ensure some degree of competitive balance and to prevent the total domination of a small number of franchises with huge fan bases.

Any suggestion that the Premier League should implement something similar would soon be denounced as revolutionary socialism. But the American sporting authorities understand that top-line revenues for a league are not everything.

To its credit, the Premier League is more financially egalitarian than some other European football leagues when it comes to the division of TV money. The inequality in Spain’s La Liga – where Barcelona and Real Madrid hoover up the vast majority of broadcasting revenues due to their popularity – is grotesque. Things have slightly improved recently, though the Spanish system remains grossly imbalanced.

But the Premier League’s egalitarianism only stretches so far. The “5 per cent of revenues” promise for redistribution to grassroots football made in 1999, whatever the protestations of the league, has not been met. As the football writer David Conn notes, the true figure is closer to 3.5 per cent.

And there’s been no moves to rein in the richest clubs, to look after the broader interests of the league and football itself. A cache of documents leaked earlier this month led to claims that Manchester City, owned by Sheikh Mansour of Abu Dhabi, used financial skulduggery to get around the Uefa rules on clubs having to match their spending on players broadly with revenues.

Uefa has said it could re-open its previous investigation into the club’s spending in light of the new information. But there has not been a peep from Scudamore about that – even though such rule-breaking, if it occurred, would be just as potentially damaging to the competitive balance of the Premier League as to pan-European competitions.

Nor has there been a peep from him, over the years, about any of the rogues who have, at various times, been able to take control of Premier League clubs. They’ve all been “fit and proper” as far as Scudamore has been concerned.

He who pays the piper calls the tune. And in the Premier League it is the big clubs who have called the tune ever since its foundation. The piper has been very well remunerated for his loyal and steadfast service to their narrow interests. And now he’s getting a golden goodbye.


Christmas has come early for Richard Scudamore. And Santa has been exceedingly generous.

The Premier League announced last week that it will award its outgoing executive chairman £5m in "recognition of his outstanding work". Not everyone is filled with seasonal goodwill at the news, to put it gently. The Football Supporters' Federation, in particular, are playing Grinch. "Fans strongly oppose the 'golden handshake' and we urge clubs not to make a decision which is hugely unpopular with supporters," it complained.


But actually the supporters' group arguably has its terminology slightly wrong. For this isn't so much a "golden handshake" as a "golden goodbye" - a perk for past services. Golden goodbyes present a bit of a problem for the usual justifiers of high corporate remuneration. The conventional argument in favour of showering bosses with humongous bonuses is that it incentivises them to do a good job.


One could fill a book explaining why this is analytically flawed and, generally, self-serving tosh. But it's impossible to make this incentive argument, at least with a straight face, when the boss getting showered in cash is departing and, moreover, did not know about it in advance. Scudamore was reported to be "surprised and embarrassed" about the idea, but seems to have got over it.


The basic point is that the £ 5m, as a matter of logic, can't incentivise Scudamore to work any harder because he won't be there. Scudamore will, apparently, continue to "advise" the league. But this raises the question: why not continue to pay him as an adviser? And the clubs are really not trying very hard to conceal the truth, which is that this is a reward for past performance, not one conditioned on future hard work.


"He deserves everything he gets," glowed the West Ham co-chair David Gold, fastening on his metaphorical Santa cap. The Premier League has, predictably, been highlighting all those blockbuster broadcast deals Scudamore oversaw while he was in charge as context for their generosity.


Three-year television rights when Scudamore took over in 1999 were worth £ 670m. Now they're well north of £ 5bn. Explosive growth, unquestionably. But how much of that was personally due to Scudamore, rather than the environment in which he worked? Should we credit Scudamore for the fact that BT decided to enter a bidding war with Sky for football rights in 2013 because it saw live football as a means of luring customers over to its broadband services? And, in any case, is that really the main criteria we should use to judge his tenure? It's an irony that, when it comes to sports, the Americans are much less blinded by primitive free market ideology than we are here in the UK.


American football has aggregate salary caps for players and a redistributive draft system - where the weakest teams have first pick of the best young talents in the following season - to ensure some degree of competitive balance and to prevent the total domination of a small number of franchises with huge fan bases.


Any suggestion that the Premier League should implement something similar would soon be denounced as revolutionary socialism. But the American sporting authorities understand that top-line revenues for a league are not everything.


To its credit, the Premier League is more financially egalitarian than some other European football leagues when it comes to the division of TV money. The inequality in Spain's La Liga - where Barcelona and Real Madrid hoover up the vast majority of broadcasting revenues due to their popularity - is grotesque. Things have slightly improved recently, though the Spanish system remains grossly imbalanced.


But the Premier League's egalitarianism only stretches so far. The "5 per cent of revenues" promise for redistribution to grassroots football made in 1999, whatever the protestations of the league, has not been met. As the football writer David Conn notes, the true figure is closer to 3.5 per cent.

And there's been no moves to rein in the richest clubs, to look after the broader interests of the league and football itself. A cache of documents leaked earlier this month led to claims that Manchester City, owned by Sheikh Mansour of Abu Dhabi, used financial skulduggery to get around the Uefa rules on clubs having to match their spending on players broadly with revenues.

Uefa has said it could re-open its previous investigation into the club's spending in light of the new information. But there has not been a peep from Scudamore about that - even though such rule-breaking, if it occurred, would be just as potentially damaging to the competitive balance of the Premier League as to pan-European competitions.


Nor has there been a peep from him, over the years, about any of the rogues who have, at various times, been able to take control of Premier League clubs. They've all been "fit and proper" as far as Scudamore has been concerned.


He who pays the piper calls the tune. And in the Premier League it is the big clubs who have called the tune ever since its foundation. The piper has been very well remunerated for his loyal and steadfast service to their narrow interests. And now he's getting a golden goodbye.



Even by Wall Street standards of gouging customers this was one hell of a skim.

In 2012 and 2013, the Malaysian government was raising $ 6.5bn (£ 5bn) from investors to establish a sovereign wealth fund and finance various domestic infrastructure investment projects. And the cut for Goldman Sachs - the most prestigious investment bank in the world - for arranging the fundraising from the global capital markets? Ten per cent, or $ 600m.


Now we can have a guess as to why the Malaysian authorities were so insouciant about those extortionate fundraising costs: because they themselves were, apparently, going to loot the pot in one of the biggest frauds in history.


Around half of the fund has gone missing. According to the US Justice Department a fair amount has been pumped into luxury American real estate and shady art auction bids. Appropriately, some went into investing in Martin Scorsese's The Wolf of Wall Street. At one stage $ 680m mysteriously appeared in the bank account of the former Malaysian prime minister, Najib Razak, who chaired the 1MDB advisory board, and who is now charged in his own country with corruption.


Malaysian politicians, officials and financiers had effectively bought Goldman Sachs' blue chip reputation to pull in naive investors to the "1MDB" state investment fund. Ten per cent probably seemed a reasonable cut in the circumstances.


The question is: what did Goldman know about the theft? The bank claims today that it was completely oblivious. But the senior Goldman banker on the ground in Malaysia, Tim Leissner, certainly knew. He pleaded guilty in New York to financial crimes related to 1MDB last week, including bribery of officials to ensure Goldman was the sole fundraiser.


What's even more problematic for the bank is that Leissner told the court there was a "culture" at Goldman Sachs of bypassing internal compliance. That's backed up by US prosecutors, who say Goldman's business culture in the region was "highly focused on consummating deals, at times prioritising this goal ahead of the proper operation of its compliance functions".


Goldman has been a Teflon bank over the past decade. Scandals have slithered off it and nothing has really stuck. We found out in 2010 that Goldman Sachs financiers constructed derivatives to help the Greek government deceive the outside world about the true state of its finances prior to the country joining the single currency.


It was revealed in 2013 that, before the financial crisis, the bank had been deliberately designing mortgage backed investment products to fail and then selling them to unwitting clients. There have been some large fines from regulators for malfeasance over the years but no senior resignations. The top brass have at every stage deplored the bad behaviour of underlings, but insisted they personally had no idea what was going on.


Lloyd Blankfein was one of the few Wall Street chief executives, along with Jamie Dimon at JP Morgan, to survive right through the financial crisis, collecting bonuses all the way. In 2007 Blankfein's total remuneration was $ 100m. His compensation in 2017: $ 22m. Clearly austerity in action.


But now Blankfein is implicated in 1MDB scandal. Reports say he personally met the Malaysian prime minister and Jho Low, the Malaysian financier accused of masterminding the theft, in New York in 2009.


Low was notorious in New York for his copious and ostentatious nightclub partying and outrageous spending. At the time, the New York Post quoted one person as saying: "Nobody spends their own money like that. It's just weird."


Is it really credible to say that this was all just a local problem, perpetrated by local rogue operatives? Did it really never occur to senior Goldman Sachs managers to wonder why the fees on the fundraising deal were so enormous? Even if it is unproven that top Goldman executives knew what was going on, what does it say about the culture of the bank that individuals like Leissner were employed there? Who is accountable for that culture? The incoming Malaysian prime minister, Anwar Ibrahim, accuses Goldman Sachs the bank, not just corrupt individuals who worked for it, of being "complicit" in the looting. And he says Goldman Sachs should return those $ 600m in fees.


We are about to discover whether the world's most politically-connected investment bank - the former employer of dozens of senior civil servants, from US treasury secretaries to the governors of the Bank of England and the European Central Bank - can brush off being close to the heart of the world's largest financial con.


The answer will tell us something - one way or another - about how much reform there has been in finance in the decade since the crash.


© 2020 by Ben Chu.

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