Friday, 27 April 2007

Magnussen's Millions Save The Day

The record Premiership fine of £5.5 million ($11 million) handed out to West Ham United over the illegal registrations of Carlos Tevez and Javier Mascherano is fifty per cent of a right and proper punishment. The FA Premier League Disciplinary Panel decided in it's wisdom that the mitigating factors should not result in the Hammers receiving a punishment of points deduction that would have effectively ended their two year hiatus in the top flight. Firstly, let's look at the facts of this case.
West Ham were desperate to complete the signings of the two Argentinians prior to the August transfer deadline and illegally entered into third party contracts involving four offshore companies to ensure that the players arrived from Corinthians in time. The players registrations were owned by a shadowy London-based outfit called Media Sports Investment (MSI) headed by Iranian businessman Kia Joorabchian. The word in the gutter is that MSI is a front for the operational manipulations of controversial Israeli agent Pini Zahavi together with Roman Abramovich. Indeed, there were many words in the gutter at the time of the transfers regarding the potential takeover of West Ham by MSI which would, in all likelihood, have led to West Ham merely taking on the form of Chelsea reserves. The MSI takeover fell through and the East Londoners were instead purchased using the profits from Eggert Magnussen's St Petersburg/Leningrad brewing empire.
West Ham United were fined a record amount (eighteen times the amount Chelsea were fined for tapping up Cashley Cole) for both the "obvious and deliberate breach of the rules" and for "dishonesty and deceit" in keeping the contracts from the prying eyes of the Premier League.
So far, all is well and good. But, why are there no points deductions for the Hammers? The disciplinary panel wheel out numerous smokescreens including the change of club ownership in November, the guilty plea and, most peculiarly, the season being at a crucial stage where the impact of points deduction would be greater than if it had been imposed midway through the campaign.
So what? There are several pertinent points here:
1) Javier Mascherano moved to Liverpool on January 31st which is when the irregularities first came to light. To use the fact that the FA Premier League decided to hold the inquiry in late April as a reason for no points deduction is a rather selective argument to put it mildly.
2) The defence of change of ownership also possesses a certain arbitrariness. Paul Aldridge (the former chief executive) was not even called as a witness which is a fairly neat way to filter the truth but Scott Duxbury, who was in charge of legal and commercial affairs at the time of the deal, remains a director of West Ham. Duxbury claims that he was unaware of the rules governing third party influences over players. Change of ownership then but not change in personnel.
3) Rotherham United have been deducted 10 points this season which has resulted in their relegation from England's League One. This formed part of an agreement with creditors without which the Yorkshiremen would have gone out of existence. In Serie A, Siena were similarly targeted with a 1 point penalty for a delay in payment of social security contributions. This penalty may also influence their relegation battle. And Bury were thrown out of the FA Cup for playing a non-registered player. Judicial equivalence would suggest that each of these three crimes fade into insignificance when compared with the misdemeanours perpetrated at West Ham.
4) West Ham United have gained numerous points through the skills of Carlos Tevez in particular - the man was not named supporter's player of the year for nothing. In every previous case that we are able to find of illegally registered players being included in teams, proportionality between points gained and points deducted has been the norm.
5) As we have stated previously, West Ham were heavily favoured by the match officials last season both in the Premiership and in their successful run to Trevor Brooking's FA Cup Final party. We strongly believe that the punishment would indeed have included points deductions if the defendants had been, say, Wigan Athletic or one of the other clubs that are not welcome in the Premiership. Magnussen's millions, Sir Trevor's influence and a suitable geographical location in England's capital are all key factors here.
In conclusion, this is evidently not a judicial level playing field. Curbishley and Magnussen's brigade deserve to be demoted for flagrantly flouting the rules of the game. The fact that some of the current hierarchy were not at the club when the misdemeanours occurred is irrelevant. Magnussen should have undertaken tests of due diligence when acquiring West Ham and the fine pales into insignificance when compared with the financial benefits of staying in the Premiership. Wigan Athletic have every right to feel aggrieved as not only are West Ham able to field Carlos Tevez in tomorrow's crucial relegation clash (as long as registered by midday Saturday) but also the Professional Game Match Officials Board (PGMOB) has decided in it's wisdom to select a certain Graham Poll to officiate.
This is just another one of those Premiership farces that one simply couldn't make up. How sordid...

Wednesday, 25 April 2007

Chaotic Butterfly Effect 1 Proper Football 0

The suspension of seven Italian referees to add to the already sidelined Massimo De Santis who is banned until 2011 is a rather selective punishment as we posted previously (see: http://footballisfixed.blogspot.com/2007/04/thank-goodness-corruption-only-occurs.html). In this post, we offer an analysis of the machinations that allow other perpetrators to continue with their corruption of match outcomes despite the overall effort to clean up the game in Italy.
Analysis of the thirteen referees who have been banned or suspended at various points in the 2006/07 season is firstly undertaken to check for correlation between crime and punishment. From our proprietary database, the following number of links between the targeted referees and the clubs that have been punished for their match manipulation may be collated:
Juventus - 6 linkages resulting in relegation; the loss of two Serie A titles; financial instability; mass exodus of players and staff.
Milan - 4 linkages resulting in a loss of 8 points.
Lazio - 3 linkages resulting in a loss of 3 points.
Reggina - 1 linkage resulting in the loss of 11 points.
Fiorentina - 1 linkage resulting in the loss of 15 points.
It hardly requires the application of rocket science to see that the punishment is highly partial. Aside from the heavy handed treatment of the Old Lady of Torino, the two right wing clubs (Milan and Lazio) have effectively got off virtually scot-free. Both of these teams have assured themselves of Champions League football next season while Fiorentina will miss out purely due to the disparity in punishment. Similarly, Reggina, despite achieving a points totalisation that would place them in the top half of Serie A, will be probably resident in Serie B for season 2007/08. Evidently, the power status of Berlusconi, Galliani and Lotito ensured preferential treatment.
In support of this assertion, we have looked at the linkages that exist between Italian referees still on the roster and the leading Italian teams. The results are disturbing for those who believe that that Serie A has moved forward on the issue of corruption.
Rosetti - links with Lazio, Milan and Roma.
Trefoloni - favours Milan, Inter and Roma.
Palanca - supportive of Milan and Juve.
Girardi - big on Roma.
De Marco - generous to Milan and Fiorentina.
Pantana - shows bias to Roma.
Between them, these officials have presided over 65 games in season 2006/07 (20% of the total). Other officials also exhibit bias but we have only highlighted the referees where such bias is statistically significant.
We have previously indicated that corruption of football in Italy is correlated with politics. Milan got away with murder while Berlusconi was in power and Roma have been similarly aided in the current season. Undertaking similar analysis that was provided for the Premiership (see: http://footballisfixed.blogspot.com/2007/04/who-do-premiership-referees-really.html) with regard to refereeing bias in the current season for a selection of Serie A teams is indicative of these biases. An index figure of 100 represents bias totally in favour of a club and 0 represents bias totally against a club's interests. As Romano Prodi gained political power effectively at the end of last season in Italy, the figures for 2005/06 are added in brackets for comparison between the world according to Berlusconi and the one related to Prodi.
Milan 36 (74) differential -38
Inter 46 (50) differential -4
Fiorentina 62 (68) differential -6
Roma 77 (60) differential +17
Lazio 56 (61) differential -5
Reggina 47 (52) differential -5
The marked structural dissimilarities between the two seasons for the two clubs most closely linked to aspects of the political hierarchy are clearly evident. Roma + Prodi = +17; Milan + Prodi = -38.
Additionally, UEFA's refereeing roster has included six Italian referees in the last two years - Paparesta (who has just been re-banned); Messina (banned); De Santis (banned); Farina, Trefoloni and Rosetti. From our data above, it can be seen that we have minimal confidence in the impartiality of Rosetti and Trefoloni also - five of the six referees that UEFA has utilised are, in our analysis, prone to corrupt activities. In this manner, the invidious manner of Italian refereeing expands on to a European stage and the premier continental club and international competitions are similarly blighted. Although we choose the Italian game to focus upon here, the impact of English officials has also been influential on outcome in these European competitions to the degree that low ratings have limited the refereeing opportunities for Webb, Riley and company in the current season's Champions League and UEFA Cup competitions.
The prime issue with corruption in any theatre of life is the viral nature of such corruption. Once one individual takes the bait, the likelihood of others following suit is significantly higher as the manipulators understand the price and the process necessary to achieve their control of a sector. Furthermore, a network effect spreads over to related sectors resulting in a far greater impact than the initial corruption should warrant. Obviously, this structural model is related to Chaos theory.
The degree of corruption in European football has already reached a stage where the butterfly effect has created a continental web of corruption linked to the authorities, governments, bookmakers, regulators, referees and players. It may already be too late to save the game from this virus as the amount of money now being introduced into the process is colossal and, unfortunately, human nature suggests that everybody has their price.

Saturday, 21 April 2007

Thank Goodness Corruption Only Occurs Abroad

As we posted last week (see: http://footballisfixed.blogspot.com/2007/04/subvert-divide-and-rule-bribe.html), calciocaos has spread deeper into the Italian game with Messina being added to the teams suspected of corruption and seven further referees now being banned. The seven officials are Paparesta, Bertini, Cassara, Pieri, Dattilo, Gabriele and Racalbuto. Over the current season, thirteen Italian referees have been banned or suspended at one time or another. The most entertaining reality flow over the season relates to Gianluca Paparesta. After being included in the original grouping of banned officials after moggiopoli first broke, Paparesta was suspended for a couple of months before the Italians and, indeed, UEFA welcomed him back with open arms only to have to ban the man again after 10 Serie A appearances. Paparesta has always shown a strong bias towards the right wing clubs in Serie A with Milan and Lazio, in particular, benefiting from the man from Bari. The Public Prosecutors from Napoli have markedly increased the scope of the investigation and the uncertainty with regard to further punishments and points deductions seems set to become a semi-permanent stage on which calcio is played out.
The officials that are being targeted are revealing too. Many other referees in Italy are closely linked to particular clubs, political parties, media organisations and bookmakers. The Italian authorities are facing down some aspects of the corruption but the resultant campaign has effectively been hijacked by certain power bases so that a cleansing process has become a route to gain competitive advantage.
The reaction in the British media has been disappointing too. When the current wave of corruption and manipulation in global football matches ignited a couple of years back, there were ample column inches covering the uproar in Germany, Portugal, Poland, the Czech Republic, Turkey and Italy etc. However, as the reality of corruption in English football has neared the surface of the cumulative consciousness of British society, the mainstream media have decided to jump into bed with the criminals and comment is conspicuous by it's absence in a peculiarly English type of omerta. The Guardian (yet again) is particularly culpable and, with no mention whatsoever of this major upgrade in the corruption investigation in Italy, have focused exclusively on the turmoil at Arsenal without, of course, any mention of the issue of gambling income which is, effectively, the frontline between Kroenke/Dein and the current board. Entertainingly, one of their writers, David Conn (great research but no big picture overview type of journalism) in his Guardian blog assured us all that everything was just hunky dory at Arsenal just hours prior to Dein's resignation. Conn's comedy timing forced The Guardian to immediately pull his piece and replace it with a briefer post where the cheeky little imp claimed that his original post had predicted the uproar. Twaddle...
Leisure punters should take care in the Premiership markets today as the PGMOB has wheeled out the refereeing big guns for Saturday's games and, additionally, there has already been major amounts of insider trading on the Cricket World Cup match between the West Indies and England which represents the final chance for a little earner for certain members of the two teams.
Finally, the Dietrological Professional Football Information Provision Service has been purchased by one client until the close of the current season while all subscribers to the new Dietrological Leisure service will receive their first information today.
Enjoy.

Friday, 20 April 2007

Trading On The French Presidential Election

Sunday sees the first round of voting in the 2007 French Presidential Election and it seems a suitable prompt to produce a post about trading political markets. Political markets are easy to trade on, they aggregate information, and they produce real-time probabilistic predictions on future events.
There has been a considerable expansion in the number of trading firms offering political/prediction markets in recent years and the consequent increase in the range of markets has made the sub-sector worthy of the analytical attention of all professional traders. Liquidity is still thin on the ground though in the non-mainstream territories which is represented by the generally prohibitive margins in such countries. We will use the race to the Élysées as an example to demonstrate some of the factors that traders need to be aware of with respect to political markets.
1. Opinion Polls - Opinion Polls (OPs) take on the form of an index market where the percentages for the candidates aim to replicate the true percentages out in the country. Polls are different than a true market in several ways. Firstly, they are not representative of money flow or inside information. Secondly, the percentages have a built in standard deviation that makes such polls of minimal value even when all other factors are taken into account. Thirdly, people may be prompted to answering a certain way by the deliberate or accidental manner of phrasing of the question. Fourthly and most importantly, the politics of the polling firm will impinge on output on a variety of levels.
2. Trends, Breakpoints and Uproar - By plotting OPs (with error bars) against time, an observer is able to detect any trends that the OPs are exhibiting. All other things considered from a market perspective, you would generally be looking to be supportive of a candidate on an upward trend. Breakpoints occur when a key piece of electoral development occurs eg a head-to-head televised debate or a particularly poor PR occurrence. Sometimes a breakpoint may be so severe that uproar results and a candidate is blown out of the water - remember Howard Dean's 2004 US presidential campaign.
3. Many voters are not willing to disclose their election preferences to pollsters. Either such voters have not made up their minds or they may be ashamed at the admission of their choice. In the 2002 election in France, Le Pen surprised all pollsters by exploiting such guilt-ridden shame to reach the second round of voting ahead of the Socialist candidate.
4. Elections that are divided into two rounds like the French are very different to model than one-off races. The modelling of the events is considerably more complex in a two round race both due to the structural nature of the event and the impact of voters whose original choice is eliminated in the first wave of voting. The very nature of two round markets encourages voters to undertake a first round protest vote before supporting their mortgage and their class in the second round.
5. The key people in all elections (from both a political and a market analytical viewpoint) are the swing voters and the masses of the befuddled. Up to 40% of voters may exist in this state of limbo in the period leading up to polling day. The control of the mainstream media is critical in the final days as this is the window when the majority of these unfortunates develop a political view about the world in which they live. Countries like England, USA and Italy are particularly susceptible to late spectacular society targeting of "the don't know's" due both to the degree of control of media in such countries and the level of voter apathy.
6. One of the most important factors to assess in any election is the great intangible of national feelgood factor. The mathematics behind such fuzzy concepts are complex and cover a wide spectrum of societal and political forces as well as taking into account mass psychologies. Indeed, we use such an approach in international football matches in addition to political markets as there are clear parallels at play here.
7. Regional politics also impacts upon national elections. Some areas have moved en masse to the right in recent years eg the former Eastern Bloc while others have swerved to the left eg South America. Such continental momentum must be considered.
8. Increasingly, in a world of spectacular events being perpetrated by various groups of driven individuals, first world elections possess a structural volatility relating to the impact of a potential major atrocity in the election run-up. The Madrid bombings were so mishandled by the Partido Popular that they effectively handed the election to Zapatero in 2004.
9. Analysis of the market prices offered by the brokers is another key source of information. Many traders and market makers have clear holistic overviews of their sectors and market memory enables them to gain an edge through superior pattern recognition skills. This feeds through into price. Additionally, many of the firms that price up political markets are also involved in international financial markets and, in such cases, their territorial appraisal is enhanced further.
10. Underhand and, even, corrupt practices must also be taken into account. What sort of creative gerrymandering has been abusively legalised? How is the fear factor in the territory? If valid, what is the early reaction of external electoral observers? Does the power reside in the vote or in some external body eg the US Supreme Court? Are the computerised voting machines open source?
11. The final key variable that we shall discuss here is turnout. Increasing depoliticisation and apathy are the norm in developed economies and modelling the ability of the individual parties to get their people out is very key.
We are absolutely unwilling to disclose our proprietary analysis of the French election this weekend but we will point you in a couple of intriguing directions. The markets currently project a Sarkozy victory at a 65-70% probability which is, no doubt, based on his OPs lead. Voters who allowed the National Front candidate to reach the second round last time are going to be much warier this time with their first vote flippancy - we expect that this will favour Ségolène Royal and undermine the middle ground candidate, François Bayrou and the candidates on the left. Additionally, we expect Le Pen to steal some votes from Sarkozy as they battle for the right wing vote. Our estimation prior to the weekend media onslaught is for the two market leaders, Sarkozy and Royal, to progress to the second round but it should be noted that a leak from the Renseignements Généraux (the French home intelligence service) suggests Le Pen will again reach the run-off. The very leaking of this report makes such an outcome less likely.
Dietrological Trading Team divide our market activities between several different types of financial market. Our current market project portfolio involves Football Trading Pre-Match (45%), Football Trading In-Running (15%), Cricket World Cup (5%), International Financial Markets (25%), Political Markets (5%), Miscellaneous Markets (5%). Political Markets are still at the periphery of the marketplace but we expect that this sub-sector will markedly expand in the coming years particularly as all markets gravitate towards a global trading platform.

Wednesday, 18 April 2007

A Tale Of Corruption, Chaos And Greed

It had appeared that the final ignominy of the 2006/07 season arrived for Arsène Wenger when some of the Emirates faithful started booing Arsenal early in the second half of last night's match against Manchester City. Not so... Today, the Arsenal vice-chairman David Dein has left the club with immediate effect.
Only three months ago, the Gooners reserves wiped out Liverpool 6-3 in a Busby Babes-esque performance but the constant institutional friction against their interests has turned around the fickle ones inside the ground. Such fans evidently possess more money than sense. The determined undermining of Arsenal on the pitch has been parallelled by the destabilisation caused by Stan Kroenke and his KSE Group in the boardroom.
The final irony is that last night's victory enabled Arsenal to virtually assure Champions League participation for next season - in the light of the machinations against them over the season, this represents the highest plateau of achievement available.
Historically, Arsenal have always been a power team in English football which is why this season's reversal has been so marked. By the time Wenger decided to call it a day in the Premiership title race, Arsenal had been unjustly targeted to the tune of 15 points over the season while biased refereeing and "random" FA Cup draws had sorted that particular competition out. The turning point came after Howard Webb's ineffective handling of the League Cup Final had prevented the occurrence of anything magical. The aftermath represented not only Arsène Wenger's third disciplinary of the season but also the turning point in the PGMOB machinations against Arsenal. Our assessment is that the necessary short term institutional targets had been achieved and so, recently, Arsenal's route to Europe has been paved with favourable officiating.
Our Trading Team have creatively modelled the corruption against Arsenal this season. In real-time, we monitor and assess all Premiership referees and the configurative parameters in our Unified Trading Model (UTM) relating to both the psychologies and the behaviours of officials are highly robust. Many of our conclusions relevant to the anti-Arsenal manipulation are too close to our proprietary core for public discussion but two areas that we are happy to cover here are the biases of the PGMOB officials and the impact of private equity money.
Hierarchically, Arsenal are in a state of flux. It is obvious that there are conflicting dynamics and hidden strategies relating to Arsenal's future ownership within the upper echelons of the club. Personal prioritisation versus organisational prioritisation is a complex playing field. The fault lines that already exist will be exploited by Stan Kroenke and the inevitable resultant momentum is the logical force that makes private equity so powerful. The market system is so structured as to lubricate this process. This internal upheaval within the club is coinciding with major infrastructural changes generally in English and European football. Strategies must be developed that accommodate this backcloth.
David Dein and Arsène Wenger were in the process of preparing Arsenal's Five Year Plan. Now that Dein has departed, there are still some key strategic choices that need to be made here. Arsenal have always exercised their power within the games infrastructure but they do not get involved in the global football betting markets. It is this, as we have shown in numerous other posts, where considerable revenue flows are being pencilled in by the private equity brigade at other leading clubs. Arsenal have two clear strategic choices. The first route is to sell out to the highest private equity bidder allowing Fiszman and Lady Bracewell-Smith to collect their millions while the club plummets into the gutter at the lowest common denominator level of business. Alternatively, Arsenal might choose not to sell out to the degree that Liverpool, Manchester United, Aston Villa and Portsmouth have. Arsenal might decide to confront the corruption against their interests by creatively involving themselves in the financial markets without having to undertake anything so grubby as betting. After all, there are many ways to influence a market. We hope that Arsenal choose the more creative and moral route with respect to the markets. As the club have discovered this season, chaos moves in mysterious ways.
At least two aspects will remain a constant under Wenger's tutelage. We would expect that Arsenal continue to develop the most entertaining and talented global youngsters and we would expect Arsenal to remain a team of style and flair.

Some previous posts on Arsenal at Football is Fixed are listed below:
http://footballisfixed.blogspot.com/2006/12/breaking-news.html
http://footballisfixed.blogspot.com/2007/01/six-three-to-arsenal.html
http://footballisfixed.blogspot.com/2007/01/non-gooner-london-bias.html
http://footballisfixed.blogspot.com/2007/01/dont-criticise-refs-and-other.html
http://footballisfixed.blogspot.com/2007/01/weekend-premiership-round-up.html
http://footballisfixed.blogspot.com/2007/02/riley-wiley-make-bookmakers-smiley.html
http://footballisfixed.blogspot.com/2007/02/magic-of-fa-cup-revisited.html
http://footballisfixed.blogspot.com/2007/03/pgmob-defeat-arsenal-again.html

Tuesday, 17 April 2007

Rampant Regionalism Wrecks Real's Racing Reality

Spanish referee Javier Turienzo Alvarez has an interesting angle on sublety. Alvarez has received death threats and hostile phonecalls following his remarkable quarter of an hour at the weekend when he managed to send off two Real Madrid players (Ivan Helguera and Alvaro Mejia) and, for good measure, provided Racing de Santander with two penalties to boot. The 2-1 defeat may well decide the La Liga against the Castillians and Alvarez claims that his six year old daughter has been targeted because her father has "ruined things for Real". Well, he certainly achieved that...
Alvarez has always been an entertaining official and La Liga has always been an entertaining league.
The control of officials by clubs is not only a major influence on match outcomes in Spain but is also a generally accepted manipulation culturally. Sports newspapers like Marca and El Mundo Deportivo frequently address the choice of officials for future matches and the presidents of the clubs equally frequently act up when it is felt that a fair deal is not in the air. Control of officials is the single most dominant corruption in La Liga although the use of Performance Enhancing Substances (PESs) comes a close second. Gambling money plays it's part but the majority of the manipulation relates to political and regional power politics. In our estimation, the absolute degree of corruption is of similar magnitude in both Spain and Italy as is the usage of PESs and, indeed, the unpleasant degree of racism.
Regarding the specific incident at the weekend. Alvarez, as far as I am aware, has no links to bookmakers. His officiating is biased but that sentence could be applied to virtually any top flight official in Spain. Spanish referees are based in regional colegios or schools and carry their regionalism into their officiating. Alvarez, for example, has a particular grudge against the city of Sevilla. The Big 2 teams, Barcelona and Real Madrid, also exercise a significant degree of control over many officials. It is simply laughable for Real to be hissy fitting over any perceived refereeing injustices as they were consummate rule benders when the Partido (not so) Popular were in power. And not just with respect to refereeing decisions - remember the lucrative deal struck for the sale of the prime real estate that was Real's training ground.
The two real issues about the weekend are as follows.
Barcelona are in control currently - Madrid probably are required to be about six points better than the Catalunyans to achieve parity.
And the referees are vulnerable. We see a future where football referees take on the protected isolationism granted to horseracing jockeys in Britain. Huge profits and losses result from officiating both with regard to the global gambling markets and individual club success within the game. Top jockeys effectively have their entire existences controlled by their operators. They do a job and they are protected with nice big houses in establishment in-breeding territory like Newmarket (if the Stepford Wives or Wicker Man were to be set in England - Newmarket's your place!) The only point to add being that the size of their living abodes bears no relation to their legitimate riding career earnings!
Referees will also need to be esconced in football's equivalent of Baghdad's Green Zone - the experience of Bob Woolmer is prescient of future realities. If corruption must be the future of the game then, at the very least, there must be protection for family members, particularly children, who are innocent bystanders to the criminal infrastructure.
Now, where's that phonebook? Hertfordshire... Tring... Poll... Graham...

An Analyst's Perspective On The Super League

Our recent post on the development of a European Super League for the continent's most powerful teams assessed the systemic infrastructural changes from a variety of standpoints (see: http://footballisfixed.blogspot.com/2007/04/every-so-often-g1418-group-of-europes.html). The prime conclusions of our original post were that a blueprint and strategy already exist for the creation of a Super League and that there was an inevitability about the development. The only uncertainty from our position is timescale.
In this post, we assess what the changes will mean for professional traders and market analysts.
So, it's August 2010 and the first Kohlberg Kravis Roberts/ Rio Tinto Zinc Super League is about to kick off - we prefer "Europa" but sponsorship money is infinitely more important than any creativeness. The 20 strong 8 nation league represents the G14(18) plus Chelsea and Glasgow Rangers. There is a pool of twelve referees - two each from the Big 4 countries and one each for the lesser nations. The first structure that will become evident to all analysts and traders is that of our old friend the fully matured market. Whether the systemic infrastructure resembles a cartel, a monopoly or a duopoly, the vertically integrated power hierarchy will enforce ultimate and complete control. One of the key developmental aspects for all market observers will be the control of price. When markets develop to their mature phase, the control of price falls into ever fewer and fewer hands. In some markets eg British horseracing, the control is absolute and, for many events, there is no information in the price for the vast majority of market participants. If football market making is an effective duopoly between the Far East and Europe then there is competitive pricing; if either side is in control of the market making process then we are in a far more entertaining marketplace. This control is targeted with respect to two main market sectors - the pre match markets and the in running markets. Obviously, the impact on margin is another factor that matures with the market. Dietrological have our own proprietary modelling of future scenario analyses and we would not wish to discuss isolationist areas. However, the progression from fragmented cartelisation to a more mature format is a prime functional backdrop to all of our trading activities. Black box technology with creative input will yield profitable outputs as will market memory but the information in the price will become an increasingly complex area of analysis for traders who lack experience in operating in fully mature sectors. A major skill for trading the Super League will be how to utilise the fundamental parameters. There will be events when these fundamentals have absolutely no relevance and others where the solution lies within such fundamentals. Indeed, this is already the case within some current market structures.
Our Trading Team have discussed the implications of the Super League recently whenever we have been able to share a location. For highly skilled market analysts, there will be a spectrum of trading and consultative opportunities. The increased liquidity across the sector will inevitably feedback into performance-based rewards. As the market depth increases so will the trading security - no more doubt about collecting your winnings. Equally inevitably, this will lead to dealing with a better class of criminal - Haberdashers' Aske's or Eton as opposed to Strangeways or the East End. The range of available consultancy work will increase. Investment houses, Super League teams, market makers/brokers, media, trading operations, government and regulators will all be buying in professional analytical skills.
The deferred gratification of staying out of the loop as long as possible is an earner for a strategic analyst.

Saturday, 14 April 2007

Subvert, Divide And Rule, Bribe

Just when the general consensus of opinion was that things cannot get any worse in Italian football, the Neapolitan Public Prosecutors decided otherwise by considerably extending the scope of last summer's investigation into match-fixing in Serie A and B. The twenty four games that were originally under investigation have been increased to 39 as the Italians oscillate timelessly in between admonishment and amnesty (for some).
The story so far is that Juventus were demoted while Milan, Fiorentina, Lazio and Reggina had points deductions. The main beneficiaries were Roma and Inter who were presented with a Serie A duopoly for the current season and Messina who avoided relegation thanks to the fall of the Old Lady. There is an instance of dietrologia here in that the very same Messina are now being added to the list of teams who are suspected of seeking to influence matches. "We have nothing to do with this scandal. And we have always operated with complete legality and transparency," Messina president Pietro Franza hilariously claimed (with tongue firmly in cheek) in yesterday's press release. Sicily is a mess. I can feel another round of point adjustments coming on here. Public prosecutor Filippo Beatrice aims to bring the miscreants to justice between now and June so the key decision is whether penalties will be applied with hindsight to the current season or whether season 2007/08 is to take the form of a handicap too. To date, the Serie A points adjustments seem to be readjusted periodically to ensure that the correct teams end up in the correct positions at the season's end.
Eight referees were originally suspended but only two served a ban De Santis (who is banned) and Paparesta who has returned to officiate 10 Serie A games this season while also still being involved in UEFA events). He must be feeling suitably disciplined then. It is interesting to look at the other initially banned officials. Below is a list of the most frequently utilised officials in this season's Serie A:
Saccani 15
Ayroldi, BERTINI, Farina, Rizzoli 14
Rosetti, ROCCHI, MESSINA 13
Bergonzi, Girardi, TAGLIAVENTO 12
The officials in capitals were those initially suspended. Rodomonti has hung up his whistle; Dondarini has officiated at ten matches as has Paparesta but the latter was out of action for two months. There is no evidence that the Italian football authorities have carried through with their initial drive with regard to referees as now it seems that twenty five referees, 18 of whom are still working in the Italian league, also remain under suspicion. In the early phases of the current season, numerous new officials were introduced onto the roster to limit corruption opportunities but most of these have now been discarded as the power regimes reassert themselves.
We have frequently praised aspects of Italian manners in dealing with illegalities but, by the time the various appeals have been heard, the punishments rarely fit the crime and, additionally, power politics warps any sense of justice. Milan were as guilty as Juventus with respect to the controlling of officials and indeed, during Berlusconi's era, Milan through Galliani were omnipotent. The dichotomous outcome for the Big 2 is that the least guilty, Juventus, effectively lose all their players, one year's income, television money, have two years of Champions League omission and a borse battering while the most guilty, Milan, ensure that their points deduction doesn't prevent Champions League qualification for next season and then focus on reaching the final of this year's competition without the distraction of a domestic title race.
Perhaps the most remarkable aspect of an Italian season that has only really had drama off the pitch is that, against a chaotic backdrop, Italy deservedly won the World Cup! This victory was, apparently, all the more applaudable in that Blatter and FIFA were allegedly livid at the Italian scandal breaking to coincide with their piece of global marketing. On this latter point, we think some of the public posturing was spectacular society nonsense but Italy's triumph was a major triumph nonetheless.
Subvert, divide and rule, bribe is the standard template used by imperial nations, multinational organisations and globalised businesses. This structure underpins the corruption that has taken hold in the Premiership over the last fifteen years about which there is no mainstream media comment. It also underpins the very public corruption exhibited in Serie A.
The English Premiership could do with a bit of dietrologia as the situation here is considerably worse. But don't hold your breath...

Friday, 13 April 2007

Bandits Taking Over The Town

Big Sam Allardyce has always had a fearsome reputation in the north west of England - I was once told how he was beating the ground repeatedly with a cane while managing Blackpool Reserves to a 6-0 pre season friendly victory over Newcastle Town. Like it mattered...? With the spooky Phil Gartside and, initially, with the talented Phil Brown, Allardyce has transformed Bolton Wanderers from a small town redneck team to a multinational highly professional outfit that utilise cutting edge science to enhance their club's prospects. With no serious money behind them, Bolton repeatedly finish in the top few in the Premiership without the Big 4 (8th, 6th, 8th and currently 5th over last four years despite sometimes switching off late season as European qualification is not always part of the strategic plan). Success requires Mr Allardyce to occasionally sail close to the wind - there is no way a small unmarketable north west club would be able to sustain such a high profile in the Premiership without tilting the playing field in their favour from time to time. Some of the manners in which Bolton achieve this advantage were revealed in the BBC Panorama programme on bung culture - an effervescent Big Sam initially threatened to sue all and sundry before wisely choosing the keeping your powder dry route. Allardyce has to be in the frame for a top tier appointment sooner rather than later. This weekend sees the vital Premiership match at Arsenal which may well determine the fourth Champions League spot. Arsenal are already on the beach and there are boardroom ructions at the Emirates; but do Bolton want it and will the PGMOB let them get it? $4000 is the price for semi-exclusive release of info tomorrow morning at 09:00GMT. Apply as usual.
Speaking of Allardyce, the man likes to maintain his public profile and yesterday's press release where he claims that the Premiership is the best league in the world is, on first glance, confirmed by the presence of three English teams in the Champions League Semi Finals. Looking closer and a more complex picture occurs. The Semi Finals pitch Berlusconi against the Glazers and Abramovitch versus Gillet and Hicks. All four teams are in the top ten in the Deloitte Touche Football Money League (formerly known as "the Rich List" but mysteriously renamed as money is a more neutral term than rich). Power wins out. Liverpool, Manchester United and AC Milan are all first tier G14(18) clubs and Chelsea and Milan are both part of the UEFA Strategy Board. The English league is not the best in the world, it is currently the league with the most powerful corrupting money behind it (see: http://footballisfixed.blogspot.com/2007/01/comparative-corruption-in-major.html). It is also the league that leaves the biggest footprint on the global betting markets on an insider basis.
Deloitte Touche's annual report on the state of football's finances should be treated with considerable disdain. It is an example of the type of poor holistic sector overviews that are produced by outsiders applying a standard formulation rather than a sector specific analysis. At no point does the report touch (touche?) on gambling income nor take account of the numerous other non-accounted revenue streams. The latter would lead to incremental differences while the former would entirely reconstitute the Rich List making it's current form obsolete. Simply, it has no value.
The chances of a three-way Abramovich v. Glazer (Russia v USA) end to the season should be moved significantly closer following the outcomes of this weekend's FA Cup Semi Finals. We advised previously to get on a Chelsea/Man Utd Final at both 3/1 and 6/4 (see: http://footballisfixed.blogspot.com/2007/03/fa-fixed-anachronistic-cup-200607.html). During our daily am internet news round-up, we noted The Guardian headlines - Dan Roebuck "Why Watford Could Beat Man Utd To Wembley" followed by a Keith Pullein special "Hope Is Not Lost For Underdogs" and Scott Murray's "Blackburn Rovers v Watford is the 'dream' final most people want". What a load of baloney. Trying to appeal to the occasional one-off National punters with glowing recommendations of belief in underdogs is a great journalistic disservice and, as regards a lack of subtlety...
The British bookmakers are on a short term loser and a medium term winner but their collective short-termism makes it difficult for them to see beyond the end of their noses. Tomorrow is Grand National Day where it is a British tradition to slaughter some graceful athletic creatures in the name of gambling. Betting turnover in this sceptred isle (sic) is humongous for Aintree Saturday as everybody is programmed to have a little flutter on the National. In a triumph of bookmaking scheduling, the FA Cup Finals were set for the same weekend. But the bookies initial hopes of a super bumper day have turned to a nightmare because of the very very high probability that Man Utd and Chelsea must win for a showpiece Wembley Final that will, in turn, repay the bookies for their immediate losses. Most bookmakers are not even pricing up the market for FA Cup Finalists. All press will be persuading punters to back the underdog (thank you The Guardian and, also, a thank you for Frank Lampard's views the other day - insightful journalism par excellence) or to get greedy and bet on HT/FT or Lampard to score and Chelsea to win 7-6 on penalties type of markets. The only sensible bet is the 1/2 available on a United versus Chelsea Final - if you must get involved, take it. Politically, this bet is entertaining. If the dream final is a reality then sensible punters will have won. If the dream final isn't a reality then the bookies will ultimately lose out. I like a twisted rationale that can find pleasure even in a potential loss!
And, while on the subject of corrution and manipulation, Poland is the latest country to show the English how to deal with corruption in football following the demotion of Arka Gdynia and Gornik Leczna for bribery and match-fixing. The decision obviously has no relevance to Poland and Ukraine's joint bid for Euro 2012 Finals which will be decided next week. Perhaps to enhance England's bid for the 2018 World Cup the Premier League should relegate Premiership teams involved in match-rigging although there would not be too many of the current crop of twenty remaining if they chose to do so!
Anybody want any tips on how to destroy steeplechase fences?

Thursday, 12 April 2007

Plus Ça Change, Plus C'est La Même Chose

Mike Newell stood up and exposed some aspects of the corruption in English football - he was recently sacked as Luton manager and his sort will never cast a shadow over the game again. Of the individuals and clubs fingered by the resultant BBC Panorama programme, there has been no action over Allardyce, Redknapp, Middlesboro, Liverpool or Arneson and Kevin Bond was given a manager's post at Bournemouth (one of Redknapp's stable of teams). The only other casualty of the affair has been Newell's former chairman at Luton, Bill Tomlins, who has stood down following sacking Newell after admitting to having made irregular payments to agents himself. Orwellian or what...? As we have stated previously, the Quest investigation into bungs is a whitewash and, by only focusing on transfers in a two year period, a very selective whitewash at that.
Bob Woolmer (remember him?) stood up and decided to expose the corruption in cricket. He was consequently sacked as a member of the human race and his sort will never cast a shadow over the game again. The death is being quietly buried by the media. Of the individuals and teams investigated by Mark Shields of the Met, there has been no action against the illegal betting markets in South Asia and their bookmaking accomplices in London and Gibraltar, nor any action against members of the Pakistan team nor, indeed, anyone else. In fact, from Sky and the commentators at the deserted Caribbean grounds, there is no indication that the World Cup has been tarnished at all - there have been several major betting coups since the Pakistan/Ireland game with the Bangladesh versus South Africa merely being the most evident. And, by the way, who decided it was a good idea to charge West Indian fans a month's wages to watch a fixed cricket game?
A whistleblower stood up and exposed an English manager of placing £12m of bets on Premiership matches with Victor Chandler International (VCI) in one season (an average of over £30K on every match in the season). VCI sacked the individual and his sort will never cast a shadow over the game again. Nobody was ever investigated regarding the illegal betting due to the preemptive strike by Max Clifford and the High Court. This particular manager and his club are still heavily involved in the global football betting markets.
People in six hundred cities worldwide marched against the illegal war in Iraq prior to it's instigation. Half a million deaths later and these people will never cast a shadow over the world again. Despite some posturing, there has been no global institutional punishment over the invasion and occupation and we have Bush and Blair structuring their respective legacies, their psychopathic disorders preventing them from seeing the reality of their actions. Meanwhile, Cheney banks his Halliburton war booty.
Newell and the whistleblower are down the dole; Woolmer and a whole load of soldiers and citizens are pushing up daisies. The psychos don't worry cos they are burying deep their diplock gold.
If football is a substitute for war then the Theatre of Dreams has equivalence with the Theatre of War. Corruption, manipulated events, psychopathic behaviour, warped economics, inside information as a competitive advantage, abusive power hierarchies, hidden agendas, numerous catch 22's, masonic cells, Clausewitz and Sun Tzu. War and football have their elites and generals and businesses and markets and working class men to do the fighting/playing. Rape and pillage become post-match domestic violence and hooliganism. The Economics of War have become the Economics of Football.
Football has always had issues related to sectarianism, racism, violence, regionalism, bigotry, nationalism, homophobia and hooliganism. Indeed, these are societal issues. Countries like England that have virtually entirely changed their fan base at a top flight level in the last fifteen years may now have less hooliganism in the Premiership but such attitudes haven't disappeared but merely migrated to the lower divisions and numerous town centres countrywide. Fifteen years ago, nobody knew what the flag of St George was but now Manchester's cemeteries are covered with competing red crosses and tricolours.
The shareholder capitalist tsunami has dropped it's template onto this already dysfunctional sport. Greed, power, corruption, massively liquid global betting markets, cartels, monopolies and, above all, profit have become the sole outputs. At times during the really dull games, I find myself daydreaming and my eyes gravitate towards the neon moving advertisements and I know that the game is up. Recent rule changes have prevented players from doing anything remotely spontaneous like putting on a mask after scoring (now specifically outlawed), displaying a t-shirt with a birthday message to your child is also now thankfully not allowed and neither is removing your shirt altogether (a goal, after all, merely being a close-up logo opportunity) nor celebrating the goal with your supporters. Presumably we can't have anything related to the real soul of football getting in the way of the marketing and advertising strategies of the businesses and private equity people who have taken over the game (wishing a teammate a quick recovery from a major injury = bad; Rooney 4/1 to score next goal with Fredbet = good).
The beautiful game does not need to be in this capitalist form. The beautiful game will die as a result of the strategies now in place. Skybet's "it matters more when there's money on it" has become an omnipresent and omniprescient statement regarding the state of the game and, whether inadvertently or deliberately, adequately describes the impact that money has had on football - devaluation. Now games only matter thanks to the money.
Thanks to Murdoch and an almost endless list that won't be missed etc etc...

Wednesday, 4 April 2007

May We Have A Nice Shiny New Super League Please?

Every so often the G14(18) group of Europe's most influential and powerful clubs utilise the threat of a breakaway European Super League as a negotiating tactic in their power play with footballing and/or governmental authorities. Aside from destabilising any negotiation process, such posturing lets the irritating regulatory and administrative bodies understand who possesses the real control of the European game at it's highest strata.
The first point to be made here is that the Super League already exists albeit in a nascent form under the tutelage of an inappropriate body (in the eyes of the G14(18)). It is called the Champions League. This misnomer of a competition has historically paid lip service to being a competition for the champions of Europe's various leagues while filtering out lesser nations to allow the latter stages to be a knockout version of such a Super League. Only three of the quarter finalists are national champions (Roma effectively finishing fifth in last season's Serie A before Italy's annual pre-season uproarious lottery) and ten of the last 16 teams came from the Big 3 countries. Several of the participants have directly and strategically targeted the Champions League competition throughout the season in preference to their domestic leagues and it is difficult to avoid the conclusion that we are involved in an ongoing process that will inevitably result in the formation of a Europe-wide moneybags tournament. For further evidence, look at the last two seasons in the English Premiership. It is an imperative that the Big 4 qualify for Europe's premier competition. The manner in which Everton were discarded in favour of their neighbours via a change in the competition rules two years ago and Tottenham were stomach-bugged out of fourth place last season is an indication of the levels that the power operators will target to achieve their rightful place. Additionally, the Big 4 have issues with the more corrupt bookmaking practices currently in vogue in the Premiership (see numerous posts on the PGMOB undermining Arsenal this season, for example).
The election of Michel Platini, although welcomed by most football aficionados, may well accelerate this process. His declared aim is to reduce the number of Champions League qualifiers for the Big 3 countries which has no chance of being a feasible strategy. Such an action is the equivalent of self-administering a poison pill as it will merely hasten the formation of his nemesis - the Super League. Platini has an unenviable choice - compromise or be yesterday's administrator...
Oh and, by the way, you'll be sidelined eventually anyway. The power brokers who are taking control of the British game would prefer a blank piece of paper to establish their growth strategies. Standard private equity-heads desire either complete and utter control of a current structure or to develop an entirely new edifice suitably designed for their own creative investment plans. This week's Milan versus FC Bayern game is a case in point. As Dietrological clients will be aware, we have been forced to not only hedge our initial positionings on the Italians but we are now actively supportive of the Bavarians in the marketplace. Some of our reasoning is proprietary isolationist stuff but the Germans are livid about the choice of Baskakov to officiate and a future Super League would have an enclosed roster of referees that were acceptable to all G14(18) teams and not just the ones with the deepest pockets. Interestingly, we still suggest FC Bayern +0.5 despite Baskakov and the exclusion of Oliver Kahn.
So, the owners want it and the powerful clubs want it. Governments and the EU? Britain's Department of Culture Media and Sport is largely in the possession of the manipulators of the English game despite the occasional outbreak of righteous indignation from Richard Caborn. This is largely tokenistic as he knows which side his bread is vegan margerined while Tessa Jowell does as she is told (incidentally, not a lot of press coverage in England for her estranged husband's ongoing legal sensitivities in Milan with fellow lodge member Silvio Berlusconi). The G14(18) have lobbied widely and effectively within the EU in order to drive a wedge into UEFA. The neo-con MEPs supportive of the creation of a Super League believe in regime change as a matter of course and are willing to play their part in the final takeover of the European game by the fat wallets.
What will be the impact on the Premiership once the Big 4 and a couple of referees have disappeared into the trading strategies of the investment banks? Prior to corruption, the playing field will be significantly more level. As the recent cup exploits of Arsenal reserves has shown, the junior teams of the Big 4 would get in the UEFA Cup spots if allowed into the Premiership. A more level playing field at a power strata equivalent to the Championship in the current English set up would be preferable for the second tier clubs supported by first world money (Portsmouth, Spurs, Villa etc) in a shiny Super League world.
And the bookmakers will be ecstatic. Our prediction of the first £1billion football market in the next 2-5 years would be achieved sooner rather than later. The betting turnover generated by the new Super League would be globally colossal. The bookmakers will have to adapt if they do not wish to be supplanted by the global investment houses but the profits on offer will allow a suitable accommodation of each other's interests (at least initially). Domestic leagues would still be an earner for the market makers as Man City and West Ham fans would not immediately desert their team for a spot of glory hunting.
And, there are going to be some very very rich referees...
The fans, what about the fans? Do as you are told. Watch what they want you to watch and bet on what they wish for you to be betting on. Understand? We have a business to run here. Be good consumerists now...
The protagonists are claiming to be looking at a timescale of five to ten years before their baby becomes a reality. We would veer towards the lower end of this range and, quite probably, sooner. Private equity people are not renowned for their patience, risk aversion or lack of willingness to undertake psychopathic creative deconstruction in pursuit of yet more dollars. If Gillet and Hicks could sort it for next season, they would. For the moment though, the G14(18) assure us that the Super League is merely a potential blueprint in case "UEFA and/or FIFA runs wild". Leaving aside the point that the like of the G14(18) objecting to football's current administrators running wild is a case of projection of the first degree, plotters may always find a viable transgression for them to advance their strategy. An example - was Hezbullah's capture of an Israeli soldier really the trigger for Israel's invasion of Lebanon last year? Of course not... A strategy was in place years ahead starting with the taking out of Rafik Hariri and the expulsion of the Syrians after some "revolution" with a colour chosen from a Dulux paint chart.
The Super League start date is already agreed.

* This post was first published for Dietroloical Platinum and Gold clients on April 2nd.