Citizens' Issues
Football and cricket most susceptible to money laundering

Sports is an area, which experiences continuous flow of money from different sources and has been able to survive and grow even during times of difficulties. No wonder cash rich sports like football, tennis, cricket and boxing are most susceptible for money laundering

Money launderers keep on finding new avenues to launder money. Whatever be the means of launder money, it is very obvious that money laundering is done in those areas where flow of money is large, frequent and not so well defined. One of the most susceptible areas for money laundering activity has been sports. This is one such area, which experiences continuous flow of money from different sources and has been able to survive and grow even during times of difficulties. Some of the sports which have seen huge money flow are football, tennis, cricket, boxing etc.

 

Financial Action Task Force (FATF) analysis of sports as a target avenue for money laundering gets manifested in the following statement , “Sports that could be vulnerable to money laundering problems are either big sports (worldwide like football or on a national basis like cricket, basketball or ice hockey), sports like boxing, kick boxing and wrestling (sports that have traditionally links with the criminal milieu because of the relationship between crime and violence), high value sports (such as horse and car racing where there are ample opportunities to launder big sums of money), sports using (high value) transfer of players, sports where there is much cash around, which give criminals opportunities to turn cash into non-cash assets or to convert small into large bills”.

 

While many sports are vulnerable to money laundering, nothing can beat football in money laundering activities. Some recent international experiences show how money laundering has become home for money laundering. Carson Yeung Ka-sing, a Hong Kong tycoon and owner of British soccer club Birmingham City, was jailed in March for six years on charges of laundering HK$721 million ($93 million). Similarly in Bucharest, Romania a court handed prison sentences to eight Romanian football officials for tax evasion and money laundering in connection with the transfer of 12 players. There was a loss of 1.7 million Euros to the state because of the activities related to money laundering and tax evasion.

 

So what makes football such a fertile avenue for money laundering? The first and the most important aspect is, of course, huge flow of money that this sport gets every year. Some interesting data point in this regard provides evidence to this. During 2011-12, the European football market grew to €19.4 billion (up 11%), of which the ‘big five’ leagues had a market share of 48% (€9.3 billion). In particular, the top end of the game showed resilience in the face of wider economic challenges in Europe.

 

Top division clubs’ revenues in 2011-12

Source: Deloitte

 

As per a study done by Deloitte, “In 2011-12 the total revenues of the 92 clubs in the top four divisions of English football exceeded £3 billion for the first time. Within the Premier League total of £2,360m for 2011/12, Premier League clubs’ revenues ranged from £320m (Manchester United) to £53m (Wigan Athletic). There were six Premier League clubs with revenue above the average (£118m), including the four clubs that competed in the UEFA Champions League in 2011/12. Champions League football generated at least £30m extra revenue per club, and around £70m for Chelsea who won the competition”.

 

All data points above show that there is a huge inflow of money in football making which it a fertile ground for money laundering.

 

While money indeed plays an important role in promoting money laundering in football, it is not just the only factor. There are some other interesting factors, which contribute in making football vulnerable to money laundering which can be described as follows:
 

  • The network of the stakeholders in the football sector is very complicated which makes money laundering easier.
  • There is a lack of professionalism on part of the management barring exception of the some of the top leagues.
  • Despite the tremendous growth of the industry as a whole, many football clubs are financially in bad shape and their financial trouble could urge football clubs to accept funds from dubious parties.
  • Football sector involves large sums and this exposes the entire sector to money laundering risks.
  • Some players are socially vulnerable, especially the young players. This exposes them to the risks of money laundering.

 

As per FATF, an investment in a football club can provide the criminal, the “favoured status”. “In most cases investments in football clubs are characterised by a high degree of uncertainty over future results. However there are strong non-material rewards for wealthy individuals who invest in football clubs or players,” it added.
 

While efforts are on at the global level to reduce instances of money laundering in football, it won’t be incorrect to say that there is huge amount of money, which has been laundered into the sector. In the days to come, more instances of money laundering may come out in open in this sport.

 

(Vivek Sharma has worked for 17 years in the stock market, debt market and banking. He is a post graduate in Economics and MBA in Finance. He writes on personal finance and economics and is invited as an expert on personal finance shows.)

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COMMENTS

NSriramamurty

3 years ago

All Sports / Games are mostly Manipulated by Rich People. Share Market is Manipulated mostly.BeingUnbearable/intolerable to Public Grievances / Accusitions , SEBI sought additinal Powers and got them. Yet to see Howfar SEBI controls Manipulations . Horse Racing , accepted by Courts as a Sport, Is fully Manipulative.That is why 90 % Common Indians goes Bankrupt in all Games. Example in my Life - in HorseRacing after Losing Lakhs of Rupees in it , inspite of Hard and Intellegent Preparations, going to Race Club with Rs.100.One Day I went in, Boght Lucky Dip Ticket and Watching Races.By Third Race I Lost Money Fully.I Saw Law dip Lottery Result and got Rs.100. Taking that Money , I Stood in Bookies Ring,emptied by then having all Punters went to Galleries . Suddenly Dr.M.A.M.RamaSwamy, Owner of > 100 Horses appeared and told a Broker his Betting on " Pamme Queen ", Raising 1 Finger .Broker asked 1000 ?,which is not his Bet and Broker asked 1 Lakh , for which Dr. nodded Positively. Immediately Broker Distributed to other Bookies and Lowered its betting Rate from 6-1. Knowing Fully well that Horses Run as per his Whims,and my selection of Winners is other 2 Horses. Getting very clear the Winner I Bought 2 Tanala Tickts Keeping my Selected Horses in Second and Third Places alternatively.Went to Watch Race. Pammequeen Jumped up First and after it went 10 Lenghts, others Started.Usually in Such Starts , Starter Declares them as Non-Start and Horses have to come back and Restart.. Nothing of that Happened ,till Winning Poll , Pammequeen is leader and Won , while my selected Horses Came Second and Third.I Got My Tanala Ticket Amount of > Rs.10,000 .Shockinin in 10 Years Racing Play .Shifted to ShareMarket, but experienced Similar Fate.

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