Has the FIFA World Cup become a Qatar-strophe?

Sascha: [00:00:02] From Equity Mates media. This is the dive. I'm your host, Sascha Kelly. The football Osaka World Cup kicked off in Qatar overnight. 

Audio Clip: [00:00:10] The World Cup has officially kicked off in Qatar with a spectacular opening ceremony and style performance. 

Sascha: [00:00:16] For the next two weeks, the world's attention will be trained on the football fields of Qatar as the world's best players compete for the ultimate national prise. Winning a world cup. 

Audio Clip: [00:00:28] Possibly now the. World,.

Sascha: [00:00:31] But equal to the attention focussed on the pitch is the climate around it. There's been a lot of media commentary about Qatar's human rights record at the migrant labour used to build these new football stadiums and how they ultimately won the right to host the World Cup in the first place. In today's episode of The Dive, we speak to one of Australia's highest profile football commentators, Ed Kavalee. One third of the trio, Santo Sam and Ed. But before then, I'm joined by my colleague here at Equity Mates. It's Alec Renehan, who's going to help set the context for this World Cup. Alec, welcome toThe Dive. 

Alec: [00:01:07] Hi. It's actually good to be here. 

Sascha: [00:01:09] Very good to have you. Because I've got to admit, I know about the World Cup happening, but I'm not a football fan myself. So let's start with the very basics. What is the World Cup? 

Alec: [00:01:19] Yes. So the World Cup is, I guess, the ultimate prise in national competitions. You might argue that winning a trophy for your club is big, but when you're representing your country, you want to win a World Cup. And if you want to be known as the greatest player of all time, as some of the players competing in this World Cup want to be known, they really need a World Cup in this event. 

Audio Clip: [00:01:40] France are the champions of the world. 

Sascha: [00:01:44] Yeah, they want that image of them holding what I imagine is a giant trophy standing there in front of thousands of adoring fans. Yes. 

Alec: [00:01:51] So it's big. The way it actually works, we've got 32 teams competing that were World Cup qualifiers and the rest of the world have been knocked out. The 32 final teams left standing for the next two weeks. We're going to watch them compete in eight groups and then we're going to see them go to a knockout stage. Ultimately, we're going to have one winner and the World Cups are held every four years. 

Sascha: [00:02:14] Okay. So there's lots of conversation about the fact that the World Cup is being held in Qatar. How did that decision come about? How do we decide where it's held?

Alec: [00:02:22] So this is really where the controversy began right at the very beginning when they were awarded the World Cup. And how a World Cup location is decided is by a vote by key FIFA members who ultimately have complete discretion as a group on where a World Cup is held. Countries bid and they vote on the winner. Now, think of it like the Olympics. The International Olympic Committee decides where an Olympics is held in the same way FIFA decides where a World Cup is held. Except unlike the International Olympic Committee, there's a lot more corruption with a lot more alleged corruption when it comes to FIFA's process. But we'll let Ed explain all of that. 

Sascha: [00:03:04] Okay. I'm looking forward to hearing a bit more about that. Last question before we kick off the interview. Why is this a business story? Because it just seems like an excuse to talk about sport. 

Alec: [00:03:15] Yeah, it does feel like we're shoehorning a topic that we're interested in, doesn't it? No. There is a really interesting business story here. So for context, hosting the World Cup is expensive. In 2014, Brazil hosted the World Cup. They spent about 15 billion USD. In 2018, Russia hosted the World Cup. They spent about 14 billion USD. So that's sort of the ballpark to host a World Cup in 2022. Qatar is estimated to spend 220 billion USD to host the World Cup almost 15 times more than the previous two World Cup hosts. And that got us thinking here at the dive. Why? How can you justify such a big increase in spend? Is there a return on investment? Is this all about nation building or sports washing, which we will get into in this interview? But ultimately, we wanted to know why. And we turn to Ed Kavalee, who knows a lot more about football to help us understand and for context, when you're listening to this, this interview was recorded last Thursday, the 17th of November. 

Sascha: [00:04:18] I'm looking forward to it. Let's get into it. 

Audio Clip: [00:04:20] This. Away from boats. I look at the space here for Betsy the Betsy Jackson. 

Alec: [00:04:29] Ed Kavalee thanks for joining me. 

Ed: [00:04:31] Yeah, great to be here, bro. But listen, man, this 15 minute limit, it's just nothing. It's just not like that, which is it's just not going to happen. We need extra time. We need injury time. This is the biggest business slash sporting event in the world. It needs it because there's a lot of tech. You send me questions. Yeah. And oh, man, we got answers. We got answers.

Alec: [00:04:54] Okay. All right. Well, look, if you can give us answers, we'll give you extra time. That's that's the deal. But let's start here and we'll see where it goes. Qatar is reportedly spending 220 billion USD on this World Cup compared to 16 billion from Russia in 2018, 20 billion from Brazil in 2014. We want to start here. We are a business podcast and we couldn't really get our heads around the business rationale for a ten X increase in spending. So why spend so much?

Ed: [00:05:27] So that's probably conservative as well. So that's probably a conservative estimate. So for them, it's about and I've said this a number of times, it's about nation building. We're going to probably get on the sports watching later. I am less concerned about that. So the key moment, one of the key moments is to go back to 2005 when they opened the Inspire Academy, which quote from their website. So I'm sure I'm being tracked as an ambitious target by 2020, 2 years ago. Need to update the website to be recognised as the world's leading sports academy. Development of youth athletes opened in 2005, and guess who they had at the opening? It wasn't like two people from Love Islands. They had Pele and Maradona. Those were the two people who opened this thing. So the eyebrows that you're raising, those are the eyebrows that they want to keep raised up. Now we're going to get to this and why it's important because it's a quiz question. Who is the current global head of the Inspire Academy Sports Division? Because there's other divisions. But who is the sports head? 

Alec: [00:06:25] Well, and you're not the only one that's done their research. And by research, I mean spoken to you beforehand. I believe it's Tim Cahill. Oh.

Ed: [00:06:32] Isn't that interesting? So that plays a part to what we're going to get to when it's tinfoil at that time. But there he is, Mr. Tim Cahill, and God bless him, as he said himself, a kid who left school at 16 from Western Sydney now running this multi-billion dollar Sports Inspire Academy. So that's partly why they're spending that money. But another part of why they're spending that money, as we know, is that it's all these Gulf countries not wanting to have to rely on fossil fuels when the Guardian finally cancels them. And then secondly, but they also need quite literally other things to do, which they've said they want this to be the place. So they've got back this, quote, global scouting network that they keep speaking about. So, you know, Tim Cahill will mention in interviews that now that the Qatari javelin throwers have never been better or who gives a shit. But the point is, it's just to be able to continuously bombard the world with press releases about progress and positivity coming out of guitar and sports. The easiest way to do it because it's the easiest thing to quantify.

Alec: [00:07:32] Yeah. And I think that that gets into this idea of sports washing. I guess we are hearing it in the sense of potentially covering up the human rights atrocities potentially. But also I guess sports washing, as you said, can be used as a proxy for progress in nation building. So help us get our heads around sports washing. And is it worth $220 billion?

Ed: [00:07:55] Well, it depends who you ask, because this is not new at all. And it's certainly not new for the World Cup. Mussolini did this in 1934 when he did not like football Mussolini, but he liked the idea that he could look good with football. So in 1934 for that World Cup, he printed tickets on the finest of paper, the best pipe you've ever seen in your life. So the people had something to go and say to the rest of the world in the evening. Great prices. Are you sure about that? A bit much note. I look at these tickets. I went to the World Cup and they also paid people to go. So they paid for fans to go to this World Cup. And what did we see three days before the World Cup? What did we just find out that they had been caught, Qatar using, we think, expats or foreign workers to pay them as being fake fans for teams that were lining up. So they did Brazil, right? They did a video on TikTok and Brazil of all these Brazilian fans that had rocked up early as okay, fine. And then they wanted to say, okay, now look at all these English fans that have rocked up and are also having a parade. The problem that they had was so they were using the same instruments, so they were the same. And the last time I checked, Brazilian fans and English fans weren't in an instrument exchange programme. And the other reason they got caught is no one's going to ever believe that there are other English fans. Everyone hates England. That's why they would never pick the one country that basically everyone in the world hates and wants to lose at the World Cup. So any other place there. Too big to run. And people would be like, Yeah, that kind of makes sense with England. Forget it. And they also were paying. So the Dutch have been really critical and they still are. The coach is like, this is stupid, why are we here? But we'll get to that later. So that's one of the first things guitar did is they made an approach to Dutch influences to go to Qatar and be paid and be paid to do positive posts about Qatar. So they go to whoever's criticising them and they find a way to go. What they don't like is what this part of them does. So that sort of evens it out somehow. And the irony of that is, of course, you're flying influences in to do stories about the World Cup influences who will then be arrested for taking a photo in a bikini in public and therefore undoing all of your good work. 

Alec: [00:10:03] Yeah, it is confusing, and I guess it's also confusing because for every Dutch influencer that you fly over, the world's media is turning their attention to Qatar. And we're speaking about it here on a business podcast. If you didn't have the World Cup, the focus wouldn't be on all of the issues. But instead that now got the world's attention on them and they're having to pay these influencers. It feels like they're not so much sports watching as sports spotlighting. And then you add to that, if the players themselves are revolting and you know, Denmark is wearing a protest kit, Australia's players released a critical video. Has this backfired? 

Ed: [00:10:42] Look, it depends. Once again, it depends on who you are and who you're answering to. So one thing that we've got to make very, very clear at this point, and we will get to the results on the pitch in a moment, because that's where all these chickens are going to come home to roost. And I've got very strong conspiracy theories about this. But the other thing that's happened is Qatar's attitude has changed. They have finished apologising. So that has been a big, you know, with the World Cups for everybody. It's this, it's that. And they just now, you know what? We pay for this. And you can actually excuse my language. You can, because the other day you ride the World Cups right around the World Cups for everyone, you know. Okay. Well, it's for everyone except the following groups of people. And there was a Atari former national player on German TV the other day who forgot the script. He was on TV and he was asked about the LGBTQ plus people who want to go and want to support it. And he just had it and he called being gay a damage in the mind. And that was every now and again it just drops a little the perfect sports watch, whatever you want to call it. And yes, and two days ago, the Danish of course, the Danish were filming and just blokes tried to stop me for no reason. And then they said we don't need a permit. Yes, we've got one. It was like Ned Flanders, you know, when Homer starts the lynch mob in Springfield and there's no burning leaves without a permit, I go one too late. And by then his house was already on fire because they keep the Leafs. It was that exact moment. And so they just now the rubber is hitting the road and you can feel them actually now going, why are we getting, why are we apologising? What are we doing? We pay for this shit. We got it through the, you know, the FIFA process, which I'd love to cover at some point how they got this bid and why that and how that plays into where we are now and how that's going to play out on the pitch. Because this is not some people aren't an outlier. It's a disgrace. You know, I've got a saying that I always like to use, how do you know something? It's not true. 

Alec: [00:12:38] How.

Ed: [00:12:39] I saw it in the Netflix documentary. Right. They are o phrases. They now have over a million when it comes to facts in documentaries. Right. They're always opinions. The main that always have Netflix always have a reason to suddenly come up with some documentary. They've made up half so or it's basically mostly bullshit. So they've got this faithful one where they say they go back through the bidding process. Now, this is true when Qatar got the World Cup during that time, 22 of the 22 that voted 16 of those ExCo members in FIFA, it's only 22 people who decide it have either been banned, accused or convicted for criminal corruptions, involved in FBI cases or accused of ethical violations, but not been convicted. Two of them were already off the voting panel because they'd be done in a newspaper sting trying to sell their votes. So as recently as 2020, the FBI is still coming after them. It is absolutely ridiculous. I mean, this is what the traitors on Channel ten thought it was going to be. Just film FIFA. You want to , I will try this. Just film the same for Mexico. But it's not a shock. It was the logical extension of a process that they had designed. So when the former FIFA president, the demonic Swiss know, Joseph Blatter, he's now trying to blame Michel Platini and he's saying it's all Platini whose fault? He was the head of UEFA Europe at the time he switched. I wanted it to be for America. Nothing to do with me, says the bloke that ran it for 30 years. And we can get that's a topic for another day. But I've got a little grab which I want to play because the legend is Tarik Panja, the journalist, he was on Pod Save the World, which has done a good job recently, but follows our IQ and then put his name into search. The. Crazy flat stick genius. And he literally is the only human being that wilfully goes to all of FIFA's Congresses as a journalist and sits there and listens to their bullshit. The man deserves a Nobel prise just for that. So this is him talking about a dinner that took place in Paris where Michel Platini, who controls basically five votes on that panel, five out of 22 blokes were kicked out. Now it's five out of 20. We're looking good here. Let's get them. So this is him, Sarkozy, the president. It brought him over for dinner. No, no. We know, it's probably normally a Swedish party, but he goes over there and he says, righto and. Oh, hello. Have you met my friend, the crown prince of Qatar? And have you met this bloke who's part of this bid that they've got for the World Cup? It's just so weird that you two are both here right now. Just to give us an idea of the stakes that are involved when it comes to the World Cup. This has to be put into context. This is what took place at the dinner to have a listen to the states that are being used for the World Cup. 

Alec: [00:15:24] There was a dinner, a famous dinner at the Elysee Palace, the home of the French president at the time, Nicolas Sarkozy. The other dinner was the then crown prince and current emir of Qatar, Sheikh Tamim. Michel Platini, another French great footballer, the head of European football, Nicolas Sarkozy. And I believe the French sports minister was there. That dinner had huge implications for the world of football and for the 2022 World Cup. Here is why. Afterwards, Qatar places in order for French jets worth billions of dollars and Platini has his head turned. Nicolas Sarkozy. 

Ed: [00:16:04] Says. 

Alec: [00:16:04] For France, the World Cup, your vote should go to Qatar. And Michel Platini, to his credit, is one of these few.

Ed: [00:16:13] Voters who at least. 

Alec: [00:16:15] Tells everyone publicly who he voted for in that secret vote. He says he voted for Qatar, though he says he would have done it anyway. Hmm. I'm not so sure about that. Right. Okay. 

Ed: [00:16:31] Okay. So this is why it's upsetting. Australia bought French submarines that they didn't even have to build. We didn't get any votes. We welcome the menu into our hearts. We didn't get any votes. 

Alec: [00:16:44] Again, I guess my question just keeps going back to why. So, you know, Qatar is spending billions on French jets. You know, the bidding process they coated with Russia, didn't they? Russia bid for 2018. Qatar bid for 2022. And there was a lot going on there. Like it is a lot of effort. There is a lot of alleged corruption. And then it's a lot of. 

Ed: [00:17:04] Oh, no, I don't go with corruption. So that's the other thing I'm tired of. That being said, this is the logical extension of a process that had already been started. So Australia paid $40 million or $25 million to remember how much it was public money to bid for this same World Cup. Let's not forget that the big issue that England had when they lost to Qatar was that they didn't do the right bribes. So I spoke to a former executive of the Australian bid who told me something incredible. She said there at Sydney Airport when they had the FIFA Congress here and one of the big bosses who's in this Netflix documentary, but he's not a bad guy because he's in a t- shirt, so he's cool now. So they're at the airport with all of the Aussies to be dropped. And this bloke walks past like, Hey, hey, going. You guys had someone tell you? Your presentation was amazing. Really? Really. Thank you so much. I think it's a shame you can't have it. Sorry. What? Here's what you know. You've got Sydney airport's got a2am curfew and the FIFA members and the big wigs and all of the obviously the VIPs, the VIPs are on a different time zone, so they won't be able to fly in and out. But anyway, they walk off and everyone ignores it. And this woman, this Benita is and she goes. Sorry, did anyone else hear that? Like what? No. That just tells us that there's no way we're getting this because of this. So we should stop spending money and they all just look around. What are you talking about? We can. We can still win. And of course, we got one, but even then, that was a stretch. So it's very important to understand that this is not corruption. It is corruption. But corrupt implies an honest system being corrupted. This has never been an honest system being corrupted, and it never will be. And that is why I don't hate it when people bang on about corruption. 

Alec: [00:18:56] Well, let's say billions of dollars of jets are a lot of bribes, alleged bribes, and then hundreds of billions of dollars worth of spending on infrastructure. I saw a post on Instagram today that was equating Qatar to the Fyre Festival based on some of the accommodation and stuff like that. It feels like a lot for a moment where the whole world will be looking at Qatar, many with critical eyes. So how do you explain such an effort and such a spend from the Qataris? 

Ed: [00:19:27] See, they're playing on levels that you and I don't understand. So the jets, all of it. The short answer is don't know. Long answer is we'll find out, but it's going to take a while. So we actually don't know why we can listen to Tim Cahill forever and not hear why they've done it. I can listen to the emir forever and not hear why they've actually done it. We don't know why they've done it. It's not a Bond film. They don't stroke a cat and tell us at the one hour, 45 minute mark, we we short answer, don't know, but we know what they're telling us. But why would we believe that one? I don't believe anything else that's being said. So no one knows yet. But here's something I want to throw in the mix. Did you know that Saudi Arabia has a beating for 2030? 

Alec: [00:20:08] It doesn't doesn't surprise me that I just bought an English Premier League football team. 

Ed: [00:20:11] Well, they bought Newcastle. And why did the other team go? I know we're getting off topic, but why don't the other English teams like the fact that the Saudi Arabians have bought in and now even the Americans, the Liverpool owners are starting to sell out? Because what do they know that we don't? 

Alec: [00:20:27] I'm sure plenty. But what in particular? 

Ed: [00:20:30] Exactly. But they also know that these blokes in their all blokes will not stop until they get what it is that they think they want. And it's not javelin results and it's not. Isn't Qatar a nice place? They could already have that. They've got the airline that sponsors everything under the sun. They've got all of that already. So we're not going to know. And that's why I'm keen for the financial people of the world. That's the pages I need to read because that's where you'll find out. 

Alec: [00:20:54] Well, and while we wait and see, I want to turn to some of the other stakeholders involved in the World Cup, in particular, the companies that are sponsoring the sport for them. A quick break here from our sponsors. 

Ed: [00:21:07] I mean. I mean. And then. 

Sascha: [00:21:13] This time for Africa. 

Alec: [00:21:15] Welcome back to the dive. And before the break, we spoke about the business case for Qatar hosting the World Cup and spending $220 billion. But we want to turn to the companies that sponsor the World Cup. Football in general has some big companies that seem to sponsor everything. And, you know, like Nike and Adidas topped the list. But there's a number there: the Mac is of the world, the Coke of the world. They seem to always throw money at sports and football in particular. How have they responded to everything that's going on in Qatar and especially, you know, the recent player awards? 

Ed: [00:21:48] Great question. Here is the point we find ourselves. FIFA for the first time is facing a future where it's not guaranteed that their revenue increases. 95% of FIFA's revenue comes from the World Cup in the four year cycle. It generates 95% of their revenue. They basically live on tuna and beans for three years and they have to put on all these tournaments they don't want to put on in order to pretend that they care about football so that they can get to this point. So the Russia one in Russia generated $4.8 billion. Now, I don't know about you, and I know that that's enough for a one bedroom apartment in Sydney, but I think before even finding it hard to live on $4.8 Billion for four years. Since 1950, the revenue has just gone up and up and up. And here is one of the great ironies of this. Sepp Blatter is a huge part of how that happened. He came from marketing and he was instrumental in helping them get to this point where they are now. But just released and this was then there's little pills in the food. You guys are experts at this digging through the information to find a beat that means something. I read this the other day. Shares in ITV fell recently. The British broadcasting ended their large broadcasting entity on a lukewarm revenue boost from airing the World Cup. That is a phrase no one would ever have thought that they would be uttering. This has been a rocket to the moon since the dawn of sponsorship in the World Cup with Coca-Cola and Adidas. And so that's why this World Cup is so important to the sponsors. But also it honestly feels as though they're saying to them, just get through this one. The next one's in America, the next one's in Mexico, the next one's in Canada. And that is where they're trying to get to this Netflix documentary, I believe, so that they can put a line under FIFA so that they can come back with the new FIFA bid on some of the rights to have games for the next one. And they can say, we were tired of putting that old awful mob to bed. Look how bad they were. Thank goodness we've got this new crew in charge and they're doing a great job. By the way, we've actually got some guys that's weird. So that to me seems as though that's exactly what's going on here. Now, one in particular, Qatar, committed a FIFA rights atrocity, which is much more serious than a human rights atrocity. Two days before the tournament, my homeboy Tarik Panja put on the Internet a video of the official beer sponsor, Budweiser, who paid $112 million to sponsor the World Cup. There was a tent being moved because it was too visible by Qatari authorities. 

Alec: [00:24:25] Yes. 

Ed: [00:24:27] That, my friend, is the biggest crime that they have in this world that I know that sounds ridiculous. 

Alec: [00:24:34] But yes. 

Ed: [00:24:35] That is the biggest crime that Qatar has committed. That is when Qatar said, you know what, we still run this joint and we've had your we have had enough of you telling us what to do. And that is the moment where FIFA goes, okay, great, no problem. Let's get the hell out of here and never speak of this joint again. And also then they released the prices, £12 for a beer, £12 for a beer. And then they announce they're going to have drunk tanks where they seem to be intoxicated. Or if they think you're intoxicated, they're going to throw you in these drunk tanks. The only thing is that it'll be the funnest place to be for the World Cup and B, it might be the only way to get near accommodation. You just have to sleep on the ground. So that's going to be the place to be. 

Sascha: [00:25:23] Well, Alec, that was a great interview. But I've got to say, for someone like me who doesn't know a whole lot about football, I'm going to be spending a lot of time on Google following up some of those threads. I've got to ask you, though, any closing thoughts? You've had a couple of days since that interview. Anything else that you want to add that you're thinking about the World Cup assassin? 

Alec: [00:25:42] You're not alone in terms of Googling. I like to think I know a little bit about football and I was certainly Googling a lot afterwards. I learnt a lot. I think it's probably important to note that we've seen some developments since this interview that in some ways reinforce what Ed was saying. So we closed the interview there talking about the companies and the sponsors. And Ed mentioned Budweiser as a key sponsor and how the Qataris were moving a tent. Well, since then, one of FIFA's major sponsors. Is a lot more annoyed because the Qataris have banned alcohol sales at the ground. I think Budweiser, I think they paid $112 million to sponsor this World Cup. So you'd be pretty annoyed that you can no longer sell your product in the stadium at the game you're sponsoring. Yeah. 

Sascha: [00:26:29] Recoup some of the cost of that sponsorship deal. 

Alec: [00:26:32] Yeah, yeah. Yeah. And the other thing we should note is in the interview with Ed, we were speaking about the Australian team and the Denmark team protesting. We have seen protests from other teams. We saw the English football team invite migrant workers to their training and I believe the American football team flew a rainbow flag in support of LGBT rights. And so we are seeing players I guess recognise their agency in this situation and step up. Whether that has any effect in Qatar, we shall see. I would hazard a guess not. But it's good to say the players at least stand up for what they believe in. 

Sascha: [00:27:10] Really interesting story. Certainly after having it not on my radar at all, it seems to be everywhere. So obviously stay tuned to the dive. We've got our headline series. As there's updates over the next two weeks, we will be delivering them to you. 

Alec: [00:27:24] And we should say the interview with Ed went on for about another 15, 20 minutes. We wanted to keep this tied, although we are waffling on now. But we released the full interview over on the Equity Mates Investing podcast. You can go and listen to it there. It's out now. If you want to hear what Ed thinks is going to happen on the pitch and maybe get a little bit conspiratorial while he's at it. So go and listen to that. If you want to hear more from Ed Kavalee. 

Sascha: [00:27:50] Yeah, get your tinfoil hats on. Well, let's leave it there for today. Alec, if you enjoyed this episode, then please tell a friend about it. Tell one of your football friends. It really is the best way for our podcast to go. And if you've just joined us for the first time, then welcome. Go check out our back catalogue. Lots to explore. Remember, you can follow us on Instagram. We're at the dive business news all in one word. You can contact us by email thedive@equitymates.com And subscribe whatever you're listening to right now so you never miss an episode. Thanks so much for joining me today, Alec. 

Alec: [00:28:21] Thanks, Sascha. 

Sascha: [00:28:21] Until next time.