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Figure at Center of FIFA Scandal Selling Team to Pay U.S. Fines

September 18, 2015

A figure at the center of the FIFA scandal is selling a Portuguese soccer team to help raise $126 million owed to U.S. authorities.

Jose Hawilla’s Traffic Sports marketing firm is selling Estoril Praia, a second-tier team it bought five years ago and turned into a profitable player-trading factory. Hawilla, for two decades one of the biggest businessman in Latin American sports, admitted he was at the heart of graft schemes that saw millions of dollars in bribes paid to soccer officials in return for lucrative sponsorships and television rights. The scandal led to the arrest of several soccer executives and forced the sport’s governing body to pledge reforms.

Hawilla has so far paid $25 million of the $151 million he agreed to forfeit to the Justice Department. Traffic director Jochen Loesch declined to reveal a sale price for the team but said his firm is asking for “low eight digits.” Traffic itself will be put on the block.

“Everything is for sale,” Loesch said in an interview at his Sao Paulo headquarters.

Months before Hawilla struck the plea deal, which included cooperating with authorities and secretly recording other suspects, Traffic sold soccer team Desportivo Brasil to Chinese investors. It has also come close to selling Estoril Praia on several occasions, according to Loesch. A deal to sell the club to a group of London-based investors called Fidelis foundered when Estoril’s previous owner exercised a right to buy the club back before backing out because he couldn’t raise funding.

Traffic created Desportivo Brasil and invested in Estoril mostly to make money trading players — a global market worth about $4 billion a year. The firm created state-of-the-art training facilities and recruited young talent before transferring the best players to rival teams for a profit. Estoril has made money in the past two years and retained stakes in players after moving them to larger teams in the hope of banking further profits should they move again. The team sold about six players per season, Loesch said.

Traffic’s business model gets around FIFA rules banning investors from buying stakes in the transfer rights of players. The practice was known as third-party ownership: teams sold shares in athletes to investors, who profited when a player was sold. Traffic was a major player in third-party ownership before the practice was banned earlier this year. FIFA is allowing current agreements to be wound down.

Over the past year Traffic has discussed selling Estoril to the Abu Dhabi-based owners of English Premier League leader Manchester City, Qatar’s sports investment fund and other investment groups.

“There are many from the football investment community who also invest in players,” Loesch said. “We also have Chinese looking into it.”

Hawilla, once described as the “owner of Brazilian football,” remains in the U.S. awaiting sentencing after pleading guilty to racketeering, wire fraud, money laundering and obstruction of justice. He has pledged to pay his fine through the sale of his Traffic assets, though authorities have said they will target other holdings should he not raise sufficient funds.

The son of dairy plant owners from Sao Paulo state, Hawilla was a television reporter before starting his career as entrepreneur with 30 hot-dog carts. He bought Traffic, a company that sold advertising for bus stops, and a few years later got a big break in soccer by signing a deal to market the Copa America, Latin America’s biggest soccer event. Those deals involved millions of dollars in kickbacks, according to U.S. prosecutors.

Hawilla’s assets include property holdings, including a shopping center in his hometown of Sao Jose do Rio Preto, and a network of Brazilian TV stations.

2017-01-13T11:59:17+00:00