Lawsuit threat to U.S. World Cup bid

By Community | November 29, 2010

The US Soccer Federation is being sued for $US50 million ($51.5m) by a former promoter of professional games in the US.

The lawyer behind the legal action said that he had asked a US court last week to compel FIFA executives in Switzerland to disclose their dealings with the USSF on the suit.

Soccer powerbrokers in the US say they were confident they could beat the lawsuit and fend off any threat to their bid for the World Cup.

The US is the frontrunner for the 2022 event, ahead of Australia, Qatar, Japan and South Korea. A European bid is certain to win the 2018 World Cup.

A judge in Chicago gave heart to the litigants in July by ruling that the federation had a case to answer on claims that it was involved in racketeering, extortion and anti-competitive behaviour when it forced promoters to pay large fees for the right to hold matches in the US between foreign professional clubs, including Manchester United and Barcelona.

The promoter, ChampionsWorld, paid $US3m to hold such matches between 2003 and 2005, and sold more tickets than the US Major League Soccer competition.

ChampionsWorld claims those fees pushed it into bankruptcy in 2005 and its creditors are suing the USSF for $US50m damages.

A court ruling that the USSF and FIFA had no right to demand the fees would knock a hole in the federation’s revenue and set a legal precedent that could allow other promoters to demand repayment of millions more in fees.

Supporters of the lawsuit said the USSF could be bankrupted, compromising its ability to host the World Cup, if the court decided ChampionsWorld was driven out of business by predatory behaviour by the federation and FIFA.

Soccer United Marketing, an MLS spin-off, does most of the promotion of international soccer matches in the US. Its revenue has helped MLS to survive its growth years and fund the World Cup bid.

Alan Rothenberg, president of the federation when the US hosted the 1994 World Cup, said he expected the federation to defeat the lawsuit, and even if it lost it had a strong enough balancesheet to avoid bankruptcy.

The federation’s revenue stream from international matches ranked well behind its earnings from television rights and gate receipts for US national team matches, he said.

In the year to 2009, the federation made $US2.9m from fees on international matches, and this year it is likely to have taken more than $US3m from more than 40 international matches involving clubs such as Real Madrid and Manchester City.

Jamie Brickell, the lawyer representing the creditors, said he hoped to be in court by the middle of next year and he was confident of success after a ruling in July by Circuit Court judge Harry D. Leinenweber.

“The judge agreed with us that there is no statute in American law that says the federation has authority over all professional soccer, or that FIFA has the power to give anybody the right to govern professional soccer,” Brickell said.

He hoped Judge Leinenweber would next week direct FIFA to provide information about its role in the matter.

The USSF tried to have the lawsuit dismissed, arguing US legislation on sport, and internal decisions by FIFA, had given it the right to impose the fees on promoters, but Judge Leinenweber said the case should go ahead.

He ruled that the federation had no right to govern professional soccer except in the Olympics.

“ChampionsWorld has sufficiently alleged a pattern of racketeering activities,” Judge Leinenweber wrote.

US laws did not appear to give the federation monopoly control over professional soccer in the US, he said, and if it had that control, USA Basketball, which ran the amateur sport, would also have control over the NBA.

“It is extremely difficult to conclude from a reading of the plain text (of the relevant legislation) or its legislative history that Congress intended such a result,” he wrote.

“The court holds that, as a matter of law, the act does not give the USSF authority to govern professional soccer in the US, except to the extent necessary for USSF to govern the participation of professional players in the Olympic Games and related events.”