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What FIFA Can Teach Us About Overpriced (And Overhyped) Stocks
Submitted by Tim Price via Sovereign Man blog,
FIFA headquarters seem more like a nuclear bunker than a swanky executive facility – or perhaps they are both.
They take up 11 acres on the Zürichberg, cost 240 million Swiss francs, and of the building’s eight floors, five of them are underground.
They incorporate a fitness centre, a meditation room and a full size football (soccer) pitch.
Bloomberg Business reports that cell phones are rendered inoperative by the black, Brazilian granite in the bowels of the building, and that executive committee meetings are held on the third subterranean level, in a conference room that has a floor of lapis lazuli.
Buildings make a statement about their owners. FIFA-Hauptquartier seems to be saying: our owners have a boatload of cash.
When the building was inaugurated, high winds and driving rain forced the anticipated flag ceremony indoors.
But that didn’t faze Obergruppenführer Sepp Blatter (for the avoidance of any doubt, we are not suggesting that Sepp Blatter is or has ever been a Nazi paramilitary, although The Guardian has called him “the most successful non-homicidal dictator of the past century”), who opined artfully that
“The sky is touched with tears but we can live with that because football also has to live in all weather conditions and rain is a gift from heaven.”
Grand High Ming Blatter, who has been compared by the president of Dominican Republic soccer, to Jesus Christ, Nelson Mandela and Winston Churchill, also observed of his headquarters’ vast glass frontage that it
“would allow light to shine through the building and create the transparency we all stand for.”
Well, quite. Apart from in those five underground levels where you can’t receive a mobile phone signal, and where FIFA’s legal department requires that visitors sign nondisclosure agreements for routine meetings.
Or even more ‘transparent’, FIFA’s head of finance Markus Kattner told Bloomberg that they wouldn’t disclose how they spent $397 million in personnel expenses, or what Mr. Blatter’s salary is: “We have hidden it so you cannot find it.”
And if FIFA had shareholders, it is likely they would be somewhat less impressed by the gaudy awfulness and conspicuous consumptiveness of it all.
When it comes to the corporate HQ, less can sometimes be more...
When Tom Murphy joined Capital Cities Broadcasting, corporate HQ was a dilapidated former convent. He was asked to project a more professional image for the company.
He responded by painting the two sides of the building facing the road. The other two sides he left untouched. Over a period of nineteen years, he generated a remarkable compound annual return to shareholders of over 22 percent.
Most corporate executives also feel obligated to a) please Wall Street and b) court the media assiduously.
Their time might be better spent on running their businesses in the best interests of their shareholders.
The crowns of our titans of finance have clearly lost some of their sheen over recent years. But the tendency to follow the crowd was well expressed by Citigroup’s Chuck Prince when he infamously told the FT in July 2007 that
“When the music stops… things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”
Adam Smith in ‘Supermoney’ wrote a passage so wonderful and so relevant to our current situation that we may have become addicted to its re-use:
“We are all at a wonderful ball where the champagne sparkles in every glass and soft laughter falls upon the summer air. We know, by the rules, that at some moment the Black Horsemen will come shattering through the great terrace doors, wreaking vengeance and scattering the survivors. Those who leave early are saved, but the ball is so splendid no-one wants to leave while there is still time, so that everyone keeps asking, “What time is it? What time is it?” But none of the clocks have any hands.”
The clocks may not have hands, but the ticking goes on.
Bond markets are living on borrowed time. Bill Gross may have been a few years early, but he was fundamentally right to suggest that they are resting on a bed of nitroglycerine.
The rally in many stock markets is starting to look a little tired, too. Valuations have certainly become stretched. What is the pragmatic solution ? We think it’s to throw in your lot with:
- Successful businesses from all over the world
- With competent and honorable management
- Who don’t squander money on trophy corporate headquarters
- Who think like owners because they are owners
- Who maintain companies that have little or no debt
And, finally and crucially, not consciously to overpay for the shares of those businesses.
In a world where heavily-manipulated stock markets are constantly achieving all-time highs, this is difficult to do. But for a patient, educated investor, there are still options out there.
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"executive committee meetings are held on the third subterranean level, in a conference room that has a floor of lapis lazuli."
Their offices were built in Minecraft, apparently. If you have computer-literate-age kids you KNOW what I'm talking about.
I mean if you have the money why not build an evil lair.
"Grand High Ming Blatter, who has been compared by the president of Dominican Republic soccer, to Jesus Christ, Nelson Mandela and Winston Churchill, also observed of his headquarters’ vast glass frontage that it “would allow light to shine through the building and create the transparency we all stand for.”"
OK, at first I thought this was all just grand over-reach by the US to nail a bunch of who-cares FIFA execs for daring to send the World Cup to Russia. But now I'm starting to think this guy and his cronies are getting what they deserved.
And, as is de rigueur, free Jon Corzine!
This is the script outline for the next 007 movie.....
"No, Mr. Blatter. I don't expect you to say anything. I expect you to DIE."
I haven't followed this story much, but here's PCR's take on the FIFA scandal:
http://www.paulcraigroberts.org/2015/06/03/washington-politicizes-footba...
the article is really "cute" and then it goes on full retard by saying that "bond markets are living on borrowed time".
what bonds? safe haven AAA government bonds, junk country bonds (like italy), corporate bonds, junk bonds? as if they are all the same.
you do know that currency issuers with reserve status can print money on demand, so their bonds are priced accordingly. all else equal, long-term interest on their bonds is a function of economic growth prospects or lack thereof. so if growth is migrating to zero, so will their long-term interest rates.
even if you don't believe this (your choice), bonds have suffered corrections every year since 2009 - and they are going through one now. the same can't be said of stocks, who haven't seen even a slight correction since 2012.
should stocks correct (and i believe the bull market is over as we speak), bonds will suffer - you are right. but not all bonds, not the safe havens.
just a thought
One bank manager I had years ago, told me his biggest warning sign were businesses that spent
opulently on their home offices.If he saw a fountain in reception, he called their loan.
I'm guessing this was around 1962?
Mid to late 60's.
He's long dead now, just as well.
Simon is just jealous that he can't scam his subscribers enought to afford office space for his little blog staff in Switzerland.
A full size empty grass field to play soccer on cost a LOT more than the bond villain conference room (which seems like a necessary "investment" these days if you don't want to suck Uncle Sam's dick).
Good, I'm GLAD they're corrupt. I hope they stole millions.
Fuck you, powers-that-be, for making such a big fucking deal about sports corruption while IGNORING the crimes of the bankers...hypocritical pieces of shit!
I'm SO GLAD that Interpol has gotten involved...where the hell have they been for the past 8 years? Chasing Julian Assange?
That's it assholes, go after the REALLY dangerous folks, like corrupt soccer organizations and horny Swedes with websites...
You're missing the big picture. The little dictators need to get the message that the big dicators are in charge.
Will the gifts to Israel from the United States never stop? For the latest extra help can be analyzed from the major news coverage of the arrests of officials with the world soccer federation, FIFA, on corruption charges.
How is Israel connected? Philip Giraldi explains:
“The answer, at least for the timing of the arrests, might just be Israel.
“The Palestinian Football Association had previously called for a vote to suspend Israel from FIFA because Israeli teams routinely play in the occupied West Bank while the Israeli government both harasses and restricts the movements of Palestinian players between the West Bank and Gaza as well as to international matches. The suspension vote requires a 75% majority of the 209 FIFA members and it would have devastating impact in Israel, somewhat similar to what happened when South Africa was suspended from most international sporting activity due to its apartheid laws. Benjamin Netanyahu recognized the danger and vowed to resist any such moves very aggressively even if it would lead to the destruction of FIFA. Preceding the FIFA arrests, it was considered quite possible that the Palestinian appeal would be successful.
“So was it just a coincidence that three days before the Palestinian vote the U.S. government ordered the Swiss police to raid the hotel where the FIFA functionaries were staying to make arrests on corruption charges going back more than twenty years? And how was it that reporters and photographers from the New York Times appeared in the hotel lobby at dawn to record the incident in real time? Was the timing and media coverage intended to delay or cancel the vote? If that was the intention, it succeeded as the Palestinians came under intense pressure at last Friday’s chaotic FIFA meeting and withdrew their motion, delighting Netanyahu .
“There is little doubt that FIFA is extremely corrupt, particularly involving bids for World Cups as well as in its marketing and broadcast agreements, and it is clear that it has been under investigation by the U.S. authorities for quite some time. But what is the United States interest apart from resentment over losing out on its own World Cup bids? Only two of the fourteen indicted persons are American citizens, one native born and the other a dual national. And the Attorney General will have to tie herself in knots to claim jurisdiction over foreign national FIFA functionaries who presumably committed their alleged crimes overseas. Washington will have to use the same mechanisms it employs for terrorist cases, where any connection including a phone call or internet message that travels through a U.S. based transmission line can be cited as a compelling American interest in the case.”
http://www.unz.com/article/keep-your-eye-on-the-camel/
As a long-retired manager and sometime Director of the Cayman Islands Chamber of Commerce (Cayman has been intimately involved in these FIFA shenanigans), I have long maintained that companies' auditors are primarily to blame when money disappears. I trained as an auditor, back in the days when standards were apparently much, much higher than they are now: I know what I'm talking about. Let's face it, just about every company in the world that ever goes broke, does so with a "clean" audit report.
Yet in all the media coverage of this FIFA scandal, the incompetence of the auditors is never mentioned. The next little essay in my personal blog ("Barlow's Cayman") will address this topic - and ZH itself should consider seeking some explanation from one of the major professional auditing firms.