The World Cup has highlighted attention on football's governing body FIFA runs itself and its president Sepp Blatter.

Things have got so bad that FIFA has been forced to put out a press release denying reports that Blatter and FIFA are under investigation by Swiss authorities on bribery allegations.

Writing in The New Yorker, finance writer James Surowiecki looks at FIFA's model of governance that underpins venal self-dealing and influence peddling.



"Modern soccer...is apparently so riddled with Machiavellian maneuvering that Henry Kissinger once said it made him "nostalgic for the Middle East." Blatter himself is a canny autocrat who has maintained and expanded his power with Boss Tweed-style tactics, as alleged in "Foul!," a new book by the British investigative journalist Andrew Jennings. Blatter denies all allegations of wrongdoing, but after he came to power, in 1998, one FIFA member signed a statement swearing that he had been offered a bribe for his vote. In 2002, Blatter's own deputy submitted a well-documented report charging him with financial mismanagement and of running fifa "to the benefit of third parties and his personal interests." When FIFA's audit committee started to look into the organization's finances, Blatter shut down the investigation. In the years since, he has consolidated his power, so that his will now seems to be law."

Surowiecki puts it down to public choice economics, where the emphasis is on the importance of self-interest in shaping behavior and where bureaucrats are often more interested in protecting and expanding their power than in looking after the common good.

Still, he rightly points out that it's not going to make any difference to the game's drawing power. FIFA's issues are not going to stop people coming to the World Cup, which means the internal politics will remain in place.

"His (Blatter's) organization's role is ultimately a feel-good one, and, as with an old-style caudillo, it seems people are prepared to accept occasional shenanigans if the man in charge has good populist instincts. In his recent speech, Blatter said, "FIFA may not be perfect, and it may not have perfect people working for it, but the basic idea is healthy and solid." The idea may be. The reality isn't."

It's led to a situation where critics say the game needs to be reformed. Writing in The Age, my colleague Economics Editor Tim Colebatch put it thus: Lovely game, but badly in need of serious reform.

"Game after game has been decided not by the skills of the two teams, but by refereeing decisions at critical moments.
"The beautiful game has a problem. In no sport on earth are more matches decided by the chance fate of refereeing decisions. If the ref sees a critical decision your way, you win. If he sees it the other team's way, you lose.
"Sure, random decisions can decide the outcome in any sport. But in soccer they matter far more often, because it is such a low-scoring game that one goal often decides the result.
"It is not that FIFA's rules never change. One charitable explanation of the refereeing at this World Cup is that it has now sent referees out with a mission to crack down on unsporting tackles, and some teams had not got the message. But go back through video replays of the matches, and that explanation is hard to accept.
"What you see on the screen is a different problem: whether consciously or not, the referees are treating the top teams with kid gloves, while dealing harshly with outsiders such as Australia and the African teams.
"By the end of the first round last weekend, the eight seeded teams had collected a net surplus of 101 fouls: that is, 101 more fouls awarded in their favour than against them. Italy alone had a net foul count of 26 in its favour, Brazil 19, Spain 18, Argentina 16 and so on. Yet Australia had 30 more fouls called against it than for it, Ghana 36, and Tunisia 26."

Can't agree with everything Colebatch says here, particularly his point scrapping the offside rule. Still, his points raise the issue of why FIFA struggles to adapt. Blame it on the governance.

Colebatch's piece was written before Italy beat Australia 1-0 following a controversial penalty with seconds left to play. That said, some of decisions against the Italians were questionable.

Still, writing in the Los Angeles Times, Graeme L Jones says that crucial decision was pay-back for 2002 when Italy was beaten by South Korea in an atrociously refereed game.

"Given the massive public support for the team, keeping South Korea alive as long as possible was very much in FIFA's interests. So Italy paid the price.
"This time around, the price has been paid back.
"Things are all square with Italy. Australia will get the makeup call next time around, at South Africa in 2010, assuming it qualifies."
"That's how it works.
"It's about making hundreds of millions of dollars in corporate sponsorships and television contracts. Fat cats greasing fat cats. It's not really about sport or sportsmanship. Only the naïve believe that."

All this suggests that FIFA's issues might suggest that systems of governance will deliver certain outcomes.

The moral of the story: if there's a problem in an organisation and the outcomes it delivers, look at the governance.