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The Insider

By Lars

«Now, look, very often, these bank guarantees aren’t worth the paper they’re written on. Like I saw one example where the bank guarantee came from that country’s central bank, but when the money came, it came from a hundred different accounts, and you think, what on earth is going on there?»

By Philippe Auclair

Following the publication of Josimar’s investigation into the links between Asian e-Gambling platforms and Premier League clubs, we were approached by a number of individuals who wished to provide us with additional information. One of these individuals is an industry insider who was intimately involved in a number of deals brokered by Premier League clubs with, in particular, Chinese e-Gambling operators. Some details of this conversation have been changed to protect our informer’s anonymity.

What explains the prevalence of partnerships between Premier League clubs and East Asian e-Gambling platforms that are geared almost solely towards markets in their region, China in particular?
“There is so much commercial pressure from owners now, and so much money in that sector in Asia, that they go for it. And now this has expanded with the ‘crypto space’, FX traders, NFTs, fan tokens…Any club which brokers a commercial deal has to do due diligence, and some clubs are better at this than others. I did some work for one which was better than most at that; but even in that case, I didn’t think our due diligence process was as thorough as it should have been. Ultimately, we’d do our due diligence, the legal team would come back with information about the company, and then, it’d be, ‘cool, let’s proceed’! And that was that, regardless of the findings. It was just a question of ticking the boxes, going through an administrative process. This is what is happening all across football at the moment.”

How does the process work? Are clubs approached by agents, or by the e-Gambling operators themselves?
“It varies from case to case. Manchester United, for example, are a very-well organised sales machine. They have a big sales team and are constantly reaching out to the market. They’ll identify a sector and say, ‘right, we want a drinks partner, we want a betting partner’. So they will create a plateau and they will send that plateau [marketing offer] to every entity in the market they’ve identified, they’ll keep on doing that, and that’s why they have the marketing power that they have. But Manchester United are very distinct from the other clubs in the Premier League – bearing in mind that Premier League clubs are way ahead of other European leagues in terms of commercial teams. One club I was involved with also tried to be proactive and reach out to people, but mostly, you’ll have inbound requests.”

What do you mean by that?
“The offers will come from intermediary agencies. Some of them are established people in the market, like Octagon and Lagardère. These people work by the book, totally above board. But as clubs are getting more and more desperate for income, there are more and more of smaller, less reputable intermediaries and agents coming up. From my experience, these intermediaries are just conduits which the Asian e-Gambling operators use to track the clubs. Because if the companies went straight to the clubs, it would be more of a ‘who are you?’ kind of response. But if an intermediary comes to a club and says, ‘look, I’ve got this brand’, it’s easier. There is so much commercial pressure on the clubs. If someone comes to me and says, ‘hi, I work for this agency and I’ve got this brand who’d like to speak to you’, I’ll take the call and say, ‘ok, tell me about the brand, tell me who you are’. Very quickly, you come to a place where, before the legal team has even been involved, we’re talking about financials and so on. Because we’re not doing due diligence immediately. It comes very, very far down the line, and by that time, when you’ve started talking about financials, forecasts, etc, and the commercial team says, ‘we want that money in’, the legal guys do their thing, we take the information, ‘all right, they’ve got this, this and this, they haven’t got this, this and this, but ok: is there a bank guarantee?’ And then we make a decision.”

And then you get the money?
“Ah. No-one – and I mean no-one – pays these fees upfront. Usually what they do is pay the first instalment. You’re happy. Then come the second and third and third instalments, and this is where the problems start. It varies from club to club of course. I know some clubs which wouldn’t go into this kind of deal. But I know of some other clubs in the UK, you go to them, you get the deal. If I’m an gambling operator, I know that if I go to club X or Y [he names two PL clubs], you’ll get the deal done. Because they need the money, and there is so much pressure on the commercial team that they won’t say no.”

Who are those agents who work for those gambling platforms?
The established ones, like Lagardère or Octagon, are actually very good. They won’t bring you this kind of betting brands. The problem is the smaller intermediaries or agencies. You go online, you see a website that looks kind of professional, and some clubs are being duped. ‘We are a leading sports marketing agency’…but who are they? But the deal’s been done. This is the big problem: the clubs are not vetting the intermediaries and agencies.”

Can you give us some examples?
Well, X [name withheld] is an example. Often it will be a contact or acquaintance you have dealt with, you used to be at a club who has now set up their own agency. In one instance a contact came to me and said, ‘there’s this company, they do this, they do that, etc’. I don’t know the company he’s talking about, but I know this guy and some of his clients and I think, ‘this is credible’ – and, straight away, your guard is down. But when I met them, something just didn’t seem right. Their guy was supposed to be the CEO of this innovative company, but there wasn’t much substance to what he was saying. Later, I learnt they hadn’t paid their bill with [another PL club]. The kind of company which tells you they’re based in this country, but then you realise they’re registered in a tax haven, and you think  ‘oh, this is all a bit dubious’. These are the guys you’re dealing with, the kind of guys these gambling operators use to get through to you.”

We’ve also been told that some of those e-Gambling brands are ephemerous and disappear after a couple of years, or morph into another brand – and the payments stop. When you do due diligence, do you try to establish who the Ultimate Beneficial Owners of those companies are, back in Malaysia, China or the Philippines to avoid this kind of scenario? Let’s say club X is approached by agent Y who says he’s got this Asian e-Gambling client Z who’s looking for a Premier League partner. Then you enter the negotiation. But who do you negotiate with?
“Essentially, the correspondence will be done with the entity in China, and the agent will be on the calls to facilitate the conversation. Usually, you’d say, ‘this is who we are as a club’, the entity will tell you what they’re looking for, we want to be big in that region. We’ll then do a sales presentation, we’ll have mock-up imagery of their brand on the LED boards, we tell them how much space they’ll get there, how much hospitality, how much digital imagery, this is the value you’re getting, this is the investment. Some kind of negotiation will follow. If they’re happy, you create a ‘Heads of Terms’ document, a two-page Word document outlining everything they’re going to get and the cost. This doc will be signed, then you go to a long-form contract, which is quite a long-drawn process, during which your legal team will do due diligence. The legal team will only come in at a very late point, a point at which everyone’s excited by the money the deal will bring in. That is a big part of the problem for me. It should be done the other way, and a lot of these conversations would be done before they even got off the ground.”

Who does that due diligence work?
“Some clubs do it themselves, others use third-party companies.”

Like, say, the business intelligence agencies you’d find in Mayfair in London?
“Yeah. But only to a certain degree. Like, the owners, the board members, are there obvious red flags somewhere? That’s the extent of it, most of the time.”

Are you talking about the actual owners and board members, who might be operating from Macau or Manilla?
“Yes, I am. The big guys, not those who’ve been paid to be a front. Like you’ll go through their financial history. Or, rather, you try. Because there is no financial history to be found, really. It often is a new company, so there’s nothing to be found. Same for the bank guarantee in case a payment can’t be made. Now, look, very often, these bank guarantees aren’t worth the paper they’re written on. Like I saw one example where the bank guarantee came from that country’s central bank, but when the money came, it came from a hundred different accounts, and you think, what on earth is going on there? So, even these bank guarantees, pff…The due diligence process is just a box-ticker. Yeah, done that, not a rigorous analysis of who these companies are, who controls them, and whether we should be dealing with them or not.”

Do you know how big these East Asian e-Gambling companies are?

“Not, not really. I’m not sure anyone does. The due diligence process with them is nowhere near what it should be.”

You’ve actually spoken to some of the Chinese operators who are now ubiquitous in the English game…

“Lots of the time, that’s why the agent or intermediary will sit on the call, because their English is not the best.”

Now, let’s talk about the UK Gambling Commission’s role. After talking to them on several occasions, our impression is that, whilst they have a very robust regulatory framework in place, which is rigorously applied to British or Irish e-Gambling operators, we always end up at the same point when we talk about East Asian/Chinese gambling platforms: it is always up to someone else – their licensed operators, who are proxies – to verify their credentials. To quote them, “We also require operators to tell us websites they will be using under their licence and this includes white label websites. We do not currently investigate marketing partners as part of an application, but we would if an issue was brought to our attention. Where an operator contracts with a third party, we expect the operators that we licence to carry out all necessary due diligence to satisfy themselves that the proposed relationship will not in any way compromise the operator’s own compliance“. So we end up going in circles. But you’re telling me that the clubs who have struck deals with companies such as W88, sportsbet.io, FUN888, will at some point talk directly with their Chinese owners?


Would you know who the Ultimate Beneficial Owners of these companies are? Would you know who is hiding behind those brands?

“It will change from club to club. But, outside of the really big clubs, the question will not be asked, and not by the Gambling Commission. They will not look for answers in a proactive fashion. It’s never “we can’t proceed with that deal if we don’t know about this and that’. And that’s the point. Due diligence doesn’t cover this. Due diligence is ‘can you provide us with this and that?’. And then it’s, ‘done it, done that call?’ ‘Yeah, ok’. and…yeah, ok. That’s all. The clubs, 100%, have to take more responsibility. The fact is that these companies are coming via intermediaries and agencies which are English-speaking and have their motivations as well. For the clubs, it’s more palatable, they’re dealing with marketing agencies, not with the e-gambling operators, through much of the process. Also, I know that these companies don’t deal with just one club. A betting company comes up and, all of a sudden, they’re partners of PL clubs X. Y and Z. That’s often because the agent will have done a multi-club deal. The operator will say, we have 5 million pounds to spend. We could do Man United…or what don’t we do something with this club and this club and this club? That’ll be a much easier process to get done, and much more lucrative as well for the agents.”

What’s the benefit for them?

“The smaller clubs will pay a much higher commission rate. The big PL clubs will pay between 5 and 7.5% commission rate. But I’ve heard that some of the smaller clubs will pay between 20 and 30% commission rate to the agent. This explains why the agents, when the Chinese operators come to them, will say, ‘let’s not go to Manchester United, let’s to X, Y and Z’ and do a multi-club deal. Because you’re not going to get Man United, but you’ll still get the exposure thanks to all the games you’ll play against Man United, Man City or Liverpool. People in China will still be exposed to your brand, at a lesser cost. They’ll see the images, the messages on the LED boards, the sleeves, the shirts. So it’s arguably much more cost-efficient to go to smaller clubs. There’s less due diligence. The deals are done a lot more quickly. And that’s why you see all those deals falling in place. Smaller clubs are also perhaps less concerned by the impact a relationship with an e-Gambling platform in Asia will have on their reputation. Smaller clubs don’t think that way. They’ve got revenue targets they’ve got to meet. ‘Do you have the money? Get on board’.”

Do you know where the money comes from? It ends up in club X…FC’s account, but from where? From the East Asian companies themselves? We were told that British banks would probably not accept those payments. Is this correct? 

“The money will never come from the entity – the gambling operator – itself. You know who you’re dealing with, but, when it comes to payment, you’re dealing with another contracted entity. ‘We’re a Chinese entity, but we have a contracted entity which is based elsewhere and will pay you’. Then the first transaction comes through, there’s a sigh of relief, and everyone says ‘cool!’ It’s a different story when it gets to the second or third instalment of course. By that stage, the brand has established its presence, and if you’re the club and you’ve got that name on your shirt, it’s not a simple process to remove your commercial partner’s logo from everything.”

Can you think of a time when the UK Gambling Commission got back to you or to another club to tell you they were not satisfied with a particular relationship with an e-Gambling platform?

“No, never. And I think that’s why you see the prevalence of these brands throughout football. I know they have protocols in place, but never have I come across a scenario in which the Gambling Commission came back to a club and asked for more information.” 

The production of this investigation was supported by a grant from the Investigative Journalism for Europe (IJ4EU) fund.

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