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Peter Vermes: An American in Communist Hungary

Wednesday, September 19th, 2007

Note: This is the seventh part of my American Soccer Road Trip, which will involve me traveling across the country, finding stories that exemplify the diversity that exists in American soccer. Check back soon for further updates.

In 1977, when Peter Vermes was 11 years old, his father took him to see a World Cup qualifier in his homeland between the Hungarian national team and the USSR. The young boy was in awe of the stadium and the players out on the field. He told his father, “One day I’m going to play in this stadium. I’m going to play for the United States and we’re going to play against Hungary.”

Vermes’s desire to play for the US against Hungary reflected his family’s background. He was born in Delran, New Jersey in 1966 to Hungarian parents. His father, Michael, had been a professional player, a member of the great Budapest Honved FC team in the 1950s. Things were on course for the elder Vermes to play in the 1958 World Cup, but the Soviet invasion of 1956 forced him to flee his homeland. He eventually settled in the United States, although he would later return most summers to Hungary with Peter, seeking to instill a connection to his homeland in his young son.

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For Love, Money, or Ethnic Patronage?

Tuesday, July 31st, 2007

That foreign investors have found British teams attractive investments in the past few years is obvious given their increasing numbers. Less clear is why these wealthy men have decided to invest their money in British soccer clubs.

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Bolivians Protest FIFA’s Ban on High-Altitude Games

Tuesday, June 5th, 2007

Sepp Blatter will not be walking the streets of Bolivia any time soon. The FIFA president is public enemy number one in the Andean country after announcing the decision to ban games at altitudes above 2500 meters. The move has angered many Bolivians, who claim it is discriminatory.

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The Rising Threat of Kidnapping in Latin America

Tuesday, May 22nd, 2007

In November of 2004, Robinho was reported to be on the verge of moving from Brazilian team Santos to Real Madrid. The transfer fees being discussed in the media were about $23 million. Robinho’s contract at Real Madrid would make the boy who had grown up in desperate poverty into a rich young man. Robinho had only one thing on his mind. And then, his mother was kidnapped.

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Gazprom’s Sponsorship of Schalke

Tuesday, May 8th, 2007

German team FC Schalke 04 are currently in first place in the Bundesliga. If they win the championship, it will be their first league triumph since 1958. A Bundesliga title would be quite an achievement for a club that had an estimated 100 million euro debt only a few years ago.

This turnaround has been made possible in no small part by a massive sponsorship deal with Russian energy giant Gazprom. This lucrative sponsorship (25 million euro per year, which beats out Bayern Munich’s 20 million euro deal with Deutsche Telekom) has helped Schalke immensely, but may ultimately prove even more beneficial to Gazprom.

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It’s a BIG deal

The importance of the deal can be seen by looking at those behind the agreement. It was signed in 2006, “not by coincidence” at a time when German chancellor Angela Merkel and Russian president Vladimir Putin were meeting. And former chancellor Gerhard Schroeder likely also played a role, as he is an advisor to Gazprom, a position he began soon after leaving government.

All sponsorship deals are intended to bring benefits to the corporations that sign them. But the Gazprom deal is different for two reasons: 1) the company is a joint venture of private Russian industry and the Kremlin and thus reflects political as well as economic interests, and 2) the results Gazprom hopes the deal will achieve are far more clear than in most sponsorship agreements. As Rob Hughes wrote in the International Herald Tribune last year, the deal “represents a direct line connecting soccer, commerce and political power.”

Created from the privatization of the former Soviet natural gas industry, Gazprom has never completely lost its connection to the Kremlin. Today, it is a public company, but one in which the Russian government continues to maintain a majority stake. It only began allowing foreign ownership of its stock in 2005.

As a company controlled by the Kremlin, Gazprom has often reflected official government policies. The most obvious manifestation of this has been the recent occasions in which Gazprom has cut flows of gas to neighbors with which it has disputes. Ukraine, Belarus, and Georgia have all felt the wrath of Gazprom.

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Ukranians protest Russian gas cuts in 2005

As gas was cut off to these former Soviet states, supply to Western Europe was also affected. Pipelines which normally carry gas through Eastern Europe ran dry, meaning access to gas at the Western European outlets decreased and prices increased. Not surprisingly, some anger arose among those in Western Europe, who began to wonder if Gazprom (and thus Russia) could be counted on to reliably supply energy. A German resident of Gelsenkirchen, where Schalke is based, told the BBC in March, “The Russian government, by the leverage which they have over several energy firms, has found it easy to put pressure on Ukraine, on Lithuania and Latvia. Why should they one day not put pressure on Germany?”

It is this mistrust that Gazprom’s sponsorship of Schalke is intended to counter. And what better way than to sponsor a popular team in Germany, a country which gets nearly a third of its gas from Russia? After all, how can you hate the team whose money just helped your team buy a new striker?

Gazprom officials have been clear that improving the company’s image is a large part of the Schalke deal. Claus Bergschneider, head of marketing for Gazprom’s German operations, has said, “In marketing, you have a natural sequence of ‘Know It, Love It, Buy It’.”

Knowing Gazprom and perhaps loving it will come as Germans see the company’s logo on Schalke’s shirts. At least, that’s what the company is hoping. By improving its image with the German people, Gazprom wants to lower the chances of the German government seeking out other energy suppliers.

Recent changes in EU laws also now make it possible for Gazprom to sell directly to German consumers. The Russian company hopes that its name being seen by millions of soccer fans will lead them to arrive at the last step of the “natural sequence” and buy gas from Gazprom.

Two weekends remain in the German Bundesliga. If Schalke can win their remaining matches, they will become champions for the first time in nearly half a century. It is nearly certain that the team from Gelsenkirchen will be playing in the Champions League next year. Schalke’s fans will be ecstatic to see their team’s royal blue jerseys playing in stadiums across Europe. And carried on these jerseys will the logo of Gazprom, a company with as much to gain from Schalke’s success as the team itself.

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Yes! I’m improving European opinions of a Russian oil monopoly!

The Less-Than-Reputable MLS Uniform Sponsors

Monday, March 26th, 2007

Slowly but surely, David Beckham is showing why MLS shelled out the big bucks to bring him to the US. In the days after his signing was announced, the Galaxy announced they had sold 5,000 season tickets. And when the Los Angeles team announced on Friday that they had signed a five-year jersey sponsorship deal with “nutritional products” manufacturer Herbalife, the $3.5 to $5 million quoted was due, in no small part, to a certain Mr. Beckham sporting the company’s name.

Since MLS decided this season to allow its teams to sign jersey sponsorship deals, four teams have done so. In their bids to secure corporate sponsorship, a pattern has emerged. Whether by choice or necessity, several MLS teams have reached deals with companies whose products and marketing strategies are not the most reputable.

Real Salt Lake was the first team to announce a jersey sponsorship deal, when they signed with XanGo. XanGo paid an estimated $4 to $5 million dollars to have Jeff Cunningham and the rest of the RSL team promote their brand.

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Dave Checketts gets hooked up with some mangosteen juice

This raises the question: what exactly is XanGo? Well, according to its website Xango is

A delicious dietary supplement, XanGo Juice harnesses the nutritional power of the whole mangosteen fruit through a potent proprietary formula. Just one to three ounces each day unleashes a concentrated rush of xanthones, a vigorous family of phytonutrients. The best part: sensational flavor that’ll keep you coming back for more and more.

What XanGo is still seems a bit murky (Mangosteen? Xanthones? Phytonutrients?). But it is not the first slightly sketchy drink to find itself emblazoned on an MLS jersey.

That honor goes to Red Bull, whose logo has been seen on the jerseys of the team of the same name since it was taken over by the Austrian beverage company. Wooed by Red Bull company head Dietrich Mateschitz’s billions, the league changed the name of the franchise formerly known as the MetroStars and allowed Mateschitz to put his logo on the team’s uniforms before other teams were permitted to sign such corporate sponsorship deals.

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The 2006 New York Red Bulls

So, what is Red Bull? Well, the official website is a bit murky, claiming only that “All ingredients used for Red Bull Energy Drink are synthetically produced. Most ingredients are produced by pharmaceutical companies. This guarantees highest quality.” A bit vague.

Wikipedia clarifies a bit (though not much for those without advanced degrees in chemistry), claiming Red Bull contains “Water, sucrose, glucose, acidifier sodium citrates, carbon dioxide, taurine (0.4%), glucuronolactone (0.24%), caffeine (0.03%), inositol, vitamins (niacin, pantothenic acid, B6, B12), flavourings, and colours (caramel, riboflavin).”

So, highest quality synthetic ingredients such as taurine, glucuronolactone, inositol? Thanks, but I’ll pass.

New LA Galaxy sponsor Herbalife is also not quite mainstream. Though it markets itself as a “premier nutrition and weight-management company” with “life-changing products,” every product it sells carries the disclaimer “These statements have not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure or prevent any disease.”

Many of Herbalife’s products deal with weight control. One, called Snack Defense, claims to be

A scientific advancement in snacking control, Snack Defense … works all day to reduce the desire for sweets while it helps prevent the urge to snack between meals. Formulated with a blend of natural ingredients, including Gymnema sylvestre, a cutting-edge herb that targets the body’s response to sweets, plus chromium polynicotinate and Garcinia cambogia extract, Snack Defenseâ„¢ takes weight loss to a whole new level.

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Gymnema sylvestre, chromium polynicotinate, Garcinia cambogia extract? Delicious!

(The one counterexample to MLS teams signing deals with producers of sketchy products is the expansion team Toronto FC. Their deal with the BMO, a bank, seems straightforward enough, even if Maurice Edu is a bit skeptical about their mascot.)

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The ingredients of XanGo, Red Bull, and Herbalife products are enough to give me pause about those companies. But the sketchiness doesn’t end there.

All three companies have had their business practices questioned publicly. XanGo was issued a warning letter from the FDA telling the company to stop claiming health claims about its product, such as fighting depression, Parkinson’s disease and cancer. Red Bull was banned from being sold in Canada until 2005 and a CBC investigation headlined Raging Bull found that “two people have reported serious adverse health reactions after consuming the Red Bull energy drink.”

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According to a 2000 article in Salon, since its founding in the 1980s, Herbalife has “courted its share of regulatory nightmares. Some health experts questioned the effectiveness of the company’s nutritional supplements; Herbalife claimed to increase energy and cure a range of illnesses from venereal disease to bee stings.” Other have criticized Herbalife for being a pyramid scheme (see Dan Loney’s in-depth discussion), though a wildly successful one that made founder Mark Hughes over $400 million dollars by the time of his 2000 death by overdose (ironically, by anti-depressant pills: wasn’t there an Herbalife cure for what ailed him?).

The companies whose logos will be on the chests of David Beckham and fellow MLS players this season are not quite mainstream. But, then again, neither is MLS. It is a ten year-old league struggling to succeed on the field and on the balance sheet. Real Salt Lake is about as well as known to the general public as is XanGo, so in that sense, the teams and the sponsors are at an equal level in their respective fields. But as a fan who hopes to see MLS become a long-term success, I can only hope that XanGo, Red Bull, and Herbalife will be on teams’ uniforms only until they can find more reputable sponsors.

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