American media companies, including DirecTV and 21st Century
Fox, have had business relationships with the sports-marketing
firms at the center of the corruption scandal that has rocked
international soccer.
U.S. authorities late last month charged executives at the
marketing firms, including Traffic Group and Torneos y
Competencias, with paying or facilitating bribes to officials
linked to FIFA, soccer's governing body, to secure lucrative TV and
sponsorship rights to games.
The U.S. TV companies have been important customers of Traffic
and Torneos, acquiring rights to major soccer events through them,
as have other broadcasters around the world. In some cases, the
relationships also involve corporate partnerships and joint
ventures, according to public records and people familiar with the
businesses.
The American companies aren't accused of any wrongdoing in the
Justice Department's indictment in the FIFA case. A Justice
Department spokeswoman didn't respond to a request for comment.
Satellite broadcaster DirecTV owns 40% of Argentine sports-
marketing firm Torneos. Torneos is a part-owner of Datisa, a
company that acquired rights to the Copa America tournament
allegedly through bribes of more than $100 million to soccer
officials, according to the indictment. DirecTV has four of the
nine board seats at Torneos.
This year's edition of Copa America, which features South
American national teams, kicks off Thursday, and DirecTV Latin
America will be telecasting it in Argentina, Chile and Colombia,
according to its websites in those countries.
Separately, former Torneos Chairman Alejandro Burzaco, who was
among the 14 people charged in the case, is alleged to have acted
as a middleman for paying off Argentine soccer officials. Interpol
has ordered an international arrest warrant for Mr. Burzaco and
considers him a fugitive from justice. Torneos fired him on June
3.
DirecTV, which is in the process of being acquired by AT&T
Inc., confirmed its stake in Torneos and said it has "no management
control" of the company. It added that it expects "all businesses
in which we have ownership interests to comply with established
laws and regulations." The company said it is "following the matter
closely to determine what, if any, actions will be
appropriate."
DirecTV has 19 million subscribers in Latin America, about as
many as in the U.S. It has been a crucial growth region as the
domestic pay-TV business matures. The company acquired its interest
in Torneos in 2008 and 2009 from DLJ Offshore Partners, Mr. Burzaco
and Fred Vierra, a former cable executive, a DirecTV spokesman
said.
21st Century Fox has its own connection to Torneos as well as to
Traffic Group, a Brazilian company that also acquired soccer rights
and resold them to broadcasters. (Fox and Wall Street Journal owner
News Corp were part of the same company until mid-2013.)
In 2002, Fox teamed up with Liberty Media Corp., an investor in
Torneos at that time, and private-equity firm Hicks, Muse, Tate
& Furst Inc., which held a large minority stake in Traffic.
Together, they created Fox Pan American Sports LLC, a programming
and marketing venture.
As part of the deal, Fox transferred into Fox Pan American its
Spanish-language sports channels, while Hicks transferred its 50%
interest in T&T Sports Marketing LLC, a joint venture between
Traffic and Torneos, according to a document from Argentina's
Finance Ministry. T&T, which was registered in the Cayman
Islands in 1997, held broadcasting rights to some popular soccer
tournaments.
The deal gave Fox rights to two tournaments, Copa Libertadores
and Copa Sudamericana, prestigious South American soccer
competitions. Fox Pan American Sports bought out Hicks Muse's
interest in 2011. After that transaction, Fox ended up owning more
than 50% of T&T, a person familiar with the transaction said.
Mr. Burzaco of Torneos ran T&T, according to a 2013 lawsuit by
Uruguayan soccer teams against a South American soccer
organization.
A Fox spokeswoman said the company has no operational control of
T&T. A spokeswoman for Liberty Media, whose stake in Torneos
ultimately ended up with DirecTV, didn't respond to requests for
comment. A Hicks spokesman declined to comment.
Representatives of Traffic and Torneos didn't return calls
seeking comment. The owner and founder of the Traffic Group,
José Hawilla, earlier pleaded guilty to charges related
to the probe, according to the Justice Department.
The 2014 World Cup drew more U.S. viewers than ever before and
raised hopes among soccer executives that sponsors and broadcasters
would funnel more money into the sport. Now, the scandal may make
companies "more wary or cognizant of who they are doing business
with," said John Guppy, founder of sports-marketing firm Gilt Edge
Soccer Marketing, LLC.
Several legal experts said U.S. companies wouldn't be liable
under the U.S. foreign-bribery law for connections to any sports-
marketing firms found to have bribed soccer officials.
Robert Mintz, a former federal prosecutor who heads the
white-collar criminal-defense practice at McCarter & English
LLP, said it was unlikely that prosecutors would charge a U.S.
company merely because they have an ownership stake in a company
charged with criminal activity, even if some members of the U.S.
company knew about that activity.
The U.S. Foreign Corrupt Practices Act focuses on payments to
government officials. The soccer officials who were recipients
wouldn't be considered government officials, the experts say. Mr.
Mintz said a more likely challenge for broadcasters would be
lawsuits from competitors who lost out on soccer rights, should the
allegations of bribery prove true. "At this point, there's enough
allegation of impropriety swirling around that we can expect
lawyers to look at every aspect of these transactions," he
said.
In addition to TV rights, Traffic also acquired sponsorship
rights to major events. According to the U.S. indictment, Traffic
acquired sponsorship rights to the Gold Cups running from 2013 to
2019 by paying bribes totaling $3.1 million to the president of
tournament organizer Concacaf, which governs soccer in North
America, Central America and the Caribbean.
The company resold those rights to marketers including several
well-known U.S. brands. Sponsors of the 2013 Concacaf Gold Cup
included Miller Lite, 7UP and Sprint, while sponsors of the 2015
Gold Cup, which starts next month, include Allstate, Sprint, and
Delta.
Sponsors said they were confident their business dealings with
Traffic were proper. MillerCoors said it is tracking the Justice
Department's probe and will "let due process play out before
determining any next steps" regarding its work with Traffic.
Allstate said, "We take a deliberate and thoughtful approach to
all of our marketing relationships and expect our partners to
adhere to the highest standards of ethics and integrity."
A spokesman said 7Up's sponsorship was "straightforward... with
negotiated deliverables." A Sprint spokesman said Traffic was the
"designated agency" for sponsors to work with for the Gold Cup. "We
were directed to work with it on the Gold Cup sponsorship, which
we've done," he said.
The sponsors of the 2015 tournament plan to stick by their
sponsorships. A Delta spokeswoman said, "There are things happening
with FIFA, but this is to support our customers' love for the
sport."
Samuel Rubenfeld contributed to this article.
Write to Tripp Mickle at Tripp.Mickle@wsj.com, Patricia Kowsmann
at patricia.kowsmann@wsj.com and Joe Flint at joe.flint@wsj.com
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