Hungry Like the Wolf Turning a Football Team into a Money Machine
Wolverhampton Wanderers Executive Chairman Jeff Shi
For anyone who knows the Wolverhampton Wanderers, this story won't come as a surprise. It will, however, provide some certitude about the Premier League club's Chinese owner, the Portuguese player agent Jorge Mendes and clear example of conflict of interest they have created around the "Wolves." In fact, four sentences are all it takes to understand it: The Chinese company Foyo bought a stake in Mendes' agency Gestifute. Then, the same Chinese managers took over an English club. Since then, a remarkable number of players represented by Gestifute have transferred to this club. This suggests that Mendes is collecting commission payments for transfers that his own business partners have negotiated with him and his confidants.
This business model, which would fail every compliance test in normal industries, has already been described, explained and commented on in the press. Nevertheless, this story deserves to be told again. In public, after all, the involved parties have consistently denied any conflict of interest. But now, for the first time, documents from the whistleblowing platform Football Leaks have illuminated how the involved parties talk about the deals internally. DER SPIEGEL shared and evaluated the data with the journalistic network European Investigative Collaborations (EIC).
The Wolverhampton Wanderers are a tradition-rich club from an unspectacular city. They won a trio of championships several decades ago but more recently have spent most of its time in the second division. In May of this year, however, the Wolves escaped their sporting insignificance and returned to the Premier League. One man who has been a symbol of this success is Rúben Neves. Back in April, a deflected corner landed at the Portuguese player's feet during a match against Derby County. He was about 25 meters from the goal and the 21-year-old controlled the ball with his right foot, took a step and hammered it into the left corner of the net. Wolves fans couldn't believe their eyes. It was the goal of the year.
Neves has already played in the Champions League as a captain for FC Porto. For the past year, he's been with Wolverhampton. How can it be that a budding star with international experience transfers to a second division team in England?
Since being taken over by the Chinese company Fosun in 2016, Wolverhampton has developed into a Portuguese all-star team. Six of the 11 most valuable players are publicly seen as clients of Jorge Mendes, the most powerful agent in Portugal. The Wolves' coach, Nuno Espírito Santo, was Mendes' first-ever client some 20 years ago.
The agent's influence on the team's strategic planning seems obvious. Yet the rules of the English Football Association are unambiguous: No player agent may interfere in the business of any club, neither directly nor indirectly. With this, the organization wanted to prevent agents from securing expensive transfer fees and high salaries for their own clients -- and collecting big commissions for themselves.
Jorge Mendes doesn't only advise superstars like Cristiano Ronaldo, James Rodríguez or José Mourinho. His agency counsels dozens of players with multi-million-euro market values. Mendes' business practices raise a number of questions. Some of his most prominent clients have admitted to tax fraud after authorities discovered they all owned similar constellations of offshore companies. Multinational tax investigations have also been initiated across Europe against Mendes' business deals as well. The Italian author Pippo Russo, who wrote a book about Mendes, called him the "most powerful man in football." Mendes wasn't simply someone who "works in the market," Russo told the New York Times, "but someone who creates the market."
Could Mendes create a lucrative market for himself in the Premier League with the Wolves?
The team's executive chairman, Jeff Shi, plays down the issue: He claims that Mendes is merely a "close friend and an advisor." The club, Shi says, makes its own decisions. But the Football Leaks documents show how Mendes' agency collaborates with its Chinese business partners in order to circumvent the Football Association's rules.
On July 3, 2016, shortly before the Wolves' takeover by Fosun, the club's chief executive, Jez Moxey, informed then-owner Steve Morgan about three planned transfers: Ivan Cavaleiro, Hélder Costa and Péle -- three Portuguese players, all of whom were Mendes clients, would be coming to Wolverhampton. "Fosun would like the Club to sign these players before the sale and purchase is completed." But as Shi reported back to Gestifute, Morgan refused. "We have to wait. Please help us hold any player to join Wolves." He said he wanted to discuss things in more detail with Mendes the next day. When contacted by EIC, Morgan denied having any knowledge of this communication.
This excerpt reveals just how deeply Mendes and his agency were involved in the takeover plans -- and that his players were an integral part of the future strategy even before Fosun bought the club.
In an email to a Gestifute employee, Jeff Shi explained the Wolves takeover: "You always know the reason for the investment of Wolves is mainly because of our bet and trust on Jorge." He added: "Jorge can take Wolves as the most reliable partner and agency revenue source for long long time."
An investor buys a club because he trusts a player agent who, in turn, delivers his clients one after another -- and at the same time, the investor promises the agent that his club will be a guaranteed source of revenue? Does the English Football Association need any more proof than that to put an end to such a blatant conflict of interest?
The English Football League (EFL), which is responsible for England's second division, has already investigated Wolverhampton following a complaint from Leeds United -- and announced it had been unable to detect any irregularities. Mendes and Shi, it seems, use simple loopholes to ensure they comply with existing rules. For instance, it's forbidden for a club owner to have any sort of stake in an agent's deals or business. Yet this is exactly what appears to be going on with the Chinese and Gestifute, since the investors purchased exactly 15 percent of Mendes' holding company, Start SGPS. Technically, though, the Wolves' owner Fosun didn't itself buy a stake in Mendes' company, Foyo did. But Jeff Shi himself explained in February 2016 that Foyo was a subsidiary of Fosun and he himself was the company's CEO. Despite the fact that Jeff Shi was the driving force behind both businesses, the governing body EFL deemed its rules to have been complied with.
Shortly after acquiring a stake in Gestifute, Foyo was replaced by two British companies, Foyo Culture & Entertainment and another called Champion Start. "Such arrangement is entirely for the purpose of tax avoidance and circumvent restrictive regulations," Shi blatantly noted in an email.
In his own words, Shi laid his intentions bare: "Given Fosun's strong coverage on Chinese business resources, and the support of Jorge Mendes, we think we are capable of improving any club for both commercial and football values." First, he revealed the intention of his company; and second, he articulated the attitude of an entire industry in which rules do not apply because they can be effortlessly circumvented. Now that all this is out in the open, Shi won't be able to claim as convincingly that Mendes is merely a friend and informal adviser.
When contacted by EIC, Wolverhampton declined to comment, saying it had already stated its position often enough. The English Football Association said it ensured that its rules were strictly followed. It also said it had received assurances from the Wolves that they were working in accordance with regulations. Neither Jeff Shi nor Jorge Mendes responded to requests for comment.
In their last match, the Wolves tied Arsenal 1:1. On the Wolves squad, there were more than twice as many Portuguese clients of Mendes' than there were English players. The lone Wolverhampton goal was scored by Ivan Cavaleiro -- one of the three Portuguese players that Fosun had wanted to acquire before taking over the club.
