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The Alchemist Who Turned Toxic Assets Into Gold at Citigroup

The memo landed on a Sunday in November. It was 2007, and securities backed by subprime mortgages were roiling markets and imperiling banks. Merrill Lynch Chief Executive Officer Stan ONeal had just resigned under pressure, and Citigroup CEO Chuck Prince was rumored to be on his way out.

So the Nov. 4 memo to employees in Citigroups markets division seems bold in hindsight. While other banks were looking to unload the toxic securities and Citigroup was taking an $11 billion writedown on its holdings, then-trading chief Jamie Forese and fixed-income head Paco Ybarra had other plans. They announced theyd turn the banks souring mortgage debt over to a new team and chart a course for the future. It was, they said, a great opportunity.

The man they would soon ask to oversee that strategy was Mark Tsesarsky, a refugee from Ukraine with intense blue eyes and a cool demeanor. At the time, T-Man, as he was known around the bank, was head of special situations for securitizations, which meant he made bets on Citigroups behalf with bonds backed by mortgages and other assets. Now his bosses were asking him to help limit losses on someone elses portfolio of collateralized debt obligationsinstruments with names such as Bonifacius and Jupiter that were threatening to destroy the bankand find a way to profit from the turmoil.

Tsesarsky, at Salomon Brothers in 1999.
Photographer: Michael Paras/Bloomberg

Over the next eight years, Tsesarsky and his team did just that. They rebuilt their bank into Wall Streets biggest for CDOs, not by issuing securities but by buying billions of dollars of debt, holding it as values rose, and trading with customers. In the three years ended in December 2015, the handful of traders notched almost $2 billion in revenue, more than any other desk at the bank, according to people familiar with the companys operations. Their performance was made possible by an unprecedented rescue of the financial system, including a bailout of Citigroup, and a flood of central bank money that lifted asset prices.

Tsesarsky, 54, declined to comment. He hasnt given an interview since 1999, when he told the Jewish Week that his experience being discriminated against as a Jew in the former Soviet Union makes me stronger and different. The banks senior executives declined to comment as well. But the story of how he did it, pieced together from conversations with more than a dozen current and former executives, shows that even on a safer and sounder Wall Street and at a bank that says it wants to be more boring, a trader can wager billions of dollars in often opaque debt markets.

On a sunny day this spring, construction workers in hard hats mingle outside two buildings in Lower Manhattan that have long housed Citigroups investment bank and that this year became the companys headquarters. Michael Corbat, who became CEO in 2012, has been restructuring Citigroup, selling unwanted assets, shrinking its global footprint, boosting capital, and trimming staff. The scaffolding shrouding the bottom of one building is a sign of the changes.

But on the trading floor where Tsesarsky has a desk, at the top of the other building, little has changed. A wiry man who favors designer suits and ties, Tsesarsky runs the asset-backed bond-trading business behind a veil of secrecy. CDOs are only a small part of an empire that includes securities linked to auto or credit card loans, mortgages, and consumer-installment debt. For two decades, Tsesarsky shared leadership with Jeffrey Perlowitz, who announced his retirement in March. The louder of the two, Perlowitz was the id to Tsesarskys superego, says one person whos known both men for years.

Theres a serene balance that he has, James Zelter, a former Citigroup colleague and now head of investments at Apollo Global Managements credit unit, says about Tsesarsky.

To understand how Tsesarsky turned toxic assets into gold, its worth going back to the markets beginnings. In the 1970s, less than 10 years before Tsesarsky joined Salomon Brothers in 1986, a trader there created the first private mortgage bond by pooling home loans and divvying up the cash flows into different securities. The innovation spread risk across thousands of loans, making them easier to trade and attracting investors unwilling to buy single mortgages. It catapulted Salomon to the top of Wall Street.

Source: Securities Industry and Financial Markets Association

By the turn of the century, the ideas success led bankers to a little-used instrument with an esoteric name, the collateralized debt obligation. Working much like a mortgage bond, a CDO packaged existing securities into new debt. It was a second-generation magic trick that enabled even subprime mortgages to be transformed into triple A-rated paper. The market took off, increasing to $521 billion in 2006 from $68 billion in 2000, according to Securities Industry and Financial Markets Association data. Citigroup, which had swallowed Salomon in 1998, became the biggest issuer of CDOs.

As home prices crested in 2006, investors found themselves too far from borrowers to judge the securities risk and rushed for the exits. Banks had trouble unloading their inventory. The busiest arrangersCitigroup, Merrill Lynch, and UBS, among themsuffered billions of dollars in losses as the debt plunged in value. By the time of trading chief Foreses November 2007 memo, it wasnt clear thered be much left but rubble for Tsesarsky to manage. In December analysts at Barclays predicted the safest portions of the securities could lose as much as 80 percent of their value. Many considered the instrument broken, and much of Wall Street left the market for dead.

Citigroup, however, wasnt ready to give up. Executives, including Forese, viewed their experience in the business as the key to growth. Add to that Tsesarskys more than two decades in the mortgage markets, and Citigroups leadership thought it could make money and avoid another near-death experience, according to an executive privy to the discussions. In short, the bank decided to go long.

Ten months later, Lehman Brothers declared bankruptcy, plunging the world into a crisis that threatened the financial system. Citigroup needed a government transfusion of more than $500 billion, including emergency loans and asset guarantees at least $14 billion for risky mortgages in Tsesarskys portfolioand the U.S. Department of the Treasury took a 27 percent stake in the bank.

Even so, Tsesarskys team enjoyed more freedom than others, says a former colleague. In at least one instance, Tsesarsky helped persuade management to give more resources to the business, beating Bank of America and other rivals that didnt want to commit the additional capital.

Citigroup was ready when the Federal Reserve Bank of New York auctioned a portfolio of CDOs in 2012. The team canvassed customers and collected orders, making pitch after pitch about its deep knowledge of the securities and their cheap prices, according to a person with knowledge of the strategy. In cases where the bank saw something too good to pass up but couldnt persuade investors to bid, it used its own money to buy the debt, the person says. Of the more than $45 billion sold by the central bank, Citigroup won $6.3 billion, paying an average of 38 on the dollar.

Over the next few years, the bank reaped the rewards, becoming the go-to source for the more than 500 mutual funds, hedge funds, and other institutions still trading CDOs, according to one person familiar with Citigroups operations. And because there was less competition in an illiquid market, the difference between what Citigroup paid for the bonds and what it sold them for was greater than in less opaque parts of the debt markets, the person says.

The bank also stocked up on inventory and profited when those positions rose in value. In the first years after the crisis, bargains were plentiful: Much of the CDO market traded at deep discounts. As home prices rebounded, borrowers refinanced loans or started making payments, and the securities recovered.

In some cases, Citigroup took steps to force gains by amassing senior positions in CDOs and unwinding the structure, getting access to the mortgage-backed securities inside that traded at higher prices, says a person with knowledge of the banks strategy. The trade has typically been a hedge fund strategy because banks face capital constraints, according to Grant Buerstetta, a partner at Blank Rome who specializes in the deals. To get a deal unwound is a home run, he says.

Source: Securities Industry and Financial Markets Association

While it isnt clear how much Citigroup made from marking up inventory, one thing is certain: By 2015 the bank had full control of the CDO market. It traded about $6 billion of the securities with roughly 150 customers that year, according to a person with knowledge of the operation. That amounted to about $700 million of revenue, or 80 percent of the market, says another person. The tally, more than 6 percent of the banks total from bond trading last year, was large enough to save the unit from reporting its worst performance since before the financial crisis. The team booked $700 million in 2013 and $500 million in 2014, that person says. The gains helped the larger securitized-markets operation run by Tsesarsky and Perlowitz tie for No.1 on Wall Street, according to Coalition, a London-based research firm.

The success of the unit and its unusual mandate stuns Ronald Colombo, a law professor at Hofstra University and former counsel to Morgan Stanley. The theatrics are horrible, he says. Its impossible to imagine. Youre being bailed out with one hand, and youre pouring money into the very same assets that precipitated the bailout with the other.

The performance of Tsesarskys team is notable not only for its size but also because of new rules that sought to limit the risks that banks could take. Deep in the 2010 Dodd-Frank Act, Section 619 forbids banks from engaging in proprietary trading, the practice of making bets with their own money. Known as the Volcker Rule for the former Federal Reserve chairman who championed it, the law sought to curb Wall Streets speculative ways. It can be difficult to determine if a trade is for a client or the banks own account, so lawmakers zeroed in on banks inventory and the length of time securities are held. As a result, the rule stipulates that firms are exempt if they can prove that trades dont exceed the reasonably expected near-term demands of clients, customers, or counterparties.

With illiquid positions such as those in the CDO market, that can be a blurry line, and companies have more opportunity to interpret the rule in their favor, according to Charles Whitehead, a Cornell University law professor. While Citigroup says the inventory buildup meets client demand, other banks may have shied away for fear of violating the letter or spirit of the rule, Whitehead says.

All of our activities comply with every applicable regulation, including the Volcker Rule, says Danielle Romero-Apsilos, a spokeswoman. Citi has been successful in our securitized-markets and structured-credit businesses because we have stood with clients in all market environments.

For Tsesarsky, it was just the latest winning trade. As a teenager in Ukraine, he escaped with his mother, grandmother, and sister to the U.S. with $90, according to a 1999 profile in the Jewish Week, which interviewed him after he won the Young Leadership Award from the Wall Street division of the UJA-Federation of New York. Growing up Jewish in the former Soviet Union, he risked arrest to read Leon Uriss novel Exodus, about the founding of Israel. He became a Zionist in hiding, he said.

That upbringing informed his career on Wall Street, where Tsesarsky is known for his skill analyzing complicated trades, says David Finkelstein, a former colleague and a senior executive at real estate investment trust Annaly Capital Management. He came here with nothing, Finkelstein says. You have very little room for error when you have nothing.

During high school in Colorado and college at the Colorado School of Mines, Tsesarsky delivered pizzas, ushered at a movie theater, and worked at Kentucky Fried Chicken. After earning an MBA from the University of California at Los Angeles, he headed east.

It was 1986exciting times on Wall Street. Salomon, where Tsesarsky had won a spot in the training class, was pioneering new ways to package home loans into bonds. A year earlier, CEO John Gutfreund was crowned the King of Wall Street. In 1989, Michael Lewiss Liars Poker would be published, further cementing the companys reputation as a home for swashbuckling bond traders. After surviving the arduous program, Tsesarsky earned an assignment trading mortgage bonds.

It was the first time hed prove adept at navigating the politics of Wall Street. While the typical mortgage trader was loud and obnoxiouseating marathons were common, Lewis wroteTsesarsky stood out for keeping kosher. In other ways, he fit right in. He was disciplined, fearless, and always looking for an edge, says Steven Beck, a former Salomon colleague. Before the widespread use of modeling software, Tsesarsky kept a manually updated list of hundreds of bond prices from the prior nights close, Beck says. Competitors avoided big trades until Tsesarsky was on vacation, although he followed the market closely even when traveling. Tsesarsky once called a junior trader from the top of a Colorado ski slope to place a trade, according to Beck. Mark was obsessed, he says. He wanted to win badly, he had a knack for winning, and he was determined to be the best trader on the Street.

In 1991, Tsesarsky received a promotion to head the team that trades government-backed mortgage bonds after a trader got in trouble for rigging bids in Treasury auctions, Beck says. It was at about this time that Tsesarsky first worked with Corbat, then an Atlanta-based bond salesman.

When Sandy Weills Travelers Group bought Salomon in 1997, Tsesarsky was tapped to run mortgage trading for the combined company. Hed share the role with Perlowitz, beginning one of the longest-running partnerships on Wall Street. Named to lead the special situations securitization business in 2007, Tsesarsky oversaw Citigroups push into film financing, traveling from Colombia to South Korea to evaluate potential investments, says a former colleague.

During those years, Tsesarsky kept the Salomon culture alive for a generation of mortgage traders. That meant being tough on colleagues when they made mistakes and rebuilding their confidence once the lesson was learned, says Finkelstein, one of at least a dozen traders who learned from him and went on to leadership positions in the industry.

Tsesarsky also has a protective side, former colleagues say. According to Finkelstein, nothing was more terrifying than committing Citigroups capital as a junior trader under Tsesarsky. When you make a mistake, you know it, he says. You are in the hot seat. However harrowing the experience, Tsesarsky was always the mentor. He makes sure you learn from it, Finkelstein says. He doesnt let people fail.

And even when they lose money, Tsesarsky stands up for them. Former colleagues say he championed Anna Raytcheva, a Bulgarian-born trader who lost billions of dollars during the financial crisis and an additional $50 million in 2011 on bad mortgage bets. (A team run by Raytcheva that used the banks money to make bets on government-backed bonds was disbanded in May.)

Tsesarsky and Perlowitz made their own blunders, too. They lost money on a 2004 German mortgage deal and in February 2007 provided a cash infusion to the struggling parent of Ameriquest Mortgage, once the largest U.S. subprime lender. By August, Citigroup had agreed to buy parts of the business.

Ameriquest ran late-night television ads that attracted lower-quality borrowers, and the acquisition was doomed from the start, says Richard Couch, an executive at the time in Citigroups corporate mergers-and-acquisitions group. Some executives opposed the plan, code-named Project Adventure, but lacked the power to stop them, according to Couch, who refused to bless the deals financials before sending Tsesarsky and Perlowitz to the board. We wanted nothing to do with this thing, he says.

Six months later, incoming CEO Vikram Pandit dismantled much of the Ameriquest operation. By then, Tsesarsky was overseeing the CDO business.

Michael Corbat
Photographer: Simon Dawson/Bloomberg

Tsesarsky’s success in the CDO jobthe $2 billion score Corbat, Forese, and other top executives dont want to talk aboutpoints to Citigroups continuing appetite for risk. The bank has more than doubled its derivatives holdings over the past decade, according to regulatory filings, and beefed up commodities trading.

Romero-Apsilos, the Citigroup spokeswoman, says the bank employs prudent risk-management practices in its asset-backed securities business. But the secrecy shrouding Tsesarskys unit and the history of complicated, structured products on Wall Street raise questions about Corbats commitment to making the company safer and more boring.

No one really has any idea of the risks these banks are taking and therefore the threat they pose to the financial system at any point in time, says Dennis Kelleher, president of Better Markets, a nonprofit that advocates for tougher financial regulations.

Those risks may be diminishing, at least for the CDO business, as new deals remain scarce and older ones unwind or pay off. For Tsesarsky, that means plenty of time to contemplate whats next on the 4-mile walk he often takes between his office and the home on Central Park West he shares with his wife, whos a rabbi, and their four children. Theres plenty to keep him busy: He sits on the board of an Upper West Side synagogue that calls itself the oldest Jewish congregation in the U.S., and he contributes to pro-Israel and Jewish causes. He once bought plane tickets for 250 Russians immigrating to Israel and joined them on the trip. People on Wall Street become jaded and think that money is all thats important in life, he told the Jewish Week in 1999. The indifference really bothers me.

Yet Tsesarsky is always searching for the next profitable trade. He has this ability to see the long game, and he has this feeling for the market and where its going, Finkelstein says. When he sees opportunity, he jumps on it.

Campbell and Griffin cover banking and finance in New York and London, respectively.

This story appears in the July/August issue of Bloomberg Markets. Subscribe now.

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Cowboys collapse ends season, the offense might be in need of an overhaul – Blogging The Boys (blog)


Blogging The Boys (blog)

Cowboys collapse ends season, the offense might be in need of an overhaul
Blogging The Boys (blog)
Make no mistake, 2018 will be a crucial year for Dak Prescott. If he wants to lead the Cowboys to the promised land, he has to get close to being the player he was in 2016. Dez Bryant's game is collapsing. It's not just the drops, even though they are

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Coaching staff changes looming for Dallas Cowboys? – Blogging The Boys (blog)


Blogging The Boys (blog)

Coaching staff changes looming for Dallas Cowboys?
Blogging The Boys (blog)
There is churn among the position coaches every year on almost every team across the league. But could the churn in Dallas be a little higher than normal this year? By One.Cool.Customer@OCC44 Dec 25, 2017, 2:00pm CST. tweet · share · pin · Rec. Matthew

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Jeb and Jeter aren’t an odd couple – they’re two rich guys trying to be richer

The presidential candidate and the former Yankees star may seem like an unlikely MLB ownership team, but theirs is a very American story

If the Miami Marlins were a politician, they would be Jeb Bush. Both were expected to be a powerhouse from their inception, but after some early success the Florida Marlins two World Series titles and Jeb twice being elected to run Florida they failed to generate much of a following and eventually became a punchline. Both call Florida home, both are synonymous with losing and few seem to care that either exists. And what was the exclamation point thrown into Jeb! 2016s logo but the desperate campaign equivalent of the home run sculpture at Marlins Park. If there wasnt already a Marlins Man, Jeb! would rightfully be given the title. Please clap.

So it seems a perfect fit that Bush led the ownership group that has reportedly reached an agreement to purchase the Marlins from current owner Jeffrey Loria for $1.3 billion. The deal must still be approved by Major League Baseball and there are plenty of details to be ironed out, but if everything proceeds as expected, Jeb Bush will be the Marlins new majority owner and he will be joined in the ownership group by Yankees legend Derek Jeter. Yes, Jeb and Jeets. Jeets and Jeb. Together. The oddest couple in sports since Cleveland got a championship trophy.

Outside of the fact that Bush and Jeter both live in Florida, are wealthy and have long-time ties to baseball Jebs father played baseball at Yale and his older brother was an owner of the Texas Rangers before he became president the pair seems to have very little in common. Jeter is one of the most successful players in the history of a baseball dynasty; Jeb is the presidential failure from one of Americas political dynasties. Jeter was considered baseballs coolest player during his career; Jeb is considered to be a sweater vest in human form. Jeter was linked to dozens of models and actresses for two decades; Jebs favorite woman has always been his mother. Jeter reportedly presented his one-night stands with post-coital gift bags; Jebs campaign store gave you a guacamole bowl in exchange for $75. Jeter was breathlessly lauded by the New York media every time he moved the runner over on a ground ball out; Jebs one viral campaign moment was begging a crowd to please clap.

Even politically Jeb and Jeets arent likely all that similar beyond the fact that they both dont care much for Donald Trump or his properties.

Jebs brother was replaced in office by Barack Obama and Jeb spent his campaign run speaking out against Obama-era policies, whereas the Yankees shortstop was quite chummy with the 44th President on and off the golf course. Even down at the policy level, theres the fact that Bush cut off state funding to Planned Parenthood while governor of Florida and said during his presidential campaign that the organization is not doing womens health issues. Jeter, based on those many relationships throughout his career, has to be a fairly staunch supporter of access to birth control, wouldnt you agree?

Speaking of bedding, there is the well-known saying that politics makes strange bedfellows. That surely is true. Bush himself, mocked by the current president for his low energy, was backed by Hollywood action producer Jerry Bruckheimer during the campaign. But while political alliances can bridge divides, opportunities to make money can do the job even more efficiently. Loria purchased the Marlins for $158.5m in 2002 and is set to sell them now for $1.3bn. Thats more than an 800% return on investment in just 15 years. Who wouldnt hang out with Jeb Bush from time to time for the chance of getting that kind of payout? For that much money, some people might even be willing to look at Ted Cruz for seconds at a time.

Jeter won his last World Series in 2009 playing everyday alongside Johnny Damon, a former rival on the Boston Red Sox. If he can do that for a ring, he can surely handle some Jeb for the rare opportunity to own a sports team. Other sports legends, from Ted Williams to Wayne Gretzky, have tried and failed at coaching and Jeter says he has no interest in following in their footsteps. But ownership lets him into an exclusive club that includes Mario Lemieux, Michael Jordan, Magic Johnson and Gretzky. Ownership allows him to go from rich to wealthy.

And thinking that Jeter and Jeb are so different may just be evidence that weve all been successfully programmed by the Jeter brand. While Jeter was great on the diamond, what has he ever said or done off the field that was even interesting, let alone exciting? Removed from the mouth of Jeets, much of Jeters words sound very Jeb! He followed the Jordan model of athlete-as-brand and made it his own. Despite living in the New York media spotlight and playing for his sports marquee franchise for 20 years, 162 games and interviews a year, we somehow never knew much about him beyond the fact that he played baseball, was a leader, wore No2 and enjoyed products made by Gatorade and Nike. Theres not a politician alive who wouldnt RE2PECT that kind of disciplined messaging. His entire career was designed for him to be able to accept the kind of opportunity he has now, to easily jump in a deal with a politician from the right or the left, and make a ton of money. Maybe Jeter has strong opinions on womens rights or immigration or Canadian lumber. Who knows. But hed never put his brand on the line to let anyone know. Most people wouldnt for the chance to make a few hundred million.

Jeb and Jeter probably arent that much of an odd couple at all. They are just two rich guys agreeing to become even richer together. It is the modern American story. Please clap.

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5 things for Monday, November 14: Trump White House, South Korea, Colombia peace deal

(CNN)Happy Monday. We hope you took some time this weekend to relax and decompress. Now, back to it. Here’s what you need to know to Get Up to Speed and Out the Door.

1. Presidential transition

The Donald Trump White House is starting to take shape. Reince Priebus will be his Chief of Staff and Steven Bannon his chief strategist. Also, Trump softened on some of his harshest promises: Obamacare? Eh, parts of it are okay. The wall? Some of it may be a fence. Oh, and no deportation force.

    2. Presidential backlash

    The first weekend of a Trump America brought even more protests nationwide. One person was shot and 71 arrested in Portland, but otherwise they have been peaceful. Sadly, the racist attacks continue, prompting Donald Trump to tell his supporters to “stop it.”

    3. South Korea

    South Korea’s having presidential drama of its own. Hundreds of thousands took to the streets to rail against Park Geun-hye. They want her gone because she shared classified information with a confidante who a) doesn’t have security clearance, and b) may be using her access to Park to make money.

    4. Colombia

    Let’s try this again, shall we? Colombia’s government has signed a revised peace deal with FARC. You may remember that voters shut down the previous deal because they wanted the rebel group punished for its crimes. The new deal requires FARC to pay reparations to victims.

    5. New Zealand

    A huge quake struck New Zealand this morning, killing at least 2 and leaving damage the country’s president said may cost billions to repair. There was a small tsunami, too, but the region has since been given the all-clear. A quake in 2011 killed 185 there, so citizens were rightly freaked out today.

    Breakfast Browse

    People are talking about these. Read up. Join in.
    Two entertainment greats, gone
    Singer-songwriter Leonard Cohen is dead at 82. Rock & Roll Hall-of-Famer Leon Russell is dead at 74. We get it, 2016. You can stop now.
    Still want to move to another country, Americans?
    Bikers rescue a stranded Bruce Springsteen
    Motorcycles, the Boss and a little kindness. We definitely needed all of this.
    Here are the dirtiest things on a plane
    New Zealand builds tiny underpass for tiny penguins
    These creatures are so small and precious and now they can cross under roads safely and maybe mankind is good after all.

    And finally …

    You know they’d go there.
    SNL does election night. It’s only, like, the most popular thing on Youtube right now. (Click to view)

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    These 3 Women Are Fed Up With Sexual Harassment. And They’re Taking Action.

    In one sense, Tammy Cho is a typical Silicon Valley entrepreneur: She’s a college dropout.

    When the now 22-year-old was just a sophomore business major at Georgetown University in 2013, she quit school to work on her software business full time after it got funding. Cho was, of course, following in the footsteps of iconic founders Mark Zuckerberg, Bill Gates and Steve Jobs, who all famously ditched university life.

    The gambit paid off. Last year Cho’s company was acquired by a large tech firm called Meltwater, where she now works as a product design lead in San Francisco.

    Almost a year after settling into the job, Cho read an essay that went off like a bomb in the tech world. Susan Fowler, a former Uber engineer, detailed the mistreatment and harassment she experienced at the ride-hailing company ― and how her complaints went ignored. 

    Everyone read it, including Cho and her colleague at Meltwater, Grace Choi. They saw themselves in that post. They started talking, opening up about their very personal experiences with discrimination, harassment and racism in the work world. “There were stories we hadn’t shared with anyone else,” Cho said.

    In very typical Silicon Valley fashion, the conversation made them wonder, “Why don’t good solutions to sexual harassment already exist?” Choi writes in a post on Medium. They set out to find one, or at least figure out a way to help with the problem.

    And finally, this week Cho, Choi and Annie Shin, a software engineer who had been friends with Cho since high school, launched Betterbrave.com, a comprehensive guide for anyone who’s experienced sexual harassment at work and doesn’t know what to do next.

    The three women devoted hours of their free time over the past several months to put together the site, reaching out to hundreds of people to talk about sexual harassment, including employment lawyers, human resources professionals, and women in their network who spoke about confronting tricky workplace situations.

    “It felt like our duty to figure out a way to address this issue,” said Cho.

    The website features information on what constitutes harassment ― including unwelcome sexual advances, inappropriate touching, jokes and gestures, as well as guidance on what to do if it’s happening to you.

    It felt like our duty to figure out a way to address this issue. Tammy Cho, co-founder of Betterbrave.com

    In clear, straightforward language, the site offers guidance for those wondering how to handle mistreatment at work. There’s also a form you can fill out to be connected with an experienced attorney who can offer guidance. Many will offer a free consultation for those who’ve been targets of sexual harassment.

    In a section called My Options, the site says victims should let harassers know their behavior made them feel uncomfortable. “Be firm, specific, and suggest a behavior that is more appropriate,” the site advises. “Never apologize. It might look something like this — ‘Hey Josh, your remarks about my outfits on a daily basis make me uncomfortable. I’d prefer if you would stop making these comments.’”

    A section called My Rights is firm: “There are laws against sexual harassment,” reads the site. “Repeat that back to us. There are laws against sexual harassment. Moreover, there are laws against retaliating for reporting sexual harassment.”

    Cho and the site emphasize that if you believe you’ve been sexually harassed you should contact a lawyer. Though targets certainly can talk to their employers’ human resources department, that’s not always helpful. “We heard a lot of stories where HR mishandled the case,” Cho said. In Fowler’s case, Uber’s HR department sided with her harasser.

    A California employment lawyer, Devin Coyle, helped fact-check the site. Another lawyer with expertise in sexual harassment told HuffPost that the site looked pretty good but also emphasized the importance for victims of harassment to consult with a lawyer to best understand their options.

    Cho and her co-founders aren’t making any money off Betterbrave.com for now. Lawyers who get new clients through the website could potentially make money from new cases, of course.

    Cho’s not ruling out profits down the line. “We’ll see how things go,” she said, explaining they want to do a lot more research before committing to a for-profit model. “We want to ensure that whichever model we choose aligns with our mission.”

    Next up for the site is a guide for “allies,” people who know, or want to help, targets of harassment.

    Not enough people understand that this problem even exists, so one clear goal is education, Cho said.  And the issue for her and her co-founders feels personal. A lot of the time, young women who are new to the workforce are even more vulnerable to unwelcome sexual advances, she noted.

    “You’re young and you have your entire career ahead of you. It’s terrifying,” she said. Still, she adds, this happens to women (and men) at every age. “It’s just kind of everywhere.”

    Cho said the site’s been getting a steady flow of traffic since it launched. On Tuesday, Betterbrave got a thumbs-up from the woman who inspired the whole endeavor. A tweet from Susan Fowler read, “This is AMAZING!”

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    Three winners and eight losers from the Cowboys loss to the Seahawks – Blogging The Boys (blog)


    Blogging The Boys (blog)

    Three winners and eight losers from the Cowboys loss to the Seahawks
    Blogging The Boys (blog)
    Sean Lee – The guy continues to play well, and spearheaded the defensive effort with 14 tackles, and several of them for losses. He looked like a guy dying to get into the playoffs. Too bad he didn't get much help. Taco Charlton – The Cowboys first

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    Seahawks @ Cowboys: Dallas throws away playoff chances in 21-12 defeat – Blogging The Boys (blog)


    Blogging The Boys (blog)

    Seahawks @ Cowboys: Dallas throws away playoff chances in 21-12 defeat
    Blogging The Boys (blog)
    It was effectively the end to the season for the Dallas Cowboys as they dropped a really poorly played game to the Seattle Seahawks, 21-12. And the Cowboys pretty much handed the win to the visitors with mistakes in all phases of the game. So many

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    Manchester City’s plan for global domination

    The long read: Football has already been transformed by big money but the businessmen behind Man City are trying to build a global corporation that will change the game for ever

    On 19 December 2009, Pep Guardiola stood and wept in the middle of Zayed Sports City Stadium in Abu Dhabi. The 38-year-old Barcelona manager clasped a hand across his face as his body gave way to huge, shoulder-heaving sobs. Zlatan Ibrahimović, the club’s towering Swedish striker, wrapped a tattooed arm around Guardiola’s neck and then gave him a vigorous push in order to jolt him out of it. But Guardiola could not stop. It was a strange place for the world’s most celebrated football coach to break down: Barcelona had just won a game that few people watched on television to secure one of football’s most obscure titles, the Fifa Club World Cup. But the victory secured an unbreakable record: Barcelona had won all six titles available to any club in a single year. That is why Pep was sobbing.

    Back at home in Barcelona, it was a bittersweet moment for Ferran Soriano. A hairdresser’s son from the city’s working-class district of Poblenou, Soriano had become one of FC Barcelona’s top executives – and had helped build what could now claim to be the greatest football team the world had ever seen. “I was happy, but it was also painful not to be there when the team reached its pinnacle,” he told me. Instead, he picked up the phone and called Guardiola.

    Soriano had overseen Barcelona’s finances for five years until 2008, and the club’s record owed much to the ideas he had developed after running a US-style political campaign to bring a group of swashbuckling, sharp-suited young men to power at elections for a new board of directors in 2003. He had even written a book, La Pelota no entra por azar (“The ball doesn’t go in by chance”), in which he argued that Barcelona’s success – and, by inference, that record – was the result of good, creative business management. Vicious political infighting had driven him to resign from the club the previous year. But even before that, he had seen one of his more ambitious ideas – to set up franchise clubs in other countries – thwarted at Barcelona. This was a step too far for a club owned by 143,000 voting fans, firmly rooted in their city and Catalonia.

    But Soriano’s big idea has now been brought to life by two men who were watching very closely on the night Guardiola wept in Abu Dhabi: one is a member of the United Arab Emirates’ ruling family, Sheikh Mansour bin Zayed al-Nahyan, and the other is Khaldoon al-Mubarak, a youthful executive and adviser to the royal family. With their backing, Soriano is now upending football’s established order by building its first true multinational corporation – a Coca-Cola of soccer.

    That corporation is City Football Group (CFG). It already owns, or co-owns, six clubs on four continents, and the contracts of 240 male professional players and two dozen women. Hundreds more carefully picked teenagers and younger children who aspire to greatness play in CFG’s lower teams. The longterm ambition is huge. The company will trawl the world for players – shaping and polishing them in state-of-the-art academies and training facilities across several continents, selling them on or sending the best to the clubs it will own (and improve) in a dozen or so countries. Supplied and shielded by the vessels around it, the flagship of this new football flotilla – Manchester City FC – will continue its already startling rise to become the world’s greatest club.

    That is the Soriano idea – or at least, a simplified version of a complex plan. The corporation is only four years old, but it is rapidly becoming one of the most powerful forces in the world’s favourite sport – watched with awe, envy and fear by those who wonder if it could become football’s own Google or Facebook.


    In a game where top players cost £200m, televised matches attract audiences of hundreds of millions and club owners are among the wealthiest potentates on the planet, no expense is spared in seeking any competitive edge. Once upon a time, money alone was enough to make the difference (if it was spent wisely), but that is no longer the case, in part because there is so much of it sloshing around the game.

    When Manchester City won the Premier League in 2012, Sheikh Mansour was widely accused of “buying the title for £1bn” – the amount of money he had poured into City since purchasing the club four years earlier. It was City’s first major trophy in 36 years, and grown men cried when Sergio Agüero’s goal in the penultimate minute of the season’s final game secured the title. Mansour watched it on television: he had only ever been to one match at City’s Etihad stadium, and did not enjoy the fuss his visit caused. In the hours that followed, his phone hummed, filling up with 2,500 messages.

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    Man City CEO Ferran Soriano. Photograph: Chris Brunskill Ltd/Getty Images

    But this was also the end of an era. European football’s regulator, Uefa, had brought in new rules designed to stop clubs spending much more than they earned. Critics dismissed Mansour as a spoiled hobbyist, and even today some wonder to what extent his “private” ownership might become an instrument of Abu Dhabi’s soft power. But his few public statements made it clear that he had bought City – and ploughed money into it – as a genuine, long-term investment because “in cold business terms, Premiership football is one of the best entertainment products in the world”.

    The ambition, then, was double – he intended to win at both football and business. But with the Uefa spending brake, that was about to become much tougher. He needed something new. Could City win without losing money?

    In fact, when Soriano’s gang of smart young businessmen took over Barcelona in 2003, it was a loss-making club. As finance chief, Soriano helped deliver a spiralling “virtuous circle” of high investment, trophies and then even higher revenues. Forceful and analytical, he had built and sold a global consultancy business by the age of 33; at Barcelona, where he was nicknamed both “the Panzer” and “the Computer”, he made a strong-willed but sensible counterpoint to the club’s mercurial president, Joan Laporta. But Soriano also saw Barcelona as something far bigger than a city club, while realising that the global football business itself was poised to enter a new era. In 2006, at a talk Soriano delivered at Birkbeck College in London, he presented 28 slides that set out his early vision. Thanks to the phenomenal growth in their worldwide fan bases, he noted, big clubs were being transformed from promoters and organisers “of local events, like a circus” into “global entertainment companies like Walt Disney”. If big clubs seized the opportunity to “capture the growth and become global franchises”, they would soon stand apart from their rivals, creating a new, world-conquering elite.

    “He thought, and thinks, in a different way to most other people in football,” says Simon Chadwick, now a professor at Salford University, who had invited Soriano to give the talk at Birkbeck. At the time, Soriano himself was disappointed to find English football so in thrall to a model in which managers such as Arsène Wenger and Alex Ferguson appeared to run their own clubs, while “the level of conceptualisation of the business model was zero”. Even the language was telling. “They called the coach ‘manager’, as if he managed everything,” Soriano recalled.

    With his abrupt departure from Barcelona in 2008, Soriano’s dream of turning that club into a global franchise, with a first satellite team in the US, was definitively dashed. Instead, Soriano threw himself into running an airline, Spanair. But five years after his presentation in London, as Mansour sought a fresh competitive edge, both on and off the field, Soriano found himself, in October 2011, sitting down for a 7am meeting in a Mayfair hotel with the globetrotting New York lawyer Marty Edelman – who was tempting him back into football.

    Edelman had been drafted on to City’s board by Mansour, working alongside his appointed chairman, the US-educated Khaldoon al-Mubarak, from the very beginning. Edelman, a real estate expert, was already a trusted adviser in Abu Dhabi, and the choice of an American was an early sign of the club’s new cosmopolitanism. Soriano initially brushed off City’s advances. He was used to associating Manchester with its glittering rival United, and he still distrusted what he called “the stereotype of the rich owner”. (In his book, he had even described City as a club that provoked “savage inflation” through “irrational investment”.) But the two sides were slowly discovering shared values. Chief among them was ambition – and with that came a willingness to challenge the status quo.

    Even then, it was an off-and-on affair. Meetings followed in Paris and Abu Dhabi, before, in April 2012, Soriano was sneaked through Manchester airport (where the club says it “can get people in without anyone knowing they have arrived”) and taken to a room at the Lowry Hotel booked in someone else’s name. A former rugby second-row forward, Soriano is, at 6ft 3in, difficult to hide. By now it was a mutual seduction, with City wanting to persuade him that, with Mansour’s long-term commitment, the club could be as great as Barcelona. Soriano, in turn, pitched a mould-breaking plan that required deep pockets, imagination and a steady nerve. Both sides agreed that City should aspire to being the world’s top club – a position long held by either Real Madrid, Barcelona or Manchester United. “And I mean number one – not number two or three,” Soriano told me.


    The idea of becoming the world’s biggest club was not just vanity or business machismo. Soriano had spotted long before that a tiny group of elite clubs would capture the new global market, but he also wanted to build something “far bigger”. Football clubs, he pointed out, were massive brands but absurdly small businesses: a team with a global following of 500 million fans might have an income of only €500m. “That’s one euro per fan,” he says, “which is utterly ridiculous.” In business terms, this was “a combination of a lot of love and, literally, no love” – because fans in, say, Indonesia spent nothing on their club. “So what can we do? The answer was pretty simple, maybe too simple, but very bold. You have to be global but local. You have to go to Indonesia and open a shop.” He outlined his idea for a corporation that would have both a global brand – in Manchester City – and lots of local brands, developing talent through a network of clubs that would also provide a pipeline of players for City. He knew this might sound far-fetched. “If I had pitched this idea to Real Madrid, the answer would be ‘you’re crazy’ – and that is actually what had happened in Barcelona,” he told me.

    But City was already going through a revolution, and was ready for more. For Edelman, the plan put flesh on the skeleton built with Mansour’s millions. “Any great idea needs to have a host, right? And we were a great host,” Edelman told me at his Park Avenue offices. “You couldn’t take Ferran’s idea and just put it on a blank sheet.” Soriano’s idea (which he now terms his “artistic challenge”) was a way of taking Mansour’s original vision – summed up in his early pledge to build “a structure for the future, not just a team of all-stars” – and putting it “on steroids”, in Edelman’s words.

    Soriano started work as CEO of Manchester City on Saturday 1 September 2012. Two days later, he arrived in New York to create a new football club. This meant paying $100m (£74m) for a spot in Major League Soccer (MLS), the professional league for the US and Canada, and building a team from nothing. Seeking a local partner, Edelman eventually took Soriano to see Hank and Hal Steinbrenner, the owners of the New York Yankees. The brothers had inherited their baseball team, but Hank is a soccer fan who played at college and coached his local high-school team. It was one of the quickest deals Edelman had ever seen struck, taking “about 15 seconds” to agree it. “It just worked,” he told me. The Yankees took 20% of the new team and offered their stadium as a temporary home. (It still is, though it takes 72 hours to transform it from a baseball field into a soccer pitch.) The team, baptised New York City Football Club, began playing in 2015. Forbes now values it at $275m (£205m). To fans it is “NYCFC”, or simply “New York City” – a marketer’s dream. “Our brand is perfect, because it is ‘City’ and we know we can add that word to any city,” observed Soriano, who began his working life marketing detergents.

    Man City global reach map

    When I first visited the Etihad campus in March, the wall behind the reception desk bore the shields of City, NYCFC and two other clubs: Melbourne City, and Yokohama F Marinos, a Japanese club in which CFG owns a minority stake. Melbourne Heart, as the Australian club was originally known, had only been founded in 2009. It won its first major trophy last season, just two years after City bought it and changed its name, and changed its colours to sky blue. “It’s like being a start-up tech firm, and Apple buying you,” Scott Munn, the club’s founding CEO, told me. East Manchester, in this analogy, will become the Silicon Valley of soccer. A modest cluster of other football businesses is even forming in the area – making the Californian analogy even more apt.

    By the time I returned two months later, City had bought yet another club, this time in Uruguay – Atlético Torque, a second-division side that was founded in 2007 and became professional only in 2012. At the company’s annual staff meeting in May, a representative from the new outpost began his presentation with a map of South America and a large arrow pointing to Uruguay. “Nobody knows what is Torque. Nobody knows where is Torque,” he admitted, only half-jokingly. (It is in Uruguay’s capital, Montevideo.) “In this room we have as many people as go to a Torque match.” The ambition, however, was for the club to rise to the first division, finish in the top four and qualify for continent-wide competitions – and this in a country that produces world-class players such as Barcelona’s Luis Suárez or Paris Saint-Germain’s Edinson Cavani. Rather more mysteriously, the club also aimed to “sign and register players from all across South America”. The latter was the result of a cold statistical analysis, which had revealed that Uruguay was the biggest per-capita exporter of professional footballers – an astounding £25m-a-year business. And this was despite the fact that many small clubs often sold talented players cheaply when they were still teenagers. “It’s astonishing,” Soriano said. “We are big, and will hold on to them longer” – making them even more valuable.

    The next time I saw Soriano – at his holiday apartment in the small Catalan beach resort of Tamariu – it was July, and he had closed yet another deal just a day earlier. For €3.5m (£3.1m), City had purchased 44% of Girona, a club in Spain’s top division. This was a far bigger fish. As he sat on a balcony overlooking the bay in shorts and a T-shirt – pulling data on fan numbers and television rights out of a battered laptop – Soriano looked happy (and not just because, in Tamariu, he can make work calls from his balcony and then pop down to join his two “Mancunian” infant daughters on the beach).

    “When we agreed the price last year, it was in the second division. Now it’s in the first,” he said. On 29 October this year, with help from players loaned by Manchester City, the newly promoted team convincingly beat Real Madrid in their first meeting. The injection of CFG cash and know-how at Torque has had an even more dramatic effect. Last month it finished top of Uruguay’s second division, meaning it has already been promoted – just six months after it was bought.


    Soriano is convinced that football will eventually become the biggest sport in almost every country in the world, “including the United States and India,” he says. So how far will CFG go? “We’re open. In Africa we have a relationship with an academy in Ghana. And we’ve been looking at opportunities in South Africa,” he said. CFG already has a close relationship with Atlético Venezuela in Caracas; Soriano also mentioned Malaysia and Vietnam. The limit, he suggested, was two or three clubs per continent. But the next major purchase may well be in China, where the group is “actively looking” to buy a club.

    In October 2015, China’s football-loving president, Xi Jinping, visited City’s Etihad stadium; two months later, Chinese investors bought 13% of CFG for $400m (£265m), valuing the whole at $3bn. This was probably well over 30% more than Mansour had pumped into it (no exact figures are available). Soriano has been watching the dramatic, chaotic evolution of Chinese soccer – a pet project for Xi – ever since he arrived in Manchester. At first, Soriano was put off by rumours of chaos and corruption, and then by a price bubble. “The market is now more rational and the league is more structured,” he says.

    Xi wants China to create 50,000 special “soccer schools” within 10 years – partly to get deskbound schoolchildren fit – and to make ready 140,000 pitches. Soriano sees an opportunity to teach millions of children soccer, which “might be bigger than the business of Manchester City”. It is a reminder that CFG – which recently put $16m into a joint venture to own and operate five-a-side urban pitches in the US – is interested in the entire sector, not just clubs.

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    Chinese president Xi Jinping, Man City striker Sergio Aguero and then prime minister David Cameron at MCFC’s Etihad stadium in Manchester in 2015. Photograph: Sergio Aguero/AP

    CFG is not the only owner of multiple clubs – and some other teams are experimenting with modest forms of integration – but the others are largely just investment portfolios. CFG is the only owner that has consciously established a single corporate culture around the world, which in some cases extends to wearing the same sky-blue shirts. Fernando Pons, a sports business partner at Deloitte in Spain, sees this as a prime example of what consultants have dubbed “glocalisation” – a concept that implies taking a global product, but adapting to local markets. “A Girona or New York City fan will almost certainly also become a City fan,” he said. It also means that the advertising for Nissan, SAP and Wix that is seen at the Etihad stadium in Manchester will be replicated in Melbourne or New York – and that players from the US or Australia will be able to travel off-season to the world’s most advanced training centre, built on 34 hectares of land beside the Etihad and equipped with sophisticated extras such as hyperbaric and hypoxic chambers that can simulate high altitude or boost blood oxygen levels.

    What seems to excite Soriano most, however, is the vast pool of players and the range of clubs they can play in. CFG almost certainly already owns the contracts of more professional soccer players than anyone else in the world, and that number is only set to go higher. So while “entertainment” and running clubs is the group’s first business, he explained, “business number two is player development”. The inspiration is Barcelona’s famous and much-copied Masia youth academy, which, for about €2m each, produced legendary players such as Lionel Messi, Andrés Iniesta, Xavi, Carles Puyol and Guardiola. At today’s prices, the same group would cost closer to €1bn. “We are globalising the Barça model,” Soriano said.

    The logic behind this was made even more clear – in the same week we met in July – by the widespread amazement over the £198m fee that the Qatari owners of Paris Saint-Germain had agreed to pay Barcelona for the Brazilian star Neymar. Transfer records are smashed almost yearly, and Soriano now sees this inflation as an inevitable part of the game, now driven not by wealthy owners but demanding fans.

    “Why is that? It’s very simple: the industry is growing,” he explained. “Ultimately, it goes back to the clients – these are the fans, who want to watch good football and are ready to pay. So clubs have more money to spend, but the number of highly skilled or top players generated each year does not change.”

    “This is a typical ‘make-or-buy’ challenge. You can’t buy in the market, so you have to make,” Soriano said. “This means spending a lot of money – on academies, coaches, but also in transfers for young players. It’s like venture capital in that if you invest 10 million each in 10 players, you just need one to get to the top who is going to be worth 100 million.”

    For Manchester City, the expanding web of CFG clubs solves a particularly English problem, which occurs when promising footballers hit 17 or 18. Soriano calls this “the development gap”, and it may explain why England’s national team performs so badly. “If the player is top quality, he needs to play competitive football to develop. It’s not only for the technical aspect of the game, but also for the pressure. The under-21 or under-19 competitions in England don’t provide this, because games aren’t in front of a lot of fans and there isn’t enough competitive tension,” he said. If Spain and Germany are much better at developing players, he says, it is because clubs such as Barcelona, Real Madrid and Bayern Munich all have reserve teams that play in their countries’ second or third division against other professional clubs – not in a separate league, as English youth teams do. “If you manage a boy who has talent and is promising, who is 18 or 19, you can have him training with the first team, but playing in the second, where games are difficult, competitive and you play before crowds of 30,000.”

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    MCFC players in training at the City Football Academy in Manchester. Photograph: Oli Scarff/AFP/Getty

    Because Premier League clubs are not allowed to field second teams, the primary way to develop promising young players who are not quite ready is to loan them to another club, usually in a lower division; Manchester City, for example, currently has around 20 players out on loan. But once a player is loaned out, the parent club loses control over their development – as Chelsea can testify, having bought up so many young players that more than 30 are on loan at 24 different clubs. At worst, this leads to the warehousing of players and the ruining of promising careers. CFG’s integrated web of clubs, all (in theory) playing the same style of football, is meant to solve that. “In this system we control exactly what they do. The coaching is exactly the same. The playing style is exactly the same,” Soriano said.

    If this vision works out, successful players will progress from, say, Torque to New York, and then to Girona, and then – eventually – to Manchester City. CFG will not “own” them, since they will belong to the individual clubs, who must compete against outside bidders and pay transfer fees where appropriate. But CFG clubs will have insider information on the players, who can, in turn, be confident of fitting in with the style at all the other CFG clubs – while transfer income will end up back in a single corporate pot. In May, club officials gave me the example of the Australian midfielder Aaron Mooy, who joined Melbourne City in 2014 and was the team’s player of the year in his first two seasons. CFG decided Mooy was good enough to play in England, and Melbourne sold him to Manchester City for £425,000 in June 2016. But Mooy did not play for the club – he was immediately loaned to Huddersfield Town, who were then a second-division team. After helping them win promotion to the Premier League, Mooy was then sold to Huddersfield – for £10m. The deal shows how CFG can leverage its insider knowledge of players to simply trade them, even if they never actually play in Manchester. The profit from this one transaction, incidentally, was some 40% more than it cost to buy the entire Melbourne club.


    Hiring Pep Guardiola was always part of Soriano’s big plan – though enticing him to Manchester required time and patience. One of Soriano’s first City hires was Barcelona’s former director of football, the man responsible for buying new players and helping to choose coaches, Txiki Begiristain. “Immediately we went to talk to Pep, because Pep was the best coach in the world,” Soriano told me. Guardiola had just left Barcelona and was determined to enjoy a sabbatical year in New York. “So we said: ‘OK, come next year’,” Soriano recalled. “And [the next year] he said: ‘I’m sorry, I want to go to Bayern Munich’. So we said: ‘OK, come in three years.’ And he came.” This kind of patience is only available when your owner has no need to cash in and, in a fast-moving sport where fans demand instant results, knows how to play a waiting game.

    Guardiola’s prime task is to meet Soriano’s definition of a “number one” club by winning at least one title per season. “That doesn’t mean you win every year, but that in five seasons you win five trophies. It means getting to April with possibilities of winning the Premier League and playing in the semi-finals of the Champions League,” he explained. City have only managed the latter once – in 2015/16, the season before Guardiola arrived – but the target implies winning the Champions League every four years.

    Sheikh
    Sheikh Mansour (front right) with chairman of Manchester City FC Khaldoon al-Mubarak (front left) and Manchester City manager Pep Guardiola (front centre) at a training camp in Abu Dhabi, 2017. Photograph: Victoria Haydn/Manchester City FC via Getty Images

    But an implicit part of Guardiola’s job, away from the merry-go-round of matches and press conferences, is to help engineer something that may ultimately prove more valuable – a recognisable and entertaining playing style across all of CFG’s teams and players. Again, the model comes from Barcelona, where players moved seamlessly from junior teams to the Camp Nou because all had learned the same Cruyff-style soccer. In the CFG model, clubs and academies in a dozen countries should be doing the same – creating a frictionless supply line of players who automatically know how to play Pep-style and can slip in and out of the group’s teams. Soriano says that will allow “a more seamless movement of players”, with the best ending up at City.

    This may prove more challenging than it sounds. On a warm August afternoon this year, as smoke rose from dozens of tailgate barbecues in gravel-covered parking lots, I joined fans wearing the sky-blue colour of NYCFC as they trooped into the New York Red Bulls stadium in Harrison, New Jersey. David Villa – the 35-year-old former Barcelona player – led them to a 1-1 draw in what has already become New York’s “classic” football derby. But this was relatively scrappy football – the kind played in the second or third divisions of England or Spain.

    A few days earlier, I had watched coach Patrick Vieira – who moved here from managing City’s “elite development” under-23 team – train his squad on a pitch in leafy Westchester County, north of New York City. When I asked Vieira, a former Arsenal captain who finished his playing career in Manchester, if his team – whose salaries, under MLS rules, are capped well below Premier League level – always played “City football”, he admitted that it did not. “You can’t play the same football in New York as in Manchester, because of the players,” he said. “What we have in common is a philosophy to play what we call ‘beautiful football’ – the offensive game, to try to have possession, create chances, score goals and play attractive football. The level will be different, but the philosophy tries to be the same.”


    As CFG grows and its impact is felt around the world, its rivals are beginning to fear its size, and hover, hawk-like, over its accounts. Javier Tebas, the outspoken lawyer who presides over Spain’s La Liga, clipped CFG’s wings when it appeared on his territory this summer, accusing Girona of misrepresenting the details of five players loaned by City. The club was forced to increase the accounting value of those players – a measure that, given Spain’s budget cap system, left Girona with 4% less money to spend on players’ wages. “We had to correct certain market values … so that loaning of players did not represent unfair competition,” explained Tebas. Girona are still trying to get that decision overturned.

    At the Soccerex football business conference in September, Tebas took aim at Manchester again, accusing City of circumventing the rules by taking hidden state aid in the form of sponsorship contracts with public companies from Abu Dhabi. (He had similar complaints about Paris Saint-Germain’s Qatari owners, who he claimed were “pissing in the swimming pool” of European football.) In Tebas’s view, what is provoking inflation in transfer fees and player wages is not fan demand, but Gulf cash and so-called “state clubs” – including “Manchester City and its oil”. City not only denied this, but threatened to sue him – and Uefa has ignored Tebas’s demands that it investigate the club’s finances. But the vocal hostility from the head of a league dominated by Real Madrid and Barcelona is a sign that the latter two – whose not-for-profit, member-controlled structure prevents them taking the CFG route to global expansion – are starting to feel threatened.

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    Man City star Kevin De Bruyne (centre) during their recent victory over Swansea City. Photograph: Thomas/JMP/REX/Shutterstock

    But Tebas’s suggestion that CFG uses its muscle to push the regulatory boundaries is not without merit. In 2014, Uefa punished City with a €20m fine for breaking the financial fair play rules in previous seasons. The Australian league, meanwhile, introduced new rules last year after CFG circumvented the league’s ban on transfer fees between clubs with a ruse that one critic dubbed “farcical”. Manchester City bought a local player called Anthony Cáceres – “outbidding” Australian clubs by paying a transfer fee – before loaning him straight to Melbourne. The league responded by banning the practice for the first year after signing.

    The same ownership whose deep pockets have enabled these global ambitions may also be a source of further difficulties – in part because the desire to protect Abu Dhabi’s image looms large at CFG. This has become more challenging as the emirate’s ambitious mega-projects, such as the collection of museums on Saadiyat Island, attract the attention of human rights organisations, who accuse the UAE of violating the rights of migrant construction workers. When emails from the Emirati embassy in Washington were leaked earlier this year, among them was a memo revealing that CFG’s directors had fretted about a proposal to build an NYCFC stadium on parkland in Queens – where there was already public opposition to such a project – out of fear that stadium critics would attack Abu Dhabi’s involvement, targeting its attitude to “gay [rights], women, wealth, Israel”. The project was abandoned, and NYCFC still does not have its own stadium.


    There is a central paradox to the economics of football. While the global business has long expanded at annual rates of 10% or more, few clubs have ever made much profit, let alone paid owners an annual dividend. Even the mighty Premier League clubs have, jointly, posted pre-tax losses in three of the last five seasons. And yet the price of clubs keeps rising. Mansour, for example, was estimated to have paid around twice as much for City as the previous owner, the exiled former prime minister of Thailand, Thaksin Shinawatra, had done just 15 months earlier.

    Soriano says that sports franchises are exposed, week-in, week-out, to such relentless competition that they are driven to constantly reinvest profits – meaning that owners only really make money by selling. Others see football clubs as a “rarity” for ultra-rich collectors – with billionaires queueing to join the small, exclusive club of those who own famous clubs. These are also incredibly resilient assets: Manchester City, founded by vicar’s daughter Anna Connell to keep working men off booze and brawling in 1880, is one of many now in their second century. “How many companies that were on the New York stock exchange in 1917 still exist?” Soriano asks.

    Ultimately, value comes from combining talent and emotion – meaning players and the fans who adore them. This is the “love” Soriano talks about, which CFG must turn into money if it is to become the successful multinational corporation that the owners want. If Guardiola ever sobs for City – something only likely if he wins another Champions League trophy, which Soriano hopes will happen this season – then fans of one of England’s most historic football clubs will happily give themselves up to adoration. Many more might follow them.

    But CFG’s multinational corporate model somehow obliges us to take a more hard-nosed view of how much this “love” is really worth. Will CFG ever match a Coca-Cola, Disney or Google for size or value? Manchester City will have to win many more games, and many titles, before that happens – by which time, if the model works, other football multinationals might have appeared, all of them transforming love into money at a global scale. In the hard world of business, of course, there is only one way we will ever find out the “true” monetary value of CFG’s global juggernaut, on the day Mansour, or someone else, sells the company, and the market renders its own judgment – and puts a price on all that love.

    Follow the Long Read on Twitter at @gdnlongread, or sign up to the long read weekly email here.

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    Cowboys conundrum: Handling Tyron Smith and his health
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