When authorities barged into Zurich and snatched up nine FIFA officials and five corporate executives, and Sepp Blatter followed up with his resignation, the world rejoiced. But just because justice is seemingly—finally—being visited upon those who deserved it, there are still victims, and the North American Soccer League is one of them.
There are two names you’ll need to remember from here on out: Aaron Davidson and Traffic Sports. These are allegedly the corrupt parties in this story, as both have been indicted by the DoJ. These two entities both built up the NASL as a league that, at one point, seemed somewhat ready to challenge MLS, but were in reality setting it up for failure.
In 2010, Davidson, a Miami native and SMU graduate, was the Chairman of NASL and president of Traffic Sports USA, Inc., which owned the NASL’s Carolina RailHawks and functioned as the American branch of Traffic Sports International, Inc. The Miami-based company specializes in commercializing international soccer events in the Americas, such as the CONCACAF Gold Cup and Copa América. But it is how the company and Davidson rose to such prominence that is littered with charges of bribery, racketeering and plenty—six counts to be exact—of fraud.
For the entirety of its run with second tier of American soccer, Traffic Sports wanted NASL to compete with Major League Soccer and its marketing counterpart, Soccer United Marketing. MLS, which now has a foothold on top-division soccer in the States, was not always so clearly going to become the top dog and the cutthroat—and allegedly illegal—business operations of Traffic has made things difficult for its opposition for the past six years.
The Rise of Traffic Sports
MLS has owned American Soccer for 20 years now. Since its inception in 1993, there has yet to be a serious challenger for the nation’s top-tier competition. (Ironically, in the 1980s, it was a previous incarnation of NASL that owned the title before succumbing to financial troubles.) So when NASL reemerged in 2009, with Traffic Sports owning as many as three of the league’s teams at one point, it didn’t exactly give MLS much of a reason to fear. That would change.
Like any newcomer, Traffic had humble beginnings with big ambitions. Traffic Sports handled NASL’s marketing and TV/radio broadcast rights as Davidson led the efforts of a group of team owners to break away from USL—which eight teams managed to do successfully in 2010, against USL’s objections.
In 2012, Traffic Sports US Vice President Enrique Sanz was appointed General Secretary of CONCACAF, the continental governing body for soccer in North and Central America and the Caribbean. Up to that point, SUM and the MLS had owned the American soccer fans’ viewership and mainstream attention. After Sanz’s appointment, it was announced that the 2016 Copa America tournament was to be held in the United States and marketed by Traffic Sports USA—more business being taken away from SUM.
It should be noted that NASL was never a direct extension of Traffic and Davidson. Although Davidson led the NASL ownership groups’ decision to secede from the USL, it’s NASL’s dedicated owners and leadership have spent the past six years building up a solid fan base to match a league that has produced solid soccer. But Davidson and Traffic have played a large role in that success.
And, like seemingly all things involving soccer officials lately, Traffic’s success was allegedly far from legal.
On May 27, the DOJ busted into a Swiss hotel and threw a monkey wrench into everybody’s plans, Davidson’s included. Although much attention has been given to the FIFA fallout, Davidson was major target of the joint FBI/IRS investigation. He was brought before a Brooklyn judge and currently faces 12 charges:
- One count of Racketeering conspiracy
- One count of obstruction of justice
- Four counts of money laundering
- Six counts of wire fraud
Davidson has pleaded not guilty to the charges, which accuse him with arranging bribes in exchange for the right to market various tournaments.
Also worthy of note—his firm’s parent company, Traffic Sports International, Inc., has already pleaded guilty to an assortment of charges. From the DOJ’s report:
On Dec. 12, 2014, the defendant José Hawilla, the owner and founder of the Traffic Group, the Brazilian sports marketing conglomerate, waived indictment and pleaded guilty to a four-count information charging him with racketeering conspiracy, wire fraud conspiracy, money laundering conspiracy and obstruction of justice. Hawilla also agreed to forfeit over $151 million, $25 million of which was paid at the time of his plea.
On May 14, 2015, the defendants Traffic Sports USA Inc. and Traffic Sports International Inc. pleaded guilty to wire fraud conspiracy.
When breaking down the movements of Davidson and his company, the appointment of Sanz also turns out to be fishier than it initially seemed, as Sanz was placed on indefinite leave by FIFA June 1.
When reading the report of the indictment—which can be found below—it becomes very clear that Sanz, though not named, is “Co-Conspirator #4”, who is described as serving as a “high ranking official at Traffic Sports” from 1999 to 2012—the year Sanz was named CONCACAF’s general secretary. From that point on, the report details Sanz supporting the campaign of now ex-CONCACAF President Jeffrey Webb—who is one of the officials charged and named in the document—and a myriad of other illegal activities. Here’s just one example from the report:
Co-Conspirator #4 began negotiations with the defendant AARON DAVIDSON, under whom he previously worked atTraffic USA, regarding the media rights to the Gold Cup and the CONCACAF Champions League, CONCACAF’s club tournament. Upon direction by and on behalf of the defendant JEFFREY WEBB, Co-Conspirator#4 negotiated a bribe payment for WEBB. In or about November 2012, CONCACAF awarded the contract for the rights to the 2013 Gold Cup and the next two seasons of the CONCACAF Champions League to Traffic USA.
It appears that some of the biggest tournament rights were assigned in exchange for bribes—this is just one example of the many that would be allegedly be orchestrated under the watchful eye of Davidson and Traffic Sports from 2009-2015.
The report goes on to further detail bribery allegations involving Davidson and Webb, including a bribe of $3 million being made in order for Traffic Sports to obtain the $23 million contract for the August 2012 World Cup qualifiers. They would also go on to arrange a deal for the Gold Cup and CONCACAF Champions League. From the report:
For example, weeks after beginning work as general secretary, Co-Conspirator #4 began negotiations with the defendant AARON DAVIDSON, under whom he previously worked atTraffic USA, regarding the media rights to the Gold Cup and the CONCACAF Champions League, CONCACAF’s club tournament. Upon direction by and on behalf of the defendant JEFFREY WEBB, Co-Conspirator#4 negotiated a bribe payment for WEBB. In or about November 2012, CONCACAF awarded the contract for the rights to the 2013 Gold Cup and the next two seasons of the CONCACAF Champions League to Traffic USA.
The Future of NASL
As corrupt as Traffic may be, it’s those ill-gotten gains that kept the Fort Lauderdale Strikers, the Minnesota Stars and the Atlanta Silverbacks alive and allowed the league to continue to grow and find more interested ownership parties and companies hoping to advertise. The league, which famously wooed the New York Cosmos, could now be in serious trouble if it does not find a major financial backer and broadcasting and marketing specialist.
Still, that hasn’t stopped the league from putting its foot down. Here’s NASL statement on Davidson and Traffic Sports:
In light of the ongoing investigation announced by the U.S. Department of Justice on Wednesday, the North American Soccer League’s Board of Governors has suspended Chairperson Aaron Davidson, along with all business activities between the league and Traffic Sports, effective immediately. Commissioner Bill Peterson will serve as acting Chairperson.
The Carolina RailHawks, the sole NASL club owned by Traffic Sports, will continue to operate in the ordinary course of business. The club’s management team will continue to manage the day-to-day operations.
Although Davidson is definitely out as Chairperson, it is that last part that gets a little tricky.
While the league would certainly like to remove Traffic from all its business dealings, the company has a firm hold on all the money it’s pumped into the league and has responded with a statement of its own:
According to all the news that has been reported in the last days Traffic Group would like to clarify:
Traffic Group will continue to conduct our normal commercial activities and service all corporate sponsors, media partners and federations for the upcoming events, including Copa America Chile 2015, Gold Cup 2015, Scotiabank CONCACAF Champions League, Centennial Copa America 2016 and CONCACAF World Cup Qualifiers.
Traffic Group also would like to inform that the former president of Traffic Sports USA, Aaron Davidson, was removed from his activities, respecting FIFA’s determination. Traffic Group supports the ongoing investigations.
NASL has a class A and B stock ownership structure, and Traffic has acquired its fair share of B stock, as broken down here by Brian Quarstad of Northern Pitch:
The class A stock (representing all team owners in the league) is diluted each time a new owner enters NASL, according to a 2010 flowchart which was supplied to Northern Pitch. The flow chart also showed Traffic contributing $4.5 million, which would eventually get paid back with payments of $450,000 for the first 10 teams that entered the league. If the 2010 document is accurate, Traffic also received 30% commissions on commercial rights of media, sponsorships and merchandising.
All NASL owners vote with class A rights. Class B stock does not vote but gives Traffic the control (veto rights) they needed for limited issues, based upon their risk, to control their return on equity and return of equity, if that ever happens.
To this day, Traffic Sports owns roughly 66 percent of the NASL’s Class B stock.
In April 2014, CONCACAF and Traffic signed a multi-year renewal agreement that included the rights to the next four Gold Cups as well as the seven more seasons of the CONCACAF Champions League. So even if the NASL manages to oust the company from its business operations, Traffic will still have plenty of work—and money—on its plate.
There is a multitude of moving parts here, but the league is doing its best to carry on with a business-as-usual attitude. The NASL announced plans to bring in a team in Miami for the 2016 season—upping the league total to 12 teams—and there have been rumors that Carmelo Anthony wants to bring back the Puerto Rico Islanders.
This is going to be a sticky situation for NASL and for Traffic. What will likely happen is the league will attempt to assume ownership of the RailHawks and ask for the wealthier owners to help with the costs of keeping up the team while they seek a permanent solution. Davidson, who hasn’t been convicted of anything, may fight the move. It could easily get ugly. Hopefully the league can make it through, as soccer has been on the fringe of popular culture in the States for, well, forever, and something like this, that reaches beyond the NASL all the way CONCACAF, the USSF and MLS as well, could be a punishing blow.
H/T Shaker Samman