Why is nobody writing about the released USSF Financials?

So I just did a few quick google searches to try to find some articles about the USSF Financials that were released about a week ago.

HERE? or maybe HERE will get better results?

Nope... So I can only find a grand total of TWO articles on them from the entirety of the soccer "media". I am using the word "media" very broadly here since one of them was written by me on this blog and one was by Miki Turner on his website.

THAT YOU CAN READ HERE

So how many people out here cover soccer in the United States? Literally none of them wanted to write about the Audited Financials that were such a big deal at the USSF AGM that they were brought up a member of the National Council within minutes of the end of the election?

This post I found on Reddit kind of sums it up nicely.

Maybe after the World Cup games today you can spend a few minutes and do a little digging and write something about the Audited Financials... they are kind of a big deal.

Is MLS leadership exempt from the USSF Conflict of Interest Policy?

From reading though the policy as a layman... it would appear so.

HERE IS THE DOWNLOAD LINK TO THE FULL POLICY

The part in question is here (bold provided for emphasis).

A. Conflicts of Interest 

1.

No Person shall act in any manner which causes him or her to have a direct or indirect interest in or relationship with any outside organization or person that might affect (or that might reasonably be understood or misunderstood by others as affecting) the objectivity or independence of his or her judgment or conduct in carrying out the duties and responsibilities he or she has in connection with the USSF's activities. For purposes of this Policy, “outside organization” shall not include any constituent or affiliated member entities of the USSF provided such Person holds elected office in or is directly employed in a full-time capacity by such outside organization.

That seems pretty cut and dry that full time employees of MLS are exempt from the USSF Conflict of Interest Policy. We may have some foxes in the hen house.

#ProRelForUSA
#ReformUSSF

A deeper look at the USSF Audited Financials

Earlier today the USSF Audited financials were FINALLY released.

CHECK THEM OUT HERE

So let's take a look at some of the stuff held within them.

WTF? @ussoccer & lame-duck @sunilgulati SECRETLY signed a new contract w/SUM DAYS BEFORE THE USSF PRESIDENTIAL ELECTION! Contract was for the ENTIRE duration of the new USSF presidential term? This horrible governance! Scared of @kylemartino @EricWynalda @hopesolo @CACSoccer? pic.twitter.com/Zj6J92snUs

— Brian Costin (@BrianCostin) June 20, 2018

Well, that doesn't look good. Without even looking at anything else... that looks really bad.

Now let's go a little deeper. The USSF held off on releasing the Audited Financials until AFTER the World Cup vote even though they had them in their possession. .

BDO USA, LLP prepared and completed the audited financials on June 8, 2018. In them, they acknowledge prior accounting errors by #USSF, regarding a Copa America 2016 subsidiary & sub-subsidiary.

Why did #USSF wait until after the #United2026 #FifaWorldCup vote to release these? https://t.co/DwglxB2Ybl

— WikiMLS (@wikimls) June 20, 2018

Now let's take a look at BDO USA, LLP... a very quick Google search brings up some glaringly bad business practices including this one from 2016. The PCAOB issued a report on BDO USA, LLP.

“It appeared...that the Firm...had not obtained sufficient appropriate audit evidence to support its opinion that the financial statements were presented fairly”

READ THE ENTIRE ARTICLE HERE

This was during the time frame of the USSF Audited Financials. 

This news about the firm is in addition to $6.5B in phony tax shelter losses, Federal Fraud convictions leading to long prison sentences, and issuing false and misleading unqualified audit opinions about the financial statements. 

Why did USSF choose such a potentially shoddy firm to do their audited financials?

Now lets look at the fact that in December USSF Vice President and Presidential Candidate Carlos Cordiero made the statement that he was going to create a new Commercial Rights Committee...

On 12/6/17, @CACSoccer promised to create a Commercial Rights Committee to oversee #USSF marketing & TV. “No conflicts.”

Per today’s released Audit, #USSF instead formally executed a new 4-year agreement with SUM in January 2018, effectively rendering Cordeiro’s promise void. pic.twitter.com/Yd233DBfT2

— WikiMLS (@wikimls) June 20, 2018

This timeline leads to two possible ways that things happened in December/January concerning the SUM deal with the USSF. The USSF BOD members had already approved the new SUM contract and Cordiero ran on a platform that he was going to make sure that the USSF was going to get the best deal possible... while already signing away his ability to do anything about it or once Cordiero went public with his plan to make sure that the SUM deal was going to be reviewed by people outside of the Garber/Gulati/MLS/SUM power structure a new deal was immediately signed.

Neither of these two options look good.

Now lets take a little deeper look at the business practices of SUM when it comes to dealing with US Men's and Women's National Team media rights.

A short paragraph on the SUM marketing arrangement, which has apparently been a no-bid arrangement from 2004 and now extended to 2022. SUM is a partner of MLS which USSF also promotes and regulates. MLS helps to govern USSF. If that seems a bit incestuous, well it is. pic.twitter.com/0vucUgsIti

— Roger Pielke Jr. (@RogerPielkeJr) June 20, 2018

We know that MLS/SUM sold ESPN, FOX and Univision the 2015-2022 rights to the USNT games in early May 2014. That is 4.5 years before MLS/SUM officially acquired the rights.

The eight-year deals with ESPN, Fox and Univision are priced five times higher than the average annual value of the league’s current media deals.
ESPN and Fox will share the English-language rights to MLS and U.S. Soccer matches over the next eight years.

READ THE ARTICLE HERE 

Could the fact that USSF did not have an official contract with MLS/SUM been the reason why Gulati/Garber/MLS/SUM signed a secret deal so close to the USSF Presidential Election?

We also need to not forget that the USSF renegotiated this no bid marketing deal that didn't improve the monetary guarantee due the federation. We also have a good idea that the original deal is very undervalued on the open market. When we ask who was in charge of negotiating on behalf of the USSF with MLS... Oh, wait... Josh Westerman already discussed that in his great blog piece.

And if you’re wondering if USSF is receiving fair value in the SUM relationship, don’t worry because the Committee is also responsible for reviewing conflicts of interest of the directors and for implementing processes to deal with them. Oh, and from USSF’s side of things, its top employee, well, the Committee is in charge of his performance evaluation and for setting his compensation. That’s right, Section 5 of Bylaw 431 puts Garber (who is absolutely conflicted with respect to SUM) in charge of navigating the SUM transaction on USSF’s behalf and of setting the compensation of the USSF employee with responsibility for negotiating USSF’s side of the deal against Don’s own company. That’s marvelous.

“What are we doing?!”

 READ THE ENTIRE ARTICLE HERE



One last thing for today thanks to the keen eyes of Miki Turner (who you should give a follow if you want to keep up with all the lawsuits that the USSF is dealing with) we can ponder about that just doesn't look good...

These dates for the SUM agreement don't match up. Did @MLS/@ussoccer amend the agreement that was filed with the court? Has that 2018 agreement been submitted to the court? #NASL v #USSF/#MLS pic.twitter.com/t4Gbwc3ZYt

— Miki Turner (@turneresq) June 20, 2018

Why would the USSF provide different dates in different documents like this? One to the IRS and one to Federal Court. Just doesn't make sense at all.

I just can't stop thinking of the phrase.... "Where there is smoke there is fire..."

YOU are the USSF

I've been thinking about this all day...

The State Associations have no idea how powerful they are as the National Council of USSF.

Too many of them think of themselves as local only organizations instead of a part of a national one.

YOU are USSF. Not the Board of Directors and President. Not the staff. YOU ARE!

— Chris Kessell (@THEChrisKessell) June 3, 2018

It is important to remember this. The State Adult and Youth Associations that make up the national council and the other organizations involved at that level are USSF. Not the people on the Board of Directors, not the President of the Federation, not the senior staff... the national council... the MEMBERS are the USSF!

I know all of us involved in governance of soccer in this country at whatever level we are involved... whether we are on a board of a local club, a league, the state board, a national board or committee... it is easy for us to fall in to the trap of only thinking about our personal issues we face in our organization that we are a member of and down. We MUST start to think of our place UP the chain of command. What can we do as members of our club board do to help the entirety of local youth or adult soccer not just our club. What can we as league board members do for our league AND state. What can us state board members do to help with the needs of our state AND nationally.

We all have a job to do that requires looking both internally and externally. We all are members of a larger organization. Clubs are members of leagues. Leagues make up the state. States make up the Federation. The Federations make up the regional confederations... who make up FIFA.

It is all tied together. We have to start thinking of it that way and acting like it.

What is going on?

I’m sure that many of us have seen this video… we all saw it live and in person at the 2018 AGM. 

We're still waiting for @CACSoccer to hit the ground running and release the @ussoccer financials. Anyone else seen them? pic.twitter.com/wR8mXjGsG9

— American Soccer (@USASoccerTV) May 21, 2018

USSF CFO Eric Gleason gave us a response of 30-45 days from 2/10/18… 

We are now over 100 days since 2/10/18 and no audited financial statements have been posted on the USSF website for our review. The USSF posted its last audited statements in November 2016. 

What is really going on? Why is this taking so long? I’m not sure exactly, but we should all read Roger Pielke, Jr’s very informative research in to the USSF controlled ‘CA2016’ subsidiary and it’s financials.

“In 2014 the US Soccer Federation, a non-profit charity registered in New York, created a subsidiary non-profit related to the hosting of the Copa America Centenario soccer tournament. Specifically, on 29 October 2014 the USSF set up a single-member LLC, called The CA2016 Local Organizing Committee LLC.

I've reviewed the 2016 IRS 990 form from the CA2016, and this post raises some questions about the numbers reported in that form.”

Mr. Pielke Jr. came up with several very pertinent questions that may have something to do with the time it is taking to finish the report…

“The CA2016 reported $190 million in revenue in 2016 (specifically $189,681,375). CA2016 reported providing a grant of $64,941,805 to the USSF (Schedule I, Part ID, d). USSF 2017 IRS 990 (PDF) reported receiving $50,000,000 from CA2016 (p. 68, Part V (1)).

    Question #1: Why is there a $14,941,805 discrepancy between the two numbers?”

This multi-million dollar one and six more questions that the leadership of our organization need to answer are found in this article… 

http://leastthing.blogspot.com/2018/04/seven-questions-for-us-soccer-on-ca2016.html

These 7 questions do not cover the fact that USSF has not responded to another major  governance concern. Questions have been raised about the USSF being out of compliance with New York state law concerning Non-Profit Charitable Organization reporting and the potential issues with the NY Attorney General that this would bring about. 

http://leastthing.blogspot.com/2018/04/has-us-soccer-failed-to-comply-with.html

Non-profits like the USSF were required to file by February 18^th under New York State law with the penalty of doing so being the losing of non-profit status. Currently the USSF is over 90 days late. Are we as members of the organization worried about what the penalty could be? 

Finally, Corporate Governance Lawyer Josh Westerman asks for the USSF… us… to “aim higher” and touches on some very important issues when it comes to how our USSF Nominating and Governance Committee operates compared to industry standards and norms. 

https://medium.com/@joshwesterman/ussf-nominating-and-governance-committee-537ed7c0a427


As members of USSF, the associations that the board serves, and the clubs that the associations are made of… it is up to us to hold our Federation accountable. It is up to us to make sure that WE are doing all that we can to push this organization forward and to make sure that major questions and concerns like these are addressed. We can't sit on our hands, we must ask questions, we must demand answers…

Chris Kessell

West Side Soccer

Kanawha Valley Soccer League

West Virginia Soccer Association

Guest Post: Is USMNT's path to success a fan-owned Bundesliga club? by Jay Sorgi

Guest Post from Jay Sorgi

It's a crazy conundrum, this failure of the United States Men's National Team, in a nation with approximately eight million men and boys who play the game, can't field a team that can get to the 2018 World Cup, let alone have a reasonable chance to win it.
We know and have debated on - ad nauseum, but with defeinite reason - every reason why the USMNT has failed, what needs to change about U.S. Soccer and how the almighty dollar can conflict with the mission of winning the world's biggest single team sport event. The fundamental issues, including entry and youth-level, must be solved.

But perhaps at the top, the size of America's military presence in one particular soccer-loving nation could be a tool to help the USMNT gain a major competitive advantage on every other football-playing nation.

The rub: You, the American soccer fans, could be the controller of the direction.
(I don't claim this to be the panacea of the USMNT's problems, nor do I claim to be anywhere near an expert on the sport. This idea is rather meant to be a conversation starter which the soccer community can reject or refine into more of what it should be.)

Here goes:
A majority American fan-owned club that climbs the ranks of the German soccer system and, if/when it reaches the Bundesliga Official, becomes as much of the USMNT as possible within federation rules and their German-born player requirements. In lower leagues, it could be used as a talent developmental tool for U-23 and younger American players.

The club would be based in the south central area of Germany where tens of thousands of American military personnel are stationed, close to Mannheim and Kaiserslautern where the USMNT and USWNT played numerous World Cup matches in 2006 and 2011.

This would allow a major international competitive advantage, as American players would be playing together in European competition (read: NOT MLS) on the same side 12 months out of the year in both club and national team matches, something rarely seen at the top levels.

The key to retaining top American talent would be, of course, money - making sure the top talent would not head to other top clubs. If Christian Pulisic would be on such a squad, but get big money offers from Liverpool (as reported recently), Barcelona or one of the other megaclubs, it would certainly be a battle to keep him or others like him within the club.

However, that wouldn't have to stop top American players from growing together, so long as there is enough capital on hand (read, corporate minority ownership or top sponsorship with deep pockets - very possible considering the American corporate climate) to keep them on the roster.
It could have the US Soccer coaching staff. It could have youth clubs set up both in America and Germany (to fulfill German federation requirements).

Most importantly: MLS doesn't have to own it. You would.

You, the American soccer fan - perhaps through American Outlaws - would set the direction of the club. The US Soccer team's in-season operations would not have rich-pocketed MLS ownership whose main goal is to make money and not have the best interest of American soccer necessarily top of mind.

It would be you. Millions of you running a big part of the show of the team America supports more than any other.

Would US Soccer (sorry about the upcoming baseball pun) play ball? Would they let a fan-owned club be a major developer of their national team?

Who knows. You probably have more insight on that than I would.

Again, this is meant to be a brainstorm to be developed, debated and either fine-tuned or jettisoned in the spirit of wanting the best for my country's most well-known national team worldwide, with the goal of not only returning to, but someday winning the World Cup.

With you, the fan, owning a greater percentage of the direction of it.

(Make sure you comment on this post on Jay's Facebook!)