TIME health

NCAA Proposes $70M Concussion Fund To Settle Lawsuit

NCAA President Mark Emmert News Conference
NCAA President Mark Emmert speaks to the media during a press conference at AT&T Stadium on April 6, 2014 in Arlington, Texas. Jamie Squire—Getty Images

The settlement includes funding for testing current and former college athletes

The National Collegiate Athletic Association will pay $70 million for concussion testing as part of a proposed settlement over an ongoing head-injury lawsuit, the organization announced Tuesday. The money would pay for symptom identification for current and former college athletes.

If accepted, the proposed deal, which would also offer $5 million for concussion research, would put an end to an ongoing class-action lawsuit facing the NCAA in federal court. According to the plaintiffs in that case, a 2010 NCAA internal study showed that almost half of college trainers put athletes with signs of concussions back on the field. The suit has been riding a wave of accusations that the NCAA and college teams across the country have put players at risk of brain injuries.

“Student-athletes — not just football players — have dropped out of school and suffered huge long-term symptoms because of brain injuries,” the lead plaintiff’s lawyer, Steve Berman, told The New York Times. “Anything we can do to enhance concussion management is a very important day for student-athletes.”

The settlement would affect men and women across all NCAA divisions. In addition to football, ice hockey and soccer squads, the settlement also affects basketball, wrestling, field hockey and lacrosse teams. All current and former athletes in the NCAA would be eligible for concussion screening and possible damage claims under the proposal.

As part of the deal, college athletes will be required to take a baseline neurological test at the beginning of each year, which will help doctors monitor the effects of potential concussions during the season. Concussion education will also be required for coaches and athletes.

“We have been and will continue to be committed to student-athlete safety, which is one of the NCAA’s foundational principles,” said NCAA Chief Medical Officer Brian Hainline in a statement. “Medical knowledge of concussions will continue to grow, and consensus about diagnosis, treatment and management of concussions by the medical community will continue to evolve. This agreement’s proactive measures will ensure student-athletes have access to high quality medical care by physicians with experience in the diagnosis, treatment and management of concussions.”

TIME World Cup

FIFA Rejects Calls to Strip Russia of World Cup

(ZURICH) — FIFA rejected calls to move the 2018 World Cup from Russia, saying the tournament “can achieve positive change.”

Russia’s alleged involvement in shooting down a Malaysia Airlines plane over Ukraine last week prompted calls from some lawmakers in Germany to review the country’s hosting rights.

On Friday, FIFA issued a statement saying it “deplores any form of violence” and questioning the purpose of relocating the sport’s showcase tournament.

“History has shown so far that boycotting sport events or a policy of isolation or confrontation are not the most effective ways to solve problems,” FIFA said, adding that global attention on the World Cup “can be a powerful catalyst for constructive dialogue between people and governments.”

The conflict between Ukraine and pro-Russia separatist rebels escalated days after the World Cup ended in Brazil.

On July 13 in Rio de Janeiro, Russian President Vladimir Putin attended a World Cup hosting handover ceremony with Brazilian counterpart Dilma Rousseff. Both then sat next to FIFA President Sepp Blatter to watch the final at the Maracana Stadium, won by Germany.

FIFA, which has Russian Sports Minister Vitaly Mutko on its executive committee, said a World Cup in the country “can be a force for good.”

“FIFA believes this will be the case for the 2018 FIFA World Cup in Russia,” the governing body said.

Blatter already rejected calls to strip Russia of the tournament after it annexed the Crimea this year.

“The World Cup has been given and voted to Russia and we are going forward with our work,” Blatter said in March.

In a separate statement Friday, Mutko said a U.S.-led boycott of the 1980 Moscow Olympics had been a mistake.

“So there’s no sense in reacting to politicians trying to make names for themselves,” Mutko was quoted saying by Russian news agency R-Sport. “We’re preparing in a calm way, building facilities, getting ready for the World Cup.”

Russia has announced a $20 billion budget for building and renovating 12 stadiums, and other construction projects, for the first World Cup in Eastern Europe.

“FIFA has stated many times that sport should be outside politics,” Mutko said. “Hosting an event like this, we’re doing it for athletes from all over the world, for footballers, for the fans.”

TIME Sports

Kareem Abdul-Jabbar: Stop Keeping College Athletes Poor and Trapped

Ed O''Bannon
Ed O'Bannon playing for the UCLA Bruins in 1995. O’Bannon, along with a few other players, is suing for players to have control over the use of their likenesses, which earn millions of dollars for the NCAA. J.D. Cuban—Getty Images

Without unions, college athletics will remain a subtle but insidious form of child abuse.

A new survey finds that 60% of incoming college football players support unions for college athletes. The horror! Were such unions allowed, our glorious cities would crumble to nothing more than shoddy tents stitched together from tattered remnants of Old Glory; our government officials would be loincloth-clad elders gathered in the rubble of an old McDonald’s passing a talking stick; our naked children would roam the urban wilderness like howling wolves, their minds as blank as their lost Internet connection. We would be without hope, dreams or a future.

Or at least that’s what you might believe based on the nuclear reaction a few months ago when a dapper man named Ramogi Huma attempted to destroy everything that America holds sacred with just such a proposal to unionize college athletes. His argument was simple: that college athletes should be classified as employees of their colleges and therefore receive certain basic benefits. He did not advocate player salaries but only programs to minimize brain-trauma risks among athletes, a raise in scholarship amounts, more financial assistance for sports-related injuries, an increase in graduation rates and several other similar goals.

You would have thought he’d proposed dressing the Statue of Liberty in a star-spangled thong.

But Huma is not alone in his assault on the NCAA’s ironfisted control of all things related to college athletics that might generate income (as befits its new motto: “If it earns, it’s ours”). Other current and former college athletes are questioning the NCAA-brand Kool-Aid. Former UCLA basketball player Ed O’Bannon, along with a few other players, is suing for players to have control over the use of their likenesses, which earn millions of dollars for the NCAA — but not a cent for the players. Another class-action antitrust suit has been filed to remove the cap on players’ compensation — currently limited to the value of the scholarship they receive plus room and board — as an illegal restraint of trade.

Predictably, the NCAA is against any scheme to get college players paid, claiming that unionizing will “completely throw away a system that has helped literally millions of students over the past decade alone to attend college.” Attend but not necessarily complete, especially if you suffer any long-term injury. Because if you don’t compete, you don’t complete.

And the NCAA has the backing from some powerful Washington politicians who, according to Senator Lamar Alexander (R., Tenn.), worry about strikes that will “destroy intercollegiate athletics as we know it.” Speaker of the House John Boehner (R., Ohio) also chimed in: “I haven’t looked at the specifics of this and what would be required, but having formally chaired the House Education and Workforce Committee and worked with the National Labor Relations Act for the last 30 years, I find it a bit bizarre.”

Nothing more reassuring than someone who acknowledges he hasn’t really “looked at the specifics” but has an opinion anyway.

Well, Congressman, here are some specifics:

  • Last year, NCAA March Madness made $1 billion for CBS and Turner Broadcasting.
  • The NCAA takes in more than $6 billion a year.
  • The NCAA president made $1.7 million last year.
  • The NCAA’s top 10 basketball coaches earn salaries that range from $2,200,000 to $9,682,032.

While these coaches and executives may deserve these amounts, they shouldn’t earn them while the 18-to-21-year-old kid who plays every game and risks a permanent career-ending injury gets only scholarship money — money that can be taken away if the player is injured and can’t contribute to the team anymore.

The irony is that the NCAA and other supporters claim paying athletes would sully the purity of college sports — desecrating our image of a youthful clash of school rivalries that always ends at the malt shop with school songs being sung and innocent flirting between boys in letterman jackets and girls with pert ponytails and chastity rings. In reality, what makes college sports such a powerful symbol in our culture is that it represents our attempt to impose fairness on an otherwise unfair world. Fair play, sportsmanship and good-natured rivalry are lofty goals to live by. By treating the athletes like indentured servants, we’re tarnishing that symbol and reducing college sports to just another exploitation of workers, no better than a sweatshop.

Everyone’s hope was that once these inequities were exposed, the NCAA would do the right thing. That hasn’t happened on a meaningful scale. Instead, it battles in court, issues press releases and appeals to Norman Rockwell nostalgia.

The athletes are left with the choice of crossing their fingers and hoping their fairy godmothers will persuade the NCAA to give up money that it doesn’t have to, or forming a collective bargaining group to negotiate from a place of unified strength.

Most Americans agree that the athletes are being shortchanged. A recent HuffPost/YouGov poll concluded that 51% of Americans believe that universities should be required to cover medical expenses for former players if those expenses were the result of playing for the school. A whopping 73% believe that athletic scholarships should not be withdrawn from students who are injured and are no longer able to play.

But when it comes to these same student-athletes’ forming a union, an HBO Real Sports and Marist College Center for Sports Communication poll showed 75% of Americans opposed to the formation of a college-athlete union, with only 22% for it.

Why such a difference between wanting equity and supporting the best means to achieve it? Despite 14.5 million Americans’ belonging to labor unions, we’ve always had a love-hate relationship with them.

The love: Unions can be like protective parents arguing with an arrogant teacher over their child’s unfair grade. The hate: Unions can be like bossy spouses who complain about all the work they do for you while shoveling corn chips into their maw on the La-Z-Boy.

Our relationship with college athletes is much clearer. We adore and revere them. They represent the fantasy of our children achieving success and being popular. Watching them play with such enthusiasm and energy for nothing more than school pride is the distillation of Hope for the Future.

But strip away the rose-colored glasses and we’re left with a subtle but insidious form of child abuse.

Which raises the question: How will things change?

When I was a young, handsome player at UCLA, with a full head of hair and a pocket full of nothing, I sometimes had a friend scalp my game tickets so I could have a little spending money. I couldn’t afford a car, which scholarship students in other disciplines could because they were permitted to have jobs, so I couldn’t go anywhere. I got bored just sitting around my dorm room and frustrated wandering around Westwood, passing shops in which I couldn’t afford to buy anything.

How will things change? It’s possible the NCAA will eventually capitulate to these commonsense requests, but since it hasn’t so far, the only reason it would change its mind now would be the threat of a union. Either way, the union will have caused positive change for these young athletes. But without a union, these student-athletes will be without any advocates and will always be at the whim of the NCAA and the colleges and universities that profit from them.

Abdul-Jabbar is a six-time NBA champion and league Most Valuable Player. Follow him on Twitter (@KAJ33) and Facebook (facebook.com/KAJ). He also writes a weekly column for the L.A. Register.

MONEY Sports

How the Economics of Playing Football and Basketball Compare

That loud roar you heard this week was NFL training camp getting under way. With less than six weeks until the Green Bay Packers head to Seattle for a game against the Super Bowl Champion Seahawks, fans across the country are following every move of their favorite players and planning for their fantasy football draft.

We decided to take a look at some of the important markers in the life-cycle of a professional athlete. From sporting gear to concussion rates, the gallery below provides a snapshot of what parents have to pay to get their kids on the field—and how long players stay in the big leagues once they actually get there.

To put the numbers in a little bit of context we compared football’s costs to basketball’s.

TIME World Cup

Messi’s Legacy Debate Continues

Lionel Messi 2014 World Cup
Lionel Messi of Argentina reacts during the 2014 FIFA World Cup match against Germany on July 13 in Rio de Janeiro, Brazil. Mike Hewitt - FIFA—Getty Images

Messi missed the free kick in the 120th minute of play against Germany, sealing Argentina's fate

sportsillustrated

By Brian Straus

RIO DE JANEIRO – Time was slipping away, yet Lionel Messi still had plenty.

Germany’s Bastian Schweinsteiger, who committed the 120th-minute foul that offered Messi the opportunity for one last look at goal, was receiving treatment a few feet away. The Argentine maestro took advantage of the pause. He stood quietly for a moment then bent over and pressed his fingertips into the ball, testing the air pressure.

On Top of the World: Germany Tops Argentina, Claims 4th World Cup Title

Messi was calm and deliberate, as if he hoped the measured pace of his movement would help clear his mind and calm any nerves. He was about 25 yards away and to the left of Germany goalkeeper Manuel Neuer. Argentina trailed, 1-0, in the dying seconds ofthe World Cup final at the Estádio do Maracanã and its fading hopes for a third title rested where they always had – at Messi’s feet.

It was an opportunity he’d surely rehearsed countless times – maybe as a boy in Rosario, where he was born the year after Diego Maradona carried Argentina to its second world championship. It became more realistic as Messi’s own star ascended in Barcelona, where he won every team trophy there is,along with a record four FIFA World Player of the Year awards. This was supposed to be Messi’s World Cup, the tournament where the sport’s most spectacular player, in his prime at 27, would end any debate about his place in soccer’s pantheon and in the hearts of his countrymen.

The free kick missed by miles, soaring over Neuer and into the crowd. Messi looked up toward the sky with an ironic, resigned smile on his face. That was it. The sport’s greatest goal scorer would be shut out for a fourth consecutive match, one he called “the most important of our lives” in a Facebook post. Argentina would lose the final and Messi, perhaps, his place alongside Pelé and Diego, if that ever was at stake.

Diego Maradona: Lionel Messi unworthy of Golden Ball

It could have been so much simpler. Messi already has accomplished at the club level what Maradona never could, and he played this World Cup under a spotlight that his predecessor couldn’t have imagined 28 years ago. Win it, dominate it, and the argument is over.

Maradona was regarded as supremely gifted – Barcelona bought him from Boca Juniors for a world record $7.6 million in 1982. But he hardly was a legendwhen that fateful World Cup rolled around in ‘86. He’d escaped the slums of suburban Buenos Aires andwon a couple of South American player of the year awards, one Argentine league title and a FIFA World Youth Championship. But he’d struggled with injuries and chemistry at Barcelona and hadn’t yet lifted Napoli to glory. No one expected or demanded a title when La Albiceleste arrived in Mexico. At 25, he wasn’t chasing immortality.

Messi was playing under a different sort of pressure here in Brazil and he rose to the occasion during the group stage. He scored in the opener versus Bosnia-Herzegovina, beat Iran with a stoppage-time goal then tallied twice against Nigeria. Messi then turned playmaker, setting up Ángel di María’s gorgeous game-winner in the round-of-16 matchup with Switzerland.

But as the tournament wore on and the opponents got tougher, Messi’s impact waned.Under manager Alejandro Sabella, Argentina has focused first on defense, starting with goalkeeper Sergio Romero and inspired by midfielder Javier Mascherano, who remains the squad’s soul if not its captain. Argentina’s soccer is far from the rhythmic, high-pressure, possession-based sort that Messi enjoys at Barcelona. Argentina had only 40 percent of the ball on Sunday, a statistic that might cause a riot at the Camp Nou.

Brazil Falls Short, but its World Cup Provides Unforgettable Theater

Messi’s contributions in the knockout rounds were intermittent and tactical. Set up to stymie Argentina’s primary threat, opponents made sacrifices in the attack. Games tightened up and scoring chances were at a premium. Sabella oftendeployed Messi in a deeper position. Hemight find the ball a bit easier there, but he was further from goal once he had it. In the semifinal against the Netherlands, Messi was shadowed effectively by Nigel De Jong and then Jordy Clasie.

On Sunday, he started behind one forward rather than two but still had lots of ground to cover when the ball came his way. And there were significant stretches when it didn’t. None of his four shots was on target, he was late arriving on a couple of counterattacks and he saw two promising first-half crosses cleared from danger after runs down the right. Messi’s best chance came in the 46th, but his left-footed shot whizzed across the face of the German net and past the far post.

Sabella refused to respond directly to a post-game question concerning Messi’s fitness, saying that he thought his captain had an “extraordinary” tournament and deserved the Golden Ball award handed by FIFA to the World Cup’s top player. Indeed, Messi led the competition in scoring chances created (21) heading into the final, a testament to his skill and efficiency. But that’s hardly a statistic they’ll be singing from the stadium terraces in Buenos Aires, and the glum look on Messi’s face as he accepted that trophy was clear indication that his dream had been dashed.

He described it in Saturday’s Facebook post.

“My dreams and my hopes are being fulfilled due to the hard work and sacrifice of a team that has given everything from match one,” he wrote. “We want to win, and we are ready.”

2018 World Cup odds: United States 33/1 to win tournament

He could have made it easier for the public and the pundits by scoring a couple goals on Sunday and carrying the more important hardware back to Buenos Aires. There’d be a three-way tie for GOAT. But it already was pretty simple for Messi, who’s famously shy and the polar opposite of the outspoken, effervescent Maradona. He doesn’t play for the history or the trappings. He’s been known to sulk when benched at Barcelona, which can happen during a game that’s out of hand or meaningless. He simply wants to be on the field.

“The only thing that matters is playing. I have enjoyed it since I was a little boy and I still try to do that every time I go out onto a pitch. I always say that when I no longer enjoy it or it’s no longer fun to play, then I won’t do it anymore. I do it because I love it and that’s all I care about,” he told ESPN’s E:60 in an interview prior to the World Cup. “I want to be world champion but not to change the perception of others towards me or to achieve greatness like they say, but rather to reach the goal with my national team, and to add a World Cup to my list of titles.”

Some Argentines feared his loyalty lay with Barcelona, or even Spain, where he moved at 13. His goalless 2010 World Cup (when Maradona was the coach) didn’t help. Messi suffered from a growth hormone deficiency as a child, and his family was unable to find an Argentine club willing to pay for his treatment, which cost more than $10,000 per year. The Catalans offered, so he left. He owes Argentina nothing but has continued to profess his love for his country. He’s already been capped more than Maradona and still has years left to play.

“I believe he’s in that pantheon. But he was there before,” Sabella said Sunday. “He’s been there for quite a while already, in the pantheon of the big ones.”

Germany coach Joachim Löw said he told substitute striker Mario Götze during the brief break before extra time, “Show the world that you’re better than Messi and that you can decide the World Cup.” Götze decided it, scoring the game’s only goal on a brilliant volley in the 113th minute.

Germany’s World Cup Title a Result of Revamped Development, Identity

But no one believes he’s better than Messi. He’ll never come close. Lifting theWorld Cup is about far more than a given shot, a single game or the bounces during a month-long tournament. Champions are forged in the long term through persistent work at the grassroots and league levelsand a focus on culture and player development.

Löw said Sunday that Germany’s route to the trophy started in 2004, the year he and Jurgen Klinsmann took over Die Mannschaft and Messi made his senior pro debut. The talent and depth on display in Rio was a decade in the making. As Germany accepted the trophy, Götze held up the jersey of injured winger Marco Reus, who many considered the team’s most dangerous player.He missed the tournament. Götze was a substitute. The man who passed him the ball, Andre Schürrle, also was a reserve. He’d relieved Christoph Kramer, who was the replacement for late scratch Sami Khedira. Messi has nowhere near that reservoir of talent with which to work. His silver medal is the reflection of a whole lot more than his (in)ability to master the moment.

Messi will move on. The next game will be the most important of his life. His legacy may be murky for some, but that’s the fun of sports. Those who want to debate it can do so. Those who are happy to let it go and are able to relax — or sit on the edge of their seat — and enjoy the remaining years of one of soccer’s most transcendent, exciting careers alsocan do so.

Messi will keep on motoring.

This article originally appeared on SI.com.

Watch Every World Cup Goal in 1 Minute

MONEY Sports

WATCH: U.S. Men’s Soccer Star Alejandro Bedoya on His Biggest Money Mistake

Alejandro Bedoya, midfielder for the U.S. World Cup team, talks about blowing a paycheck, investment strategies, and an important money lesson from his father.

+ READ ARTICLE

Bedoya on his biggest money mistake:

My first paycheck, I remember, I put in the bank. And the second one…you know, in Europe everybody is always…they want to look good…and it’s probably buying one of those brand name designer things that, I remember, for that month it was like probably my whole paycheck. Buying things like that. I mean, those things are cool to have, but it’s not really important.”

Bedoya on what he’s learned from his father about money:

He’s always taught me that it’s not what you’re worth, it’s what you negotiate. That holds true in every aspect. It’s really how you handle things and how you go about what you think you deserve. I feel like that has helped me out a lot with the opportunities I’ve gotten with money and investments.”

 

 

TIME World Cup

Argentina vs. Germany Referee Controversy Echoes, 24 Years Later

1990 World Cup Germany Argentina
West German forward Rudi Voeller heads the ball over Argentinian defender Oscar Ruggeri as forward Juergen Klinsmann looks on during the 1990 World Cup final between West Germany and Argentina July 8, 1990 in Rome. GEORGES GOBET—AFP/Getty Images

The two teams last faced off during the 1990 World Cup in Italy

sportsillustrated

By Ben Lyttleton

The outstanding image from the last time Germany and Argentina met in the World Cup final, back in Italy in 1990, was not Andreas Brehme striking home the winning penalty in the 85th minute, securing the 1-0 win for the European side, nor was it coach Franz Beckenbauer celebrating with the trophy.

WATCH: All Eyes On Rio: World Cup focus shifts to the Maracana

It was actually current U.S. national team manager Jurgen Klinsmann, tackled late by Pedro Monzon after a one-two combination with Lothar Matthaus, rolling three times and then raising up on one shoulder to continue his pained reaction. The challenge was in keeping with the rest of the game, and Monzon, a halftime substitute, was shown a straight red card for the tackle by referee Edgardo Codesal.

Worse was to come for Argentina: five minutes from time, Codesal awarded West Germany a penalty after Matthaus played through Rudi Voller, who, tightly marked by Roberto Sensini, fell to the ground in the area.

Previously in the match, Codesal had rejected Gabriel Calderon’s claims after a similar clash with Klaus Augenthaler.

Two minutes later, Codesal sent off another Argentine, Gustavo Dezotti, for grabbing Jurgen Kohler around the neck and wrestling him to the ground in an effort to get the ball off him for a throw-in. Codesal ran over and theatrically brandished his second red of the game, reducing Argentina to nine men.

“The referee has been physically manhandled by five players and if Argentina continue like this, FIFA will have to ban them from the next World Cup!” said BBC commentator John Motson. “Surely you can’t have this in the final!”

Brazil’s Nightmare Gets Worse: Argentina to Play for World Cup Title

This was Codesal’s last game as a referee. When he returned to Mexico after the game [he was Mexican-Uruguayan, and his grandfather was born in Argentina], he was confronted with hordes of journalists.

“I was brave and honest, like I always am,” he said. “The foul was Argentina’s fault, not mine. I’m calm and happy.”

At that World Cup, Codesal had taken charge of Italy’s 1-0 win over USA, awarding a penalty missed by Gianluca Viali, and blew for two penalties as England beat Cameroon 3-2 in the quarterfinal. FIFA observers gave him an average rating of 8.5 for his performances.

Codesal’s father, Jose Maria, was a referee who officiated at the 1966 World Cup. The one piece of advice he gave his son: “Don’t ever give a penalty if you think you will have to explain it a thousand times.” Nine years on, he remained convinced that his decision had been the correct one.

“I have no doubt,” he told Ole. “The referees don’t have to look for intent, they have to look for contact. This is what I saw: the Argentine tried to get to the ball first but he stretched his leg and tackled the German. It was a penalty. I was convinced at the time and I have not changed my mind since. For me, it’s a closed case.”

Netherlands Avoids Antics, Drama, But Feels Familiar Heartbreak

The case, actually, was far from closed. Soon after that interview, Humberto Rojano, the former president of the Mexican Referees’ Commission, went public on how Codesal had been appointed. He spoke of a meeting he had with Javier Arriaga, former head of the Mexican FA’s Referees’ Commission and a key figure in FIFA’s Referees’ Commission in 1990. Arriaga also happened to be Codesal’s father-in-law.

Rojano told Mexican paper La Jornada that “the authorities,” ­a phrase that is deliberately vague, ­had told Arriaga that “Argentina didn’t have to win.”

“I know the Argentines still hate me and that hurts,” Codesal told Reforma years later. “I love them and it hurts that I made them suffer. I would have liked Argentina won their third World Cup back in 1990. If I were God, I would change things, but I’m not God. I do know that in 50 years, they still won’t forgive me.”

Five Goals in 18 Minutes: How Mighty Germany Ripped Apart a Helpless Brazil

Codesal had actually watched the 1986 World Cup final between the same sides in Mexico, and had been supporting Argentina. But in 2011, over 20 years after the incident, Codesal’s stance had hardened against the continued hostility from the losing nation.

“I admire the Argentines for their will to win, but they have not learnt to lose, they just can’t accept it,” he said. “Someone told them that they lost because I was the referee, and they believed it. When Maradona uses his hand to score, that’s intelligent; but if they don’t win, it’s because someone stole from them.”

FIFA will announce the referee for Sunday’s clash between Germany and Argentina Friday afternoon, and whoever earns the honor will surely be operating with the cloud of Codesal lingering in the memory.

This article originally appeared on SI.com.

GALLERY: Brazil Fans React to Semifinal Demolition

MONEY

UPDATE: Why World Cup Bettors Are Smarter Than Bond Buyers

140626_EV_WorldCupvsInvestors_2
AP (Soccer); Getty (Stock Exchange)

Update: Two weeks ago, TIME’s Bill Saporito used the lens of the global bond market to accurately predict that Germany (arguably the world’s best-run economy) would be facing off this weekend against Argentina (one of the worst) in the final of the World Cup. We’re resurfacing his piece in the belief that readers would want another look at Saporito’s prognostication prowess. Here it is:

In soccer, Argentina is a global power. Ranked 5th in the world and featuring among its host of stars the world’s best player, Lionel Messi, it is one of the teams that can threaten Brazil’s march to the World Cup title.

In financial circles, on the other hand, Argentina is to a functioning economy what the Faroe Islands are to football. A bit of a joke. A doormat. Indeed, last week the U.S. Supreme Court slide tackled Argentina as it tried to dribble past some American investors who are demanding to be paid, in full, the interest due on their Argentine bonds. Having convinced other creditors to go along with a deal—part of a broader effort to right the economy after years of mismanagement–the Argentinians wanted to force the American investors to eat some losses as well. The Supremes blew the whistle on that.

This raises a question, albeit one more likely to be debated in bars off Wall Street than on the beaches of Rio: Are you better off betting on a country’s bonds, or on its soccer team? With Argentina, the answer seems clear: The country’s chances of paying off its sovereign debt in full appear to be inversely proportional to the odds of its football team winning the World Cup, where it was a 4-to-1 pre-tournament favorite in Las Vegas. Argentinian debt, meanwhile, has a yield of about 13%, reflecting a risk premium that only Nigeria approaches among World Cup finalists. In short, betting on Messi may be the saner play.

With global interest rates so low in a world awash in liquidity, you’d think more global investors would reach a similar conclusion — but in many cases you’d be wrong. Investors ought to be yellow-carded: Their quest for yield is leading to crazier behavior in the market than on the pitch. Italy is a prime example. Punters pegged Italy, one of footballing’s great nations, as a 20-to-1 long-shot to win the World Cup. They got it right, too, considering Italy’s early exit after a controversial loss to Uruguay. But the Italian economy is a lot worse than the Azzurri. It’s still mired in its economic past, and where young people are stifled in finding work. Still, Italy’s bonds offer a measly 2.92%, only about 30 basis points higher than the 2.61% for U.S. Treasuries.

The U.S. team, on the other hand, went off as a 100-to-1 shot; ironically, we’re still considered a third-world nation on the soccer field, despite advancing to the knockout round of the World Cup again. With its strong (if heartbreakingly inconsistent) play so far, the U.S. team’s odds are now down to 40-to-1 to win the Cup. Still, the market is telling us to bet the bonds, not the team, and it’s probably right.
Soccer bettors seem to have longer memories than investors do. When the latter look at the histories of Italy, Spain, Greece, Portugal and even France, it’s as though these nations have never defaulted, devalued, or restructured over the last couple of centuries. Compare Spain and Brazil, for example. Brazil’s bonds are yielding 4.22% while Spain’s offer a relatively paltry 2.76%, even though Spain’s economy is a shambles. True, Brazil has also struggled of late, but it has oil, youth, and seemingly higher growth prospects. And unlike Spain, it has major export industries in agriculture and aerospace — not to mention soccer players.

The place where the football bettors and investors correlate more closely is Germany: The former had 5-to-1 odds early on, the latter a 1.38% yield. True, German economic history is not untroubled, but today it is Europe’s champion economy — the strength of which goes a long way toward explaining why European bond rates in general have remained so low. Germany is, in effect, propping up the rest of the European economy. After today’s shutout against the U.S., however, it looks clear that die Mannschaft won’t do anything of the sort on the soccer pitch. If the form plays out, one of the world’s best-run economies will face off with one its worst.

 

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