Carlos Slim Heru has a net worth of around $70 billion. He is a Mexican business magnate who’s investments range from telecommunications to commodities, even chemicals and mining businesses. Up until recently he was the richest man in the world according to Forbes Magazine, but a recent surge in Microsoft shares and a loss of about $2 billion due to political issues in Mexico have Bloomberg reporting him to be 2nd and Bill Gates up in the top spot. Regardless, his fortune is quite large.
Slim, as a businessman is not unfamiliar with horizontal ownership within an industry evidenced by his ownership of multiple industrial companies and direct ownership of multiple Mexican telecoms including Telmex, the formerly government owned monopoly on telephone providers in Mexico. His telecom assets were all consolidated as subsidiaries under Grupo Carso as Carso Global Telecom and in 1996 would break off from Grupo Carso. America Movil, in 2010 would eventually move to purchase Carso Global Telecom in almost a cannibalistic way as it was formerly the mobile arm of Telmex that grew larger than its former parent company. America Movil is a venture of Slim so in the end it was a long drawn out consolidation of his Telecom assets.
Slim’s latest venture into horizontal investment hasn’t been as successful, at least, not yet. Through America Movil, Slim this past fall purchased 30% of Grupo Pachuca, an ownership group that owns both Pachuca CF and Club Leon in Mexico’s top tier Liga MX. This sparked a debate among the remaining 16 teams in Liga MX regarding the current state of multiple ownership. Results came out today regarding a vote made by the owners of the teams in Liga MX to hereby ban multiple ownership of clubs.
The reason for this appears to be very simple, with the ability to own more than one club, there exists a conflict of interest, especially when these teams compete against each other or when match ups occur where a certain result in one of the club’s matches has a direct and positive impact on the second club. The real question that arises from this though, is why is multi party ownership just being brought to the table for discussion? Two other clubs already share an owner and at one point in time, three clubs shared an owner. So why is multi-party ownership just now receiving the limelight? The answer lies in who exactly the other multi-team owners were: Televisa and TV Azteca.
If the three major companies involved sound as though they come from a similar industry, then you’re on the right track. Unlike MLS in the United States or the Barclay’s Premier League in England, tv rights distribution is not bundled in Liga MX. Each team has the ability to sell it rights individually. This in the end resulted in a duopoly between Televisa and TV Azteca with the two agreeing to split the rights to home game distribution 10:8 respectively. To deal with relegation, any team that was promoted simply had to negotiate a deal with the company who held the rights of the team that was relegated. This setup was most likely facilitated through their previous ownership relations with various clubs.
In 2012 this gentlemen’s agreement ended upon the promotion of Club Leon to Liga MX and the relegation of Estudiantes Tecos (really not a surprise that Slim also owns part of Estudiantes as well). A disagreement in the negotiation of the rights deal between Televisa and Leon ended in the announcement of the rights being sold to Fox Sports. Not so coincidentally this announcement was made shortly after the announcement of America Movil’s 30% stake in Grupo Pachuca. Pachuca CF has their reights up for negotiation next year as well. It will be interesting to see where they head.
According to Nick Dorrington, Slim had been trying to get broadcast licensing since 2006 but had been blocked by the Televisa and TV Azteca who were worried about the financial clout Slim would bring with him if allowed even a finger hold in their market. In addition Bloomberg reported back in August that “Televisa has been encroaching on Slim’s territory by offering home-phone and Internet service and entering the mobile-phone business.” America Movil, according to the same report represents about 57% of Slim’s net worth. When Televisa and TV Azteca blocked Slim’s licensing entry, he pulled all his advertising from the two and caused a loss of close to $75 million.
Slim does not have his own distribution network like Televisa or TV Azteka, which might explain. why Fox Sports owns Mexican rights to Leon, Telemundo owns US rights, and the rest of Central American rights are held by a CNN expansion website. What he does own is DLA Inc., a distributor of movies and TV programs online and on cable systems, as well as UnoTV, a streaming website. By causing a ripple in the TV rights waters, he opens up the market to his own expansion while debasing the foundation of his competitors in two industries simultaneously, the results of which are yet to appear.
The banning of further multi-party ownership doesn’t force Slim to sell his current stakes. It simply prohibits the future ownership of multiple clubs by anyone.This decision will hopefully deter a certain activity. That activity is not the potential collusion of teams and results, or manipulating the movement of relegation and promotion. Instead, it should deter the use of Mexico’s most popular sport as pawns in arguably a much larger stage involving more money than most Liga MX clubs post in profit combined. You can’t blame Slim for protecting and even furthering his financial interests and being just outright ruthless. Neither should Pachuca CF or Club Leon, as Dorrington states, it serves Slim better if these teams are successful. But this situation only gives ammunition to those claiming the beautiful game is being given a black eye by corporate interests and this situation specifically makes Abramovich, the Qataris and the Saudis look like amateurs in a sandbox when it comes to the business of soccer.