Building concerns

“As for the rest of the billions, it’s not clear precisely where that money went. There are some clues. FIFA’s personnel ­expenses were $397 million. But good luck finding Blatter’s pay in the annual report. “We have hidden it so you cannot find it,” says Markus Kattner, FIFA’s head of finance and administration. “We’re not publishing it, first of all, because we don’t have to.”

–       From ‘A League of His Own’ by Bloomberg Business.
FIFA headquarters seem more like a nuclear bunker than a swanky executive facility – or perhaps they are both. They take up 11 acres on the Zürichberg, cost 240 million Swiss francs, and of the building’s eight storeys, five of them are underground. They incorporate a fitness centre, a meditation room and a full size football pitch. Bloomberg Business reports that cell phones are rendered inoperative by the black, Brazilian granite in the bowels of the building, and that executive committee meetings are held on the third subterranean level, in a conference room that has a floor of lapis lazuli. PhDs are probably de rigueur, in case you rub up against the likes of Doctors Strangelove, No, or Mengele.


Buildings make a statement about their owners. FIFA-Hauptquartier seems to be saying: our owners have a shedload of cash. When the building was inaugurated, high winds and driving rain forced the anticipated flag ceremony indoors. That didn’t faze Obergruppenführer Sepp Blatter (for the avoidance of any doubt, we are not suggesting that Sepp Blatter is or has ever been a Nazi paramilitary, although The Guardian has called him “the most successful non-homicidal dictator of the past century”), who opined artfully that


“The sky is touched with tears but we can live with that because football also has to live in all weather conditions and rain is a gift from heaven.”


Grand High Ming Blatter, who has been compared by Osiris Guzman, president of Dominican Republic soccer, to Jesus Christ, Nelson Mandela and Winston Churchill, also observed of his headquarters’ vast glass frontage that it


“would allow light to shine through the building and create the transparency we all stand for.”


Well, quite. Apart from in those five underground levels where you can’t receive a mobile phone signal, and where FIFA’s legal department requires that some visitors sign nondisclosure agreements for otherwise routine meetings.


But if FIFA had shareholders, it is likely they would be somewhat less impressed by the gaudy awfulness and conspicuous consumptiveness of it all.


When it comes to the corporate HQ, less can sometimes be more. When Tom Murphy joined Capital Cities Broadcasting, corporate HQ was a dilapidated former convent. He was asked to project a more professional image for the company. He responded by painting the two sides of the building facing the road. The other two sides he left untouched. Over a period of nineteen years, he generated a remarkable compound annual return to shareholders of over 22 percent.


Most corporate executives also feel obligated to a) please Wall Street and b) court the media assiduously. Their time might be better spent on running their businesses in the best interests of their shareholders. The crowns of our titans of finance have clearly lost some of their sheen over recent years. But the tendency to follow the crowd was well expressed by Citigroup’s Chuck Prince when he infamously told the FT in July 2007 that


“When the music stops.. things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”


Adam Smith in ‘Supermoney’ wrote a passage so wonderful and so relevant to our current situation that we may have become addicted to its re-use:


“We are all at a wonderful ball where the champagne sparkles in every glass and soft laughter falls upon the summer air. We know, by the rules, that at some moment the Black Horsemen will come shattering through the great terrace doors, wreaking vengeance and scattering the survivors. Those who leave early are saved, but the ball is so splendid no-one wants to leave while there is still time, so that everyone keeps asking, “What time is it ? What time is it ?” But none of the clocks have any hands.”


The clocks may not have hands, but the ticking goes on. Bond markets are living on borrowed time. Bill Gross may have been a few years early, but he was fundamentally right to suggest that they are resting on a bed of nitroglycerine. The rally in many stock markets is starting to look a little tired, too. Valuations have certainly become stretched. What is the pragmatic solution ? We think it’s to throw in your lot with:


  • Successful businesses from all over the world
  • With competent and honourable management
  • Who don’t squander money on trophy corporate headquarters
  • Who think like owners because they are owners
  • With companies that have little or no debt
  • And, finally and crucially, not consciously to overpay for the shares of those businesses.


If only there were some way of finding such attractive investments.