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How West Ham’s Transfer Scandal Upended English Soccer

Richard Scudamore, the Premier League’s chief executive, was in a hurry as he took a cab to West Ham’s Upton Park stadium in a scruffy part of East London in the first week of September 2006. The club had its heyday in the 1960s, when it produced a string of talented young players. It was in the era before the transfer market took off, when commercialism had yet to take hold in the game. In 1964, the club’s manager, Ron Greenwood, had wrapped the F.A. Cup trophy in cloth and taken it home on a London Tube train after the Hammers had beaten Preston North End in the final. Two years later, three members of his team — Bobby Moore, Geoff Hurst and Martin Peters — helped England win the World Cup, snapping the dominance of Pelé and Brazil.

However, West Ham had dropped out of the Premier League in 2003, the same year that Roman Abramovich bought Chelsea and — although it returned two years later and continued to produce talented players — it did not have the financial clout to compete with the biggest English clubs. Its latest generation of talented players — such as Rio Ferdinand, Frank Lampard and Joe Cole — had one by one left for bigger-spending clubs. The club’s song, “I’m Forever Blowing Bubbles,” featuring the line “fortune’s always hiding,” was now more apt than ever.

Scudamore’s car made its way down Green Street, where pie-and-mash restaurants stand next to shops selling Indian saris and samosas. Scudamore darted out of the car and strode into the club’s offices to be welcomed by the team’s managing director, Paul Aldridge, who apologized for the absence of the owner, Terry Brown. Scudamore wasted no time, getting straight to the point of his visit. “These players, what’s the story? How have they got here?” he snapped.

The West Ham players Carlos Tevez, left, and Javier Mascherano warming up for a match against Aston Villa in 2006. CreditGlenn Campbell/Agence France-Presse — Getty Images

A few days earlier, in late August 2006, the Argentine stars Carlos Tevez and Javier Mascherano had themselves arrived at West Ham. Flanking Alan Pardew, the team’s manager, Tevez and Mascherano held up claret-and-blue shirts and smiled for the news media. How on earth had this struggling Premier League team managed to sign two of the world’s most sought-after players? The story has its roots in South America, but was also tied to the riches that accompanied the breakup of the Soviet Union and to an Israeli dealmaker called Pini Zahavi, who was never far away from soccer’s biggest transfers.

Scudamore was already aware of wealthy individuals buying the transfer rights of players as early as 2000, a year after he took the job at the Premier League. Zahavi had told him all about it.

Zahavi was suave and smooth-talking, and had parlayed a career as a soccer journalist in Israel into being a transfer broker. His first deal, while still working as a reporter, had been to take Avi Cohen to Liverpool from Maccabi Tel Aviv in 1979. After 20 years as an agent, he had turned his attention to acting as a dealmaker to help a small group of wealthy individuals, some of them from the former Soviet Union, to invest in the transfer market. He called the business Soccer Investments & Representations.

Zahavi’s office was on a tree-lined boulevard near the Mediterranean Sea in Tel Aviv, but he spent much of his working life in five-star hotels across the globe or in his apartment in London’s Marble Arch. He had learned how this South American business model worked from his partners in Argentina: Fernando Hidalgo and Gustavo Arribas. Together they had founded the HAZ agency, which took its name from the first letters of their surnames and used a series of companies domiciled in Gibraltar, Luxembourg and Malta to buy and sell transfer rights. The business was so successful that the three men set up their own motor-racing team in 2006, and even considered entering the Nascar series before one of their drivers died in a 120 m.p.h. crash at the Autódromo Juan Manuel Fangio on the outskirts of Buenos Aires. The sudden and shocking death had ended their appetite to pursue the racing adventure.

Zahavi was well known in the Premier League’s offices in London. At Christmas he would send a box of oranges to Scudamore from back home. Over a cup of tea one day, Zahavi told Scudamore that he was moving into owning transfer rights. “He said, ‘I’m not an agent anymore. I own players. I actually own them,’” Scudamore recalled. “That’s the future.”

In 2001, Zahavi had helped Gustavo Mascardi, the first registered FIFA agent in Argentina, earn as much as half of the $12 million transfer fee Aston Villa paid River Plate for the Colombian striker Juan Pablo Ángel. Mascardi owned 50 percent of Ángel’s transfer rights through a company called Siglo XXI (21st Century). Aston Villa almost pulled out of the deal at the last minute after hearing of the unorthodox arrangement, but in the end the signing went ahead.

In the spring of 2003, Zahavi was introduced by another soccer agent, Jonathan Barnett, to Chelsea’s chief executive, Trevor Birch, at Les Ambassadeurs, a private club in London’s Mayfair, in a move that would help Zahavi — with his contacts in the former Soviet Union — become a broker in the takeover of the then struggling club.

While Zahavi and Barnett loved the high life, fine clothes and trappings of success — like Les Ambassadeurs, which served French Champagne, Belgian chocolates and Cuban cigars — Birch was a more low-key character. He had a first-class degree in accounting from Liverpool Polytechnic and specialized in corporate restructuring. He was an employee of Ken Bates, a gruff Londoner who had bought Chelsea for 1 pound in 1982.

Birch had briefed Zahavi on Chelsea’s financial woes, how it could barely pay the players’ salaries and how Bates wanted to sell up. Zahavi relayed the information to Abramovich. A few weeks later the Russian billionaire, dressed in jeans and accompanied by a Citibank banker and a lawyer from Skadden Arps, came to meet Birch in one of the executive boxes overlooking the pitch at Stamford Bridge stadium. The rendezvous lasted less than an hour and ended with an outline for a deal, which was agreed on a handshake.