JPMorgan walks into another football firestorm
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Good morning from the Financial Times. Today is Friday, July 31st, and this is your FT News Briefing. Investors are giving Amazon a thumbs up, and JP Morgan and FIFA have kicked off a firestorm. Plus, radioactive material in mines in the Democratic Republic of Congo is raising security concerns. I'm Sonia Hudson, in for Mark Filippino, and here's the news you need to start your day.
Amazon stock got a boost yesterday from its earnings report. The tech giant saw accelerated growth in its cloud business, Amazon Web Services, last quarter. Sales rose 37% year on year. That beat analyst expectations. But growth is only half the story. We told you earlier this week that investors are looking for tech companies to strike the right balance between AI growth and overall spending. Capital expenditure across Amazon increased last quarter, and the group's free cash flow actually turned negative on a trailing 12-month basis. But investors seemed to be satisfied and sent Amazon shares up in after-hours trading.
Pushback to FIFA's plan to establish a $20 billion commercial entity has gotten louder and louder. Yesterday, Europe's football governing body said none of its countries would play in the next World Cup if the plan goes ahead, which spells trouble for FIFA and the bank helping fundraise for it, JPMorgan Chase. Now, the U.S. bank is very familiar with how ferocious the backlash to a football project can be. Five years ago, it was forced to apologize for financing the failed launch of a breakaway Super League. Here to tell us what we can expect this time around is Arash Masoodi. He's the FT's finance and markets editor. Hi, Arash.
Hey there.
So can you tell us more about this $20 billion commercial entity and why fans are so upset about it?
Yeah, fundamentally, FIFA is a not-for-profit. It will create a new entity in which it will put all of the things it commercializes, think meteorites, tickets, into a single entity. And it will sell a 20% stake in that entity to financial investors. That money raised from the financial investors, which would equate to $4.2 billion, would then be distributed in equal $20 million payments to the 211 member associations of FIFA. some of which may have been starved of investment to allow them to invest in football. And then that will allow a sort of ripple effect of better football from these parts of the world, which will in turn make the overall pie of what FIFA produces and puts on every four years more valuable.
That has triggered a lot of people who say what you're actually doing is selling the soul of the game. It's a not-for-profit. The people play for the spirit of their national teams. And when you turn it into just another financial product, like most things are these days in life, it totally takes away the spirit of the game and the soul of the game is being sold.
Okay, so JP Morgan is helping out with this. They're going out to investors to try to raise that $4.2 billion. How have the community of investors that they might be approaching been perceiving this move?
Well, so JP Morgan was brought into this project and they've been secretly working on it for months. And if they are to be believed, they are very busy. The phones are ringing off the hook and many people want to get in on this deal. Now, there is a bit of a plot twist here, which is that now there are threats emerging that essentially all European countries will withdraw from the World Cup. which would significantly impair the product that is put on every four years.
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