In the face of global problems, global solutions. This is the idea that various european clubs think pose in the telematic meeting of the ECA planned for today Monday in which several teams will propose a contingency plan to study one general reduction of wages to the templates of the professional teams of European football before the mace what does the economic crisis caused by the pandemic of coronavirus. The Barcelona is one of the groups most interested in implementing this initiative.This newspaper already reported last Wednesday that in the Barca They were considering reformulating the budget for this season (1,047 million) due to “unrecoverable losses” due to the lack of incomes in television rights, museum, shops, sponsorships, box offices, schools worldwide, VIP tickets, advertising and hospitality. So, it is time to act accordingly. A problem that does not exclusively affect the Blaugrana set. It is a matter that, to a greater or lesser extent taking into account the particularities of each entity and affects all teams from Spain and Europe.This is a general problem. Italy, that suffered the effects of the coronavirus before the rest of European countries is one of the most affected and think act in the same line. According to ‘Il Giornale’, the CEO of the Inter Beppe Marotta contacted several European clubs to propose the same strategy before this matter: both Barcelona and Real Madrid, for the Italian newspaper, they would have given him the go ahead. Nevertheless, the white club categorically denies that he had any conversation with Inter on this. And is that Serie A clubs are considering seriously cut the salaries of footballers due to the emergency. For Serie A, the economic prejudice is enormous: around 800 million euros, perhaps more. Many clubs have already invested the money they expected from television rights and if the championship is suspended they will be in a highly compromised situation.During the Friday assemblyItalian teams have already discussed suspending payments to footballers for the month of March. Damiano Tommasi, President of the AIC, Italian association of footballers, opened the doors to negotiate saying that “footballers are the first ones interested in maintaining the system,” but he asked for calm, since it is not yet known if the season will be suspended, and above all he recalled that each player will have to decide individually: “We cannot compel anyone.”In Spain, at the moment the topic is latent, but there is more than rumors. Joan Vehils reported in the Saturday edition of Sport that he Bartomeu president had kept a Contact informal with captains, that they would have shown him their availability by being aware of the seriousness of the situation.However, the Blaugrana club intends, along with other protagonists from the football association that is this a collegial measure he has his first step at Monday’s ECA meeting.
Fraternal rivalry is as old as Abel and Cain. Indian businesses are hardly immune to such conflicts. For example, firms controlled by business families such as the Chhabrias, the Nandas, the Mafatlals and others have seen battles for control of power and wealth. “Indian mythology, history and business are filled with examples of such discord,” says Delhi-based political and business commentator Sandeep Bamzai. “Emperor Ashoka ascended the throne after fighting 100 brothers.”One long-simmering dispute that has flared up publicly in recent times involves Mukesh and Anil, sons of Dhirubhai Ambani, the founder of the house of Reliance, India’s largest business group. The dispute concerns the price of natural gas, but it has flared into an ugly public rift, with each side making accusations against the other. Government ministers and bureaucrats have been drawn into the fray. According to experts, such disputes in business families indicate weaknesses in governance; the solution is that the family needs to come together to define its principles and values. “The family needs to develop a governance system aimed at reducing conflict,” says Raffi Amit, a Wharton management professor who oversees the Wharton Global Family Alliance. File photo of Mukesh and Anil Ambani at a board meeting of the Reliance GroupJitendra Singh, a professor of management at Wharton, believes that conflicts have “an additional charge” in family businesses. The reason, he explains, is “whenever you have interdependence, there is potential for conflict. In organizational settings, a hierarchy of authority exists, and there are people who have more power than others — but when the work-day ends, people go home at 5:00 pm. The situation in family businesses is different; there is an ongoing relationship beyond work — and so family conflicts spill over into work. There is an old saying that human beings save their worst behavior for people who are closest to them. That is why conflicts in family business have an additional charge — and relationships must be carefully managed.”BackgroundThe origins of the dispute go back to July 2002, when the senior Ambani died intestate. Soon, disagreements emerged over the roles of the two brothers and a split became inevitable. Eventually, a truce was brokered in the summer of 2005 by senior banker K.V. Kamath; Dhirubhai’s wife Kokilaben also played a key role in getting her sons to come to an agreement and sign a “family pact.”As part of the deal, the flagship Reliance Industries Ltd. (RIL) went to Mukesh. His share also included the retail and natural gas exploration businesses. Anil got Reliance Communications (R-Com), the energy business, financial services, infrastructure and entertainment. According to Forbes, Mukesh is the world’s richest Indian with a net worth of $20.8 billion, while Anil clocks in at number 3 with $10.5 billion. They are the world’s richest brothers.Despite the truce that has existed in theory for the past four years, business associates claim that rivalry has persisted between the brothers. The two competed to win the Mumbai Trans Harbor Link; both lost the $1 billion plus project. Last year, when Anil’s R-Com was negotiating a merger with MTN of South Africa, RIL claimed that it had the first right of refusal in case the junior Ambani wanted to sell out. (The deal was being structured through an initial sale of an R-Com stake to MTN.) There was sparring over special economic zones. More sinisterly, when stones were found in the fuel tank of Anil’s helicopter, some people alleged “business rivalry” was to blame.Power Struggle over GasThe current dispute is about the price of natural gas that RIL extracts and sells to consumers, including Anil. “When the division took place, RIL got the gas exploration and extraction business — the Krishna-Godavari (KG) Basin. Anil got the power generation business,” says Paranjoy Guha Thakurta, a business and political commentator and founder of the Delhi-based School of Convergence.“Normally, a fight between two brothers should not matter to the nation. But it does in this case,” writes Gurcharan Das in The Times of India. Das, author of India Unbound and former CEO of Procter & Gamble’s Indian subsidiary, adds: “The quantity of gas is so vast that it affects the nation’s finances. A lower energy price means lower inflation — it means a lower government subsidy to fertilizer and power plants. But a lower price also implies that the government will (suffer) a huge loss from its revenue-sharing contract with Mukesh.”The gas is vital for India’s energy security. RIL has 18 gas fields in the KG Basin D6 block. Just two of these fields — Dhirubhai 1 and Dhirubhai 3 — have the potential to yield $40 billion over their lifespan. But that, of course, depends on the gas price.The dispute is essentially about this price: How much should Anil Ambani’s firm Reliance Natural Resources Ltd. (RNRL) pay RIL for the gas? RNRL says it should be $2.34 per mmBtu (million metric British thermal unit). RIL counters that it should be $4.21. This is the price according to the production sharing contract (PSC) signed by the government and RIL. The government will get its royalty and profit share according to the PSC.Where does the $2.34 come from? It was the price at which RIL offered to sell gas to the government-owned National Thermal Power Corp. (NTPC) several years ago. (The deal was never implemented and is now in the courts over other issues.) RIL agreed to supply gas at this price to the Dadri power plant (now under RNRL) for 17 years. This was at a time when the two brothers were still together; the low price of the gas could have helped the new power plant show better financial performance. Now, this arrangement has fallen apart. Anil Ambani with Amitabh Bachchan.Anil Ambani argues that the family pact — though it exists — is irrelevant in this context. “The price of $2.34 was not decided by two brothers at the dinner table,” he told shareholders at the July 27 annual general meeting (AGM) of RNRL, the event at which the pot finally boiled over. “Nor is it part of some private family arrangement. The price of $2.34 was approved by RIL’s board of directors nearly five years ago, and has been duly recorded in the commercial agreements signed by RIL.”The difference between $2.34 and $4.21 can be huge, and it’s not RNRL alone that is affected. There will be considerable impact on the bottom lines of other gas users such as NTPC, which recently has joined the fray. It is likely to file a plea in the Supreme Court, where the case will be heard in October. “The Supreme Court has to, among other things, decide whether the contract between RIL and RNRL is valid as per Indian contract laws, whether the family settlement that led to the reorganization of RIL’s assets is valid or not and whether the price of gas should be $2.34 or $4.21,” says Guha Thakurta.The family pact also talks of assured gas supplies from other RIL finds, a move that has angered critics. “’It (the gas) does not belong to them,” Petroleum Minister Murli Deora told the media. “I am personally appalled and disgusted at how these two brothers are fighting over something that belongs to the government and the people of India.”Political Tug-of-war Mukesh Ambani at the World Ecocomic Forum in Davos,Switzerland. If Deora sounds aggrieved, the reason is that he has been under attack during this dispute. At the RNRL Annual General Meeting, Anil spoke about “the apparently biased and partisan role of the Petroleum Ministry” although he did not mention the minister by name. In Parliament, however, Samajwadi Party chief Mulayam Singh Yadav, a close friend of the younger Ambani, accused Deora of being corrupt and said that the Petroleum Ministry’s stand on the gas dispute would benefit one individual to the extent of $10 billion. Parliament had to be adjourned several times because of the brouhaha.Others have been dragged into the controversy. The Director General of Hydrocarbons (DGH), who is the oil and gas regulator, has been accused of allowing RIL to gold-plate the development cost of the gas fields. (Gold plating means to inflate costs.) “Only after all capex (capital expenses) and opex (operating expenses) are recovered does the contractor have to pay profit gas to the government,” explains Bamzai. This implies a bonus for RIL stemming from the possible cost inflation. “At the stroke of a pen, and in a matter of days, the Petroleum Ministry has approved a shockingly disproportionate 400% hike in the project cost of Reliance Industries’ KG D6 gas fields, from $2.4 billion to $9 billion,” reads an ad appearing on the front pages of almost all the daily newspapers. The ad claims to be “Issued in the public and national interest on behalf of 8 million shareholders of Reliance Anil Dhirubhai Ambani Group, the largest shareholder family in the world”.The ad is part of a campaign aimed principally against the Petroleum Ministry. Here is another example: “The Petroleum Ministry says the government navaratna NTPC must pay an 80% higher gas price to Reliance Industries compared to what Reliance Industries had itself voluntarily offered to NTPC. As a result, NTPC will suffer a loss of up to $6 billion, while Reliance Industries makes a super-normal profit of nearly $10 billion, with the government getting only $100 million. Is this in (the) public or national interest?”Meanwhile, senior Congress leader and Rajya Sabha MP R.K. Dhawan has written to Power Minister Sushilkumar Shinde, warning him about RNRL’s claims. “RNRL is using NTPC as a front to achieve its objective to receive preferential access to gas at a subsidized price, resulting in the government losing an amount of $6 billion,” Indian Express quotes the letter as saying.Winners and LosersThe controversy is taking its toll. “Everyone is a loser,” says Bamzai. According to an editorial in the business daily Mint, “The Ambani dispute has led to legitimate fears that business oligarchies and politicians with vested interests are distorting national policies. India does not as yet have robber baron capitalism, nor is inequality here … as acute as it is in Latin America and the former Soviet Union. But the growing power of cartels and powerful business groups is evident.”“There is a risk that India will evolve towards a condition of oligarchic capitalism, in which the market and political power of major corporations will become a drag on long-term growth and a source of distortion in policy design,” says an Asian Development Bank-financed study, titled India 2039, conducted by the Centennial Group. “Many countries have experienced periods of rapid growth thanks to family-based corporations and then had to deal (or failed to deal) with the risk of oligarchic capitalism…. Mexico’s recent history provides a warning.”There are others who don’t agree. “Conflicts, like the one between RIL and RNRL over the gas-pricing issue, are minor inter-corporate hiccups,” says Bundeep Singh Rangar, chairman of IndusView Advisors, an India-focused cross-border advisory firm. “They are hardly a deterrent as the overall Indian economy is fundamentally too strong to be ignored by investors. Moreover, this is not the first time that the two Ambani brothers have been involved in a tussle. And their mutual differences over issues haven’t had any effect whatsoever on the economy or its perception as an investment destination globally.”Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management, agrees. “The bitter and very public corporate battle between the billionaire Ambani brothers, who control the Reliance Group of companies, has produced surprisingly little collateral damage so far. For a long time, the popular notion was that as the Reliance Group went, so went the Indian stock market. Now investors can ignore the family feud because the market is so much bigger,” he writes in Newsweek.Wharton’s Amit notes that conflicts in business families occur primarily for one reason. “If you look into the reasons underlying the conflict, the common denominator is usually a perception of lack of fairness,” he says. Amit points out that research by the Wharton Global Family Alliance shows that perceptions of fairness are closely linked to what he calls “distributive justice.”What, then, is the solution to such disputes? Singh declines to comment specifically on the Ambani situation. Still, he points out that the ideal way to avoid conflicts is to tackle problems while they are still small and manageable and before they blow up into major confrontations. He cites the example of a business family in Northern India that involves three brothers. Each year, “all three brothers go away with a family consultant for a few days and they work together to resolve all outstanding issues. This ensures that the waters of the well don’t get poisoned. If a conflict becomes contentious, it is already too late.” Should a conflict emerge, however, Singh recommends that the family identify an arbiter who can bring thorny issues to the table. “In order to resolve the conflict, each side must be willing to compromise, and ultimately, to forgive. Forgiveness is essential. You can’t think, ‘Isko sabak sikhana hai.’ (I will teach him a lesson.)”Amit too declines to comment specifically on the Ambani situation. He notes that for most business families, the solution lies in setting up a governance system that can ensure fair play for family members across different generations. “Families are heterogeneous groups; you are born into them,” he says. “Fairness perceptions are important because the greater the fairness that a governance system provides, the more it will help reduce conflict. My advice to families that face such conflicts is to set up a governance system that covers multiple generations and which determines how decisions are made.”Time magazine has meanwhile advised the brothers to “duke it out using pillows stuffed with $1,000 bills”. “Imaginary money is a soft option,” says Bamzai. “Stuff the pillows with nickels and dimes instead. In a fight to the finish, you can give no quarter.” Related Items