FIFA: Where the Money Flows
Fédération Internationale de Football Association which is famously known as FIFA is the highest governing body of the game of Football in the world. Its main goal is the promotion of the game through the organisation of various tournaments and events around the globe.
Founded in the year 1904, FIFA is a non-profit organisation that has major brand value & rakes in millions of dollars in revenues through different streams. Currently headquartered in Zürich, Switzerland it has 211 member nations which are also a part of their national confederations.
By investing most of its profits back to the game, FIFA stays true to its vision of making the game more accessible to all the people around the globe and with its recently released roadmap — FIFA 2.0, it has laid solid foundations of the key tasks that need to be done to ensure just that. Through actively promoting the participation of women through events like the Women’s World Cup, and other small formats of football like Futsal and Beach Soccer world cups, FIFA has started to put baby steps in the direction of making the game inclusive to all.
Contrary to public perception, FIFA does not make or modify the rules of football which is the responsibility of the International Football Association Board (IFAB) but it helps enforce them in every football tournament played directly under it or its member associations.
Even though there is no direct government or private investors of FIFA, it has declared that it will invest US$ 4 Billion in the development of the game of football soon.
Now, reading this a question that can come to the fore is — how being a non-profit FIFA can generate this much cash?
So in this article, I will be breaking down FIFA’s financials and will try to tell you more than what meets the eye about the non-profit, where the money flows.
FIFA as a brand
Whether you have seen that blue logo on a referee’s pocket or seen it mentioned on top of the box of your kid’s video game, FIFA might have come up as a name you could not have missed. Even though much like your college’s board of directors, it is just a governing body of football but unlike them, it has become a brand that holds a great significance in itself.
After a century of being in operation, the strategic partnerships that it has created have paved a way for the brand value that has superseded many-a expectations. Some of the longest-serving partners like Electronic Arts (EA), Panini & Coca-Cola have helped create a wave of interest in its major tournaments through a wide range of product releases.
EA who are also the only co-organisers with FIFA in its e-gaming world cup has given football huge engagement in the non-football centric countries through the youth. The brand recollect is so strong in the gaming community that whenever two friends meet to play e-football, they usually say “let’s play FIFA” and their friends understand exactly what they are talking about.
Panini, on the other hand, the only partner licensed to release the sticker albums since the year 1970, has a huge fan base ranging from teens to grandfathers. You see, they have their bases covered.
The addition of newer partners such as Hublot and Louis Vitton, who have helped with keeping time in official matches and designing cases to carry the world cup trophy respectively have garnered a good reputation among the football community. The beverage partners like Coca-cola & Budweiser have also played a part in enhancing the fan connect through their limited edition world cup products. Not to mention, various champagne and wine brands from the world cup hosting countries earlier had also partnered with FIFA to release their world cup only beverages.
While this makes sense from a promotion perspective, there is one more angle to it that we might miss but FIFA doesn’t; MONEY.
Yes, FIFA charges money from these brands and in the case of EA which has an exclusive contract with FIFA, the amount is suspected to be around $100 -120 million. Coca-Cola which has been a partner since 1974 has recently extended its contract till the year 2030, and even though there is no record of the latest contract figures anywhere online, it is supposed to be upwards of $500 million. While these are just two contracts, there are many more tier 1 & tier 2 sponsors like Hyundai, Visa, Adidas, Qatar Airways & McDonalds that have similar contracts fetching huge amounts at FIFA’s disposal.
FIFA’s Revenue Streams
While the above section was dedicated to shedding light on the soft power of FIFA as a brand and how they leverage it, this section is dedicated to providing you with comprehensive information on the major revenue sources that rake in the revenues FIFA earns.
FIFA’s accounting statements are scattered across four-year cycles, from one world cup to the other and paint an accurate picture of the cash flow of the organisation. The major chunks of the revenue come from the big fish — The FIFA World Cup whose last edition in Russia contributed to 83% of the total revenues (USD 6.4 Billion) in the financial cycle 2015–2018. This was made possible with the help of a robust business model which comprises the following revenue streams.
Hosting Rights
If you thought nations take turns to host the world cup you are partially wrong. There is a bidding process, which roughly dictates that no two countries from the same confederation will get to host back to back world cups. Think of Confederations as different continents that have their own governing body working under FIFA to conduct the footballing activities in the region.
The bidding process is a tough and highly competitive realm which only gives the countries the title of hosting nation. The country that eventually gains the title of hosts, does so by putting up a number that it is willing to invest in the world cup infrastructure & sees their national football team qualify to play in the group stages by default.
According to records, Russia spent a total of USD 11.6 Billion and Qatar has pledged an investment of close to USD 220 Billion for the FIFA World Cup 2022 making it the most expensive world cup yet.
So what do the countries gain out of this process?
Since FIFA has this huge influence over the world of football, earning the title of hosts grants a huge inflow of private investment from both the domestic & overseas market. It almost always guarantees tourist inflow during the time of the event and allows the host country to make a good impression on the tourists who may consider coming back to explore more. Apart from that, it aids in job creation which has far-reaching effects on the economy on many levels.
TV & Broadcasting Rights
Football being the most-watched sport around the world gives FIFA an added incentive to promote it to every nook and corner.
According to the broadcast data accumulated, approximately 3.57 billion people watched the World Cup of 2018 so it makes sense that it made most of its revenues from that year (~55%) from the TV & Broadcasting Rights.
While the total TV & Broadcasting rights for the 2015–18 cycle stood at USD 3.12 Billion, the 2018 world cup alone made somewhere in the tune of USD 2.5 billion out of that. And now with technology improving and smartphones penetrating even the most remote corners of the planet, this number is set to rise for the year 2022.
Marketing Rights
As discussed in one of the sections above, FIFA makes huge money out of the Partnerships & sponsorships from brands around the world. According to its Financial report, over USD 1.6 Billion was made in that way through partners in all tiers in the cycle. It signed 14 more deals with various brands mostly from china which will help in brand recognition. The same amount saw an increase of 15% over the previous cycle which shows the growth of the game.
Licensing Rights
The longest-serving digital partner, Electronic Arts & their licensed products & service offerings such as FIFA e-World Cup & its continued video game series, FIFA made a total of USD 600 Million in the 2015–18 cycle. This figure saw a jump of 114% from the last cycle due to a huge increase in participation and views of the e-World cup.
Hospitality & Ticketing Revenue
Although many people are of the view that the hosts are entitled to have a share of ticket sales but it is not the case. Think of an International football stadium as a 5-star hotel. Just as the hotels have rooms in many different categories, the stadium also has different stands with some providing a luxurious lounge-like experience that has food and beverages being served at regular intervals. This is where most of the high profile people are usually found & the money that comes in from such an arrangement counts towards the hospitality revenues.
FIFA appoints a directly-owned subsidiary that takes all the revenues from the ticket sales from all the stands. The total value of the ticket sales for the World Cup 2018 alone was USD 541 million according to FIFA’s financial report & the total for the 2015–18 cycle stood at USD 712 Million.
Snapshot of Revenue Streams
Source: FIFA Financial Report 2015–18
Conclusion
With the football fever increasing by the day as the audience grows, FIFA’s soft power to control the game of football & partner brands is sure to increase in the coming few years. Even though some of its founding values came into question around the year 2015–16 where many events of Bribery, money laundering came to the front, FIFA made a swift recovery from it by changing the management and firing a lot of the executives accused of corruption.
While FIFA disburses a major chunk of revenue for the development of footballing infrastructure to its member confederations, it recovers the cost in the next world cup at the back of an increase in footballing audience from the newly developed stadiums and academies around it, just like this newly built arena in Mizoram, India.
Commenting on its long-term assessment, it can be concluded that FIFA is going to be in the running for years to come but if Covid-19 is any reminder, you can never be sure of what can impact the game tomorrow. FIFA still needs more transparency in its bidding processes & needs positive changes in the governance structure to reclaim its tarnished authenticity but for now, it can be said that it is going in the right direction.
P.s. — I hope you now have a basic understanding of the organisation that’s so much in the news every now and then. If you liked the story’s research and educational content, don’t forget to clap and if you have anything to add feel free to drop a comment. I would love to hear your views. I hope to see you all soon. Until next time ;)
