FIFA, or Fédération Internationale de Football Association, is a non-profit organization based in Zurich, Switzerland, acting as the governing body of Football (AKA Soccer) associations worldwide. Established in 1904 by seven Football associations in mainland Europe, the organization grew to the mesmerizing number of 209 member Football associations worldwide by 2015[i]. For comparison, the United Nations has no more than 193 member states[ii].
While a non-profit organization is not an automatic choice for a challenge concentrated on alignment of business and operational models, as soon as one gets a sneak peek into this organization’s numbers… this is a whole different story.
For the Game. For the World.
The three pillars of FIFA’s mission are:
- Develop the Game – Providing infrastructure and professional resources to allow the continued growth of the game of Football worldwide, and Protecting the game by fighting doping, and discrimination.
- Touch the World – Amplifying the passion for Football across the world through organizing 15 different tournaments[iii], chief of which is the Coupe du Monde (AKA the FIFA World Cup).
- Build a Better Future – Football for Hope, a fund aimed at supporting global initiative that are using Football as an instrument to bridge social and cultural gaps.
The FIFA World Cup, competing neck to neck with the Olympics as the most anticipated and watched sporting event in the world[iv], is the organization’s main revenue driver, directly accounting for over 84% of the organization’s revenue. Considering the World Cup is held only once every four years, the organization provides a consolidated financial report for the four year period ending with the world cup[v]. We’ll analyze the reports to get a better understanding of the organization’s operations.
Monetizing on the Passion
Football is, by far, the most popular sport in the world, and FIFA has been perfecting its ability to capture and transform the value of this enormous asset.
The organization’s revenue stream sources from (1) Event-related revenue which stands for (90%) of the total, (2) Financial income (5%) that origins from investment of its assets, and (3) other operating income, mostly sourcing from FIFA brand licensing.
Breaking down the event-related revenue, we can see FIFA leveraging its assets at full swing. It has been able to draw $2.484B from the sale of television rights (the World Cup accounts for 98% of that). The second revenue component is marketing rights on which FIFA has been able to considerably monetize over time. While marketing rights, meaning allowing “partners” to advertise during the World Cup and other events, stand for $1.629B in total, again the World Cup is the leading driver as it accounts for roughly 97%. In order to increase its ability to monetize on marketing, FIFA has separated advertisers into three categories: (1) FIFA Partners, which are the major FIFA sponsors year round, (2) FIFA World Cup Sponsors, allowed to use the event globally as part of their advertising campaigns, and (3) National Supporters, local companies from the hosting country. This split allows further realization of the great commercial asset that is the World Cup.
True to Its Cause?
While FIFA has obviously been able to reel in the big dough by utilizing its assets (by “Touching the World”), the question arises with regard to the level to which it conforms to its stated missions of “Developing the Game” and “Building a Better Future”. For that we should look at the expenses side of the income statement.
Reviewing it, we can see that FIFA invests 72% of its expenses (which amount to a total of 94% of its revenue) back into its defined missions, 52% into event related expenses (i.e. “Touch the World”), and 20% into development-related expenses, such as financial assistance to Football associations worldwide, training programs, and social initiatives through sports. The remaining 28% are spent mostly on operating activities and general expenditures.
On paper, this looks like a success. Extremely strong product, well monetized, and the majority of revenues reinvested into this non-profit’s objectives.
So Why So Serious..?
Years long corruption rumors surrounding FIFA have recently erupted; with the sketchy Qatar bid win to host the 2022 World Cup lead to the arrest of 30 people, including two FIFA vice-presidents; and the recent suspension of FIFA president, Sepp Blatter, who is under investigation over bribe payments[vi]. These recent events raise considerable doubts with regard to the manner the organization is managing its funds and operational objectives.