EoS-140618

FIFA Executive Committee members were unusually quiet and tense as they sat in the contemporary charcoal splendour of the underground bunker at FIFA headquarters sipping on their FIFA-labelled sparkling mineral water and sucking on their FIFA mints.

It was days before the Extraordinary Congress meeting in February. They knew that they had to corral the Congress to pass the reforms – or risk their ‘victim’ status with US and Swiss authorities – and, one way or the other, there would be a new President by the end of the week.

The Acting General Secretary, Director of Finance and former McKinsey consultant, Dr Markus Kattner, was asked about the affordability of the five candidates’ election promises. Kattner indicated that the proposals from one of the candidates - Gianni Infantino - were “unsustainable”.

Some ExCo members, notably Sheikh Ahmad from Kuwait, pushed for the financial assessment of the candidates’ campaign promises to be made available to the Congress prior to the election.

Perhaps because Sheikh Ahmad was considered to be the chief cheerleader of one of the other candidates, Sheikh Salman from Bahrain whose campaign promises were less costly, two other Executive Committee members were wary of the request. Columbia Economics Professor Sunil Gulati and former DFB chief Wolfgang Niersbach, voiced their opposition to releasing Kattner’s assessment. The majority of the ExCo agreed with Gulati and Niersbach, and the Congress proceeded without an understanding of the implications of campaign promises for FIFA’s bottom-line and finances.

Even if Kattner’s financial assessment had been known, it is a moot point whether the election outcome would be any different because of the bigger picture factors at play.

But it does beg the question now of whether any of the member associations will ask the FIFA President about finances at the Congress meeting in Mexico City this week. A look at the budget documents shows why it’s no wonder that the Sheikh from Kuwait was concerned – or at least thought that were was a tactical advantage to be exploited.

In order to fund Infantino’s cash splash of an additional $517 million in increased grants to the ‘football family’, FIFA revenues must increase by 17.2% in 2017 on 2015 levels ($198 million) and by 13.1% in aggregate over the four years from 2015-2018, up $656 million to $5,656 million on the original budget.

In a four-year budget cycle between World Cups, this magnitude of increase between years 1 and 3 is achievable. In both the 2007-2010 and 2011-2014 cycles, the change was greater.

But Infantino has two black holes.

After just one year of the four-year budget cycle, FIFA has a deficit of $122 million, $92 million more than had been budgeted. Infantino has committed to claw this back by $222 million to achieve a $100 million surplus by the end of 2018. (No wonder he’s flying budget air!) 

The other challenge is partner and sponsor revenue. In 2011, FIFA had $336.5 million contributed to their coffers from sponsors; at the end of 2015, it was $224.5 million.

Historically, this revenue stream does not increase significantly from year-to-year within the World Cup cycle.

In one glimmer of hope, FIFA’s overall revenue increased by 7.7% between the comparative years of 2011 and 2015. However, when adjusted for inflation it was a more modest 2.5% and was mostly comprised of revenue from two categories: TV rights (  $79 million) and fortuitous financial income which includes interest and foreign currency gains (  $68 million).

The newly announced Wanda partnership, which was initiated by Sepp Blatter and his Wanda-employed nephew Philippe working together, will add between $36 million and $40 million each year up to 2018. That still falls a long way short of making up the $198 million needed to reach the $1,350 million revenue target in 2017 – let alone the additional $656 million to fund the FIFA President’s cash splash before the end of 2018.

Ever since the withdrawal of Emirates, it has been anticipated that Qatar Airways is willing to be another top-level FIFA partner. This would help FIFA finances, but Infantino would also be aware that it would not be a good ‘look’ to many in the football and broader community, particularly as investigations are ongoing into the 2022 World Cup bidding process and outcome. 

No doubt many in the ‘football family’ will be eagerly awaiting their increased handout. Infantino promised $5 million each to the 209 member associations (211 if Gibraltar and Kosovo are included), $240 million between the six confederations and $26 million to be shared by the regional associations, such as the Arab, ASEAN and Caribbean football associations.

The question FIFA Congress should be asking Gianni Infantino is not ‘how much?’ – but ‘how?’


Categories: Analysis | Football Business

fifa, fifa finances, gianni infantino, qatar airways, wanda

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