FIFA’s new financial report isn’t just the financial story of last year; it also offers a fascinating window on to the future. This is in the form of the governing body’s budget for the 2015-18 business cycle.
Readers shouldn’t look on this as set in concrete; some might say it isn’t even set in custard: not even Madame FIFA can gaze into her crystal ball with anything approaching infallibility.
But it does offer an informative glimpse into how Joseph Blatter and his chums think the medium-term future might pan out. So what does it tell us?
Well, for one thing, FIFA’s revenue base is expected to continue growing at a healthy lick.
The plan budgets revenue of a nice round $5 billion. This is up nearly one-third on the $3.8 billion it said in its 2009 report it was working on the basis of for the current 2011-14 period.
Television rights, predominantly for the 2018 World Cup, should still bring in the majority of this, a projected $2.7 billion. But marketing rights, which for these purposes includes ticketing and hospitality, are catching up fast. Income of $2.3 billion is expected, which is 44% up on the $1.6 billion initially pencilled in for 2011-14.
But things only get really interesting when you start to look at how FIFA thinks it might spend this money.
Both in its latest report and in 2009, FIFA sub-divides its quadrennial spending pot into six core areas: development projects; the World Cup; other competitions; football governance; operational expenses; and a relatively small amount for rights exploitation.
Guess which of these areas are earmarked to receive the biggest increases when you compare the planned 2015-18 budget with that originally set out for 2011-14?
One of them is FIFA’s glitziest competition, the 2018 World Cup, to be staged in Vladimir Putin’s resurgent Russia, which is set to swallow 43% of those projected $5 billion revenues.
The $2.15 billion currently budgeted for it is up a hefty 55.5% on the $1.385 billion budgeted four years ago for this year’s World Cup in Brazil. It should be said, though, that accumulated expenses recognised in connection with the 2014 World Cup had, in actual fact, already reached $1.436 billion by the end of 2013 – ie nearly six months before a ball is kicked.
This is not, though, the biggest cycle-on-cycle budget increase. That privilege falls to “operational expenses and services” – basically, as far as I can see, the amount sucked in by the central FIFA organisation.
The budget for this in 2015-18 is put at $990 million – an eye-popping 69.2% more than the $585 million budgeted in 2009 for the same area for the 2011-14 period.
Many of the detailed cost centres have been re-labelled between 2009 and 2013, though it is plain enough that the human resources budget has leapt from $270 million to $451 million – that’s up 67%.
“Building and maintenance” ($47 million for 2011-14) has become “buildings and maintenance incl. FIFA Museum” ($124 million for 2015-18). The catch-all “other” category has grown from $97 million budgeted for 2011-14 to $228 million for 2015-18.
And what of development projects?
Well the budget for these has also been ratcheted up, but by a comparatively meagre 12.5% – from $800 million to $900 million. This, remember, in the context of overall revenues projected to rise by 31.6%
If I were a coach or official from one of FIFA’s poorer national associations, then, studying these figures, I would certainly want to know what justifies a shift of priorities of this magnitude: four years ago, operational expenses and services were allotted a budget $215 million smaller than development projects; this year, their budget for the coming four-year cycle is $90 million bigger.
That is some swing.
Looking at these numbers, it is hard not to conclude that the poorer members of Mr Blatter’s football family are going to be left with a smaller proportion of FIFA’s still fast-expanding cake over the four years leading up to the 2018 World Cup.
The 2015-18 budget also makes plain that, with reserves standing at $1.43 billion at end-2013, the era of deliberate reserve-building at FIFA is soon to end.
One consequence of this is that the governing body’s 2015-18 planning calls for a balanced budget over the cycle, once depreciation and taxes are taken into account.
This means, in turn, as the financial report notes, that individual annual results “may even be negative”.
Projections accompanying the text suggest, indeed, that FIFA may suffer deficits of as much as $30 million, after depreciation and taxes, in 2015 and $20 million in 2016.
These would be balanced by a $50 million surplus in World Cup year, 2018.
Contrast this with the pattern from 2007-10, when cumulative surpluses totalling more than $600 million doubled reserves from $643 million to $1.28 billion.
David Owen worked for 20 years for the Financial Times in the United States, Canada, France and the UK. He ended his FT career as sports editor after the 2006 World Cup and is now freelancing, including covering the 2008 Beijing Olympics, the 2010 World Cup and London 2012. Owen’s Twitter feed can be accessed at www.twitter.com/dodo938.