What ails Fifa as losses surmount

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Fifa’s financial report for 2016 is out. The revenues are on expected budgetary projections. The expenditure is well controlled – below budgetary figures. But losses are heavy and feared to swell further. Courtesy, massive legal expenses as American and Swiss corruption investigations added legal costs to the governing body’s budget and scared off sponsors.

Football’s world governing body has incurred a loss of $ 369 million in 2016. This is feared to reach $ 490 million for 2017. The lone ray of hope is the 2018 World Cup, which riding on Media Rights and sponsorship revenues, is ticked to pull Fifa balance sheet out of the red zone. FIFA expects to rebound with $1 billion in profit in the accounts for 2018, which will include income from most TV broadcast deals for the World Cup in Russia.

Still, the scandal-hit body’s confidence will be tested with 24 slots currently unsold in a 34-sponsor program for a World Cup that kicks off in only 14 months.

“However,” FIFA said in the 116-page financial report for 2016: “It goes without saying that stagnant global trade and subdued investment, combined with investigations surrounding previous FIFA officials, have put pressure on the organisation’s overall revenue generation.”

FIFA’s costs in 2016 included legal bills of more than $50m for the American and Swiss federal investigations of bribery and mismanagement linked to international football leaders. That legal bill rose from $20.2m in 2015, the report said.

See Financial ReportFIFA- 2016

FIFA is sticking to its revenue target of $5.56bn – mostly from World Cup TV and sponsorship deals – for the four-year financial cycle tied to the tournament in Russia, Associated Press has reported. FIFA has budgeted to earn almost $4bn income in 2018 alone and end next year with record reserves of $1.655bn.

However, the reserve fund is now down to $1.048bn and should fall to $605m in a year before the bounce back FIFA is relying on. Its cash reserves have been above $1bn since 2008. The 2016 accounts covered the first 10 months under FIFA president Gianni Infantino since he succeeded the disgraced Sepp Blatter.

FIFA booked $502m in income — with zero reported from European broadcast rights deals that are now backloaded to 2018 — and had reported expenses of $893m.

The spending rises were in part to fulfill Infantino’s campaign promises last year of increased grants to national, regional and continental soccer bodies worldwide. FIFA’s 211 member federations are now entitled to $5m from each World Cup.

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The document also blamed Blatter’s regime for “ill-considered” investments on a museum and adjoining four-star hotel in downtown Zurich. The World Football Museum lost FIFA $50m in 2016, including some one-off costs.

FIFA also spent $7.9m on the February meeting in Zurich to elect Infantino, and paid $2.44m in tax, mostly due to its subsidiaries.

There was a $5.6m increase in payments to FIFA Council members, who received a combined $13.8m — though $3m was saved by not paying pension entitlements to former officials who were banned for unethical conduct

Revenues fell to US$ 502 million in 2016 from US$ 544 million in 2015. FIFA said its reserves had fallen from US$ 1.4 billion in 2015 to US$ 1.04 billion in 2016 and they are expected to crash to US$ 605 million this year. The organisation said the bumper profits, mainly from television deals, would help bring its reserves back to US$ 1.7 billion in 2018.

 

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