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The World Cup and Fifa finances

The authoritative Swiss Ramble has taken a look at FIFA’s accounts and how important the World Cup is to their finances.

In 2017 Fifa made a $189m loss before interest and tax, though this was $202m lower than 2016 and $300m better than budget. Revenue of $734m beat budget by $120m, while $923m expenses were $180m below budget. FIFA said this was “a successful year for all key financial parameters”.

It is important to note that FIFA operates in a four year cycle with the World Cup being the “crowning event” in the fourth year and the main source of income. Thus, the majority of revenue is shown in the fourth year, whereas football development is equally spread over all years of the cycle.So, FIFA has reported deficits in last 3 years (2015 $117m, 2016 $391m & 2017 $189m), while 2018 would be a $797m surplus to achieve the $100m profit budgeted for the four-year cycle. However, the recent congress estimated revenue would be $6.1 bn, leading to a surplus over $0.5 bn.

To give an idea of the World Cup’s importance, the last three tournaments delivered substantial profits: Germany $1.6 bn, South Africa $2.4 bn & Brazil $2.6 bn. Russia is estimated to generate $3.4 bn, while Qatar could be as high as $4.5 bn (due to much lower costs for smaller location).

2018 World Cup prize money of $400m is $42m (12%) higher than 2014 $358m. Winner receives $38m, but each participant is guaranteed a minimum $9.5m ($8m prize money plus $1.5m preparation). This will be up a further 10% to $440m in Qatar. Clubs providing players receive $209m, triple $70m in 2014.

Fifa's 2015-18 budgeted revenue of $5.656 bn is $519m (10%) higher than 2011-14 $5.137 bn, mainly due to TV rights (up $516m), hospitality (up $390m) and licensing rights (up $248m). Almost 80% of FIFA’s 2015-18 $5.7 bn revenue budget comes from TV rights $3 bn (53%) and marketing rights $1.45 bn (26%). Remainder is licensing rights $363m (6%), hospitality and ticket sales $575m (10%) and other revenue $268m (5%).

Over 70% of FIFA’s $2.5 bn TV rights in 2011-14 came from deals in Europe $1.2 bn and Asia/North Africa $0.6 bn. Since then, major new deals have been signed for the 2018 and 2022 World Cups in North America (Telemundo $600m, Fox $400m) and China (CCTV $300-400m).

Fifa budgeted lower marketing rights for 2015-18, as many sponsors (Sony, Emirates, Castrol, Johnson & Johnson, Continental) did not renew, due to various corruption scandals, but latest estimates indicate this has been compensated by China (seven sponsors) and Russia (five sponsors).

What is striking is the increase in the 2019-22 development budget, up $671m (15%) from $1.65 bn to $2.3 bn. After many years when FIFA spent more on governance than football development, this is refreshing to see, but there is still a question over what member associations spend the money on.

There has been a steep reduction in President’s remuneration following the change from Blatter ($3.6m) to Infantino ($1.9m).

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