FIFA Scraps A Very Bad Idea

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FIFA which stands for Fédération Internationale de Football Association and is the governing body of football world wide who recently announced the scrapping of a new proposal. Before I get to that proposal one has to understand how rich FIFA is and they do not need the money. FIFA is the body that controls World Football and it is their to protect and grow the game and not be swayed by the commercial side of things. The game comes first even if it does not look like it does as money tends to decide their decisions and has for a very long time.

FIFA is a non profit organisation regulated under Swiss tax laws which is a joke in itself as they have a reported $10 billion in assets and over $9 billion in cash reserves. Yes they give the majority of their revenue away to the various regional bodies around the world that fall under the FIFA umbrella. If FIFA keeps 10% of the revenue they generate from their various tournaments and sponsorship deals along with television rights we are still talking about a business raking in millions which is hardly non profit.

The recent proposal was announced by Gianni Infantino the by head of FIFA where he proposed that they sell off 20% of the World Cup to an investment firm called FIFA Forward Enterprise which would then become a subsidiary under FIFA. This FFE would be headed by none other than Joshua Kushner brother of Jarred and tied to Trump via marrying his daughter.

What one has to understand is the World Cup is the golden egg every 4 years that brings in the big cash for FIFA to run as it has for so long having been founded in 1904. Not surprisingly the red flags were raised by all the other members of FIFA have come out publicly stating how bad an idea this is. UEFA the strongest body of FIFA called an emergency meeting making sure this was never pushed through and was blocked immediately.

The proposal to push this through sounded more like vote buying with more money on the table being offered. The 20% was going to be sold for a figure of around $4.2 billion when considering the latest FIFA World Cup in the US bought in more than $15 billion. $871 million was given away as prize money and another $4.2 billion was spent on the entire event so they outlaid roughly $5 billion and recouped $15 billion making $10 billion profit.

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That $10 billion profit is then further eroded by paying each of their 211 nation members $2 million each year as the base line up to $8 million each year. As a worse case scenario if each member country received $8 million each year FIFA would still have a profit of around $4 billion for this last World Cup so hardly a non profit organization. Not forgetting the FIFA World Club tournaments and the FIFA Women's World Cup which add an additional $3 billion to the coffers.

Anyone investing $4.2 billion to claim 20% of this pot would see a return within 20 years or 5 World Cups. That is slightly misleading as each World Cup has generated more revenue each time so this could be made back within 3 World Cups if being realistic. The FFE offered an increase of payments to all 211 member countries which is where the part of buying support for the vote comes from.

We have seen other sports (rugby) push these types of deals through and it is like a sport selling their crown jewels as this impacts all future revenue. Not surprisingly many of these deals are in question with many of the rugby sporting bodies looking how to buy themselves out. You would have to be a complete fool to think these are great ideas because it is not about the sport and is all about the money and return on investment.

Gianni Infantino for even proposing such a preposterous idea has left his vulnerable backside in the air and what was a clear foregone conclusion of being voted in again as president of FIFA is now not looking so good. There has to be another angle on why this was even proposed and this must do with his long term involvement once he is ousted out and would possibly be benefitting from the FFE personally which is almost guaranteed to be the case here.

Football this World Cup have not done themselves any favors as they have shown they can be bought like the addition of the hydration break which netted broadcast stations an extra $250 million in advertising revenue. FOX sports netted more than $250 million extra in advertising revenue and countless other stations benefitted form this as well. This has changed football moving forward as tv broadcasters will expect similar deals to help boost their revenue.