Fifa’s financial stability aided by highly lucrative World Cup
Football's governing body reveals record surplus thanks to last year's multi-billion dollar success in South Africa
He could well be approaching the end of his 13-year reign as Fifa president, but Sepp Blatter still has plenty to smile about.
Soaring revenues and ever-growing multi-million pound reserves have left football’s governing body in a more-than-healthy financial position ahead of June’s presidential election between the incumbent Blatter and Mohamed Bin Hammam.
Thanks largely to the highly lucrative 2010 World Cup in South Africa, Fifa has revealed a record surplus of $631m (£379m) for the four years from 2007 to 2011.
Total revenue generated from 2007-2010 topped $4bn (£2.4m), an increase of 59 per cent from the previous four-year period which included the 2006 World Cup in Germany.
The World Cup, aside from being Fifa’s flagship tournament, virtually props up the Zurich-based organisation single-handedly, with the latest competition generating almost 90 per cent of its total revenue.
“Football has continued to grow in popularity,” said Blatter. “The World Cup remains the biggest attraction for fans and I am delighted to present this successful financial result.”
The 2010 financial report, released in March, also disclosed that Fifa’s salary invoice for the year swelled to $65m (£39m), paid to its 387 employees with an average of $168,700 (£101,328).
Of the $3.7bn (£2.2m) revenue generated by last year’s World Cup, $2.4bn (£1.4bn) was income from the sale of television rights, with other marketing rights accounting for just over $1bn (£600m).
One of the overriding reasons behind the high level of revenue from last summer’s tournament is that Fifa paid no tax on 2010 World Cup earnings due to exemption agreements with the South African government.
But while clearly outlining a highly successful four years, this latest set of figures also highlight Fifa’s enormous reliance on the World Cup.
“Fifa is financially strong,” said director of finance Markus Kattner. “But [the figures] illustrate the necessity to build up reserves to decrease its dependency on the World Cup.”
Lucky for Kattner then, that Fifa’s reserves are looking pretty healthy. This year they topped $1.2bn (£721m), having skyrocketed from just $76m (£45m) in 2003.
“The Ã¯Â¬Ânancial success of the last few years and the regular increase in Fifa’s reserves have resulted in Fifa becoming even more Ã¯Â¬Ânancially independent,” said Dr Franco Carraro, chairman of Fifa’s internal audit committee.
“In contrast to the previous four-year period, Fifa did not need to borrow any money at all during the period that has just ended.”
Fifa says its reserves are required to preserve its future major duties. In the wake of the 11 September 2001 attacks on the United States, Fifa’s insurance against cancellation of the 2002 World Cup was terminated in the build-up to the tournament, and the governing body has been gradually topping up its reserves as a precaution ever since.
But with them now corresponding to around one third of its total costs for the latest four-year period, they have been to be deemed sufficient.
As a result, a far smaller amount will be added over the next four-year cycle as Fifa promises to invest “even more of its revenue in football”.
According to Fifa, “the main beneficiary of this financial success will be football itself. The great the funds available, the better Fifa can help protect and develop the game.”
Fifa has pumped $794m (£477m) into “football development” during the last four-year period – 57 times more than amount during the cycle before Blatter landed the top job.
The Goal development programme, one of schemes introduced by Blatter after he was elected in 1998, has paid out cash to most of Fifa’s 208 members during his reign.
The programme has overseen the completion of over 500 projects worldwide since its inception, and the governing body is set on further promoting football over the next four years.
And the current Fifa president insists that “playing its part in building a better future through football” is one of his organisation’s key objectives.
We will have to wait until 1 June, however, to discover if Blatter will remain in charge to oversee the next four years of the sport’s global development.