FIFA Financial Report 2014: Frequently Asked Questions
As an association, aren’t you supposed to redistribute your revenue among your members? If so, how do you explain the increase of your reserves to USD 1.523 billion? Following the cancellation of FIFA’s insurance policy after 9/11, FIFA amended its Statutes in order to guarantee its major duties through the creation of reserves (see article 73 of the FIFA Statutes). The creation of sufficient reserves is of major strategic importance to FIFA in light of its financial dependence on the FIFA World Cup™ and the fact that it is almost impossible to find cancellation insurance to cover an event of such magnitude. Having adequate reserves, therefore, allows FIFA to be financially independent and to react to unexpected events, offering much-needed stability, sustainability and confidence to the global football community. These reserves protect the future of the organisation, the FIFA World Cup™, the many other tournaments we stage – particularly youth, women’s, futsal and beach soccer competitions – and, most importantly, global football development. Our current reserves represent approximately one-third of FIFA’s total expenses over a World Cup cycle. From a financial perspective, this amount is reasonable given FIFA’s financial dependence on one event that is only organised once every four years.
You made USD 4.8 billion in revenue from the 2014 FIFA World Cup. How much of it benefited the host country? FIFA covers the entire operational costs of the FIFA World Cup™, while the host country is responsible for the cost of any infrastructure improvements that they undertake, such as stadiums and transport systems. For the 2014 FIFA World Cup in Brazil, FIFA invested USD 2.2 billion, including the entire Local Organising Committee budget.
In addition, with the aim of enabling the host country to continue to benefit from the tournament for years to come, FIFA created a USD 100 million Legacy Fund which will support football infrastructure development projects, youth football, women’s football as well as public health and social programmes.
Furthermore, one should not ignore the bigger picture, including indirect economic effects. The preparations for the tournament saw substantial long-term investments by FIFA, the Brazilian government and other stakeholders in the Brazilian economy for the human resources and infrastructure required to stage the event. In addition, significant investments were made in public infrastructure and in the development and renovation of airports, transportation systems, sports facilities and recreational areas.
The redistribution of the revenue generated by the FIFA World Cup is based on a solidarity model that allows FIFA to share the benefits between the participating teams, clubs, the host country and all other FIFA members.
The budgeted revenue for the 2011-2014 period was USD 3.8 billion but you ended up with USD 5.7 billion in actual revenue. Where did this extra money go? The additional revenue generated during the 2011-2014 period must be viewed in tandem with the additional expenditure, which increased from the USD 3.6 billion budgeted to the USD 5.38 billion actually spent. This additional expenditure was spent, among others, on:
- Event-related expenses: USD 2.8 billion, of which USD 0.5 billion was for the 23 competitions we organised other than the FIFA World Cup, including youth, women’s, futsal and beach soccer competitions, which usually do not generate income and rely on World Cup revenue
- Development-related expenses: a record USD 1 billion was invested in a variety of projects in FIFA’s 209 member associations and the six confederations, all of them subject to strict rules for audit and compliance
- Football governance (USD 232 million)
Overall, 72% of our expenses have been invested directly back into football. Please see pages 18-19 of the Financial Report for further information.
Some clubs complain that they do not get sufficient compensation for releasing their players to play in the FIFA World Cup. Do you think this is justified? In accordance with our Statutes, the revenue from the FIFA World Cup is broadly redistributed to the football community, be it through our member associations, the confederations or the clubs.
The clubs’ share of this has been growing constantly in recent cycles. For the 2011-2014 period, USD 70 million was distributed to clubs as a share of the benefits from the 2014 FIFA World Cup.
In addition, USD 88 million was also spent in application of the Club Protection Programme (CPP), which was introduced in 2012 to ensure that clubs whose players are injured during international “A” matches are compensated. The CPP will be extended to the next cycle with a total budget of USD 100 million, which will also include women’s football.
Over the 2011-2014 cycle, FIFA generated USD 5.7 billion in revenue, yet only USD 75 million was paid in taxes. How is that possible? Contrary to what has often been said, FIFA does pay taxes. FIFA is taxed in Switzerland according to the Swiss taxation rules applying to associations. As such, we are taxed on our taxable net income deriving from the statutory financial statements (revenue minus expenditure). Therefore, the amount paid in taxes cannot be compared with the total revenue. The same would apply to any company that is not taxed on its revenue but on its net profit.
How much tax did you pay in Brazil? FIFA is based in Switzerland and, as such, subject to income taxes in Switzerland. However, transactions outside Switzerland may still trigger indirect taxes. For example, FIFA paid such taxes on the ticketing revenue generated through the FIFA World Cup in Brazil, amounting to BRL 24.3 million.