A flag bearing the official logo of the upcoming Russia 2018 World Cup in front of the Winter Palace in Saint-Petersburg. –AFP PHOTO / GIUSEPPE CACACEGIUSEPPE CACACE
China’s men’s national team has played in just one World Cup, in which it finished 31st out of 32 teams. But the nation is playing an essential role in righting the financial ship of FIFA, the governing body for world soccer that has struggled to regain the trust of Western companies in recent years.
According to FIFA financial documents reviewed by The New York Times, the 2018 World Cup that kicks off Thursday in Moscow is set to generate $6.1 billion in revenue — 10 percent more than FIFA had estimated for the tournament and $1.3 billion more than the last World Cup produced in 2014 in Brazil.
Revenue from television rights sales was 2 percent more than FIFA’s $3 billion target, and FIFA’s sponsorship deals generated $200 million more than the $1.45 billion it had projected, largely because of a slew of deals with Chinese companies. Seven of the 20 companies sponsoring the tournament are Chinese, up from just one at the last World Cup.
FIFA also saw a 233 percent increase in annual royalties last year from EA Sports, the maker of the popular FIFA video game franchise.
China’s renewed interest in soccer was spurred by President Xi Jinping’s demand in 2015 that the country build a sports economy, with a particular focus on soccer. At the same time, Western companies were becoming increasingly hesitant of doing business with FIFA in the wake of a corruption investigation by the U.S. Justice Department. FIFA has not signed a new sponsor from a Western nation since 2011.
FIFA plans to release the financial figures to its 211 members on Wednesday. The organization is reporting profits of just over $100 million for the four-year cycle ending after the tournament, with losses of $997 million during the preceding three years and an estimated profit of $1.1 billion this year.
FIFA’s losses in previous years are attributable to a new, more modernized accounting system, legal costs associated with the criminal corruption case in the United States and an expensive internal investigation that followed the indictments. FIFA has also significantly increased grants for member nations under President Gianni Infantino. In his two years in the position, Infantino has distributed $775 million; the administration of his predecessor, Sepp Blatter, spent $1.1 billion in the four years leading into the 2014 World Cup.
FIFA expects to have $1.7 billion in cash and assets by the end of 2018.
Speaking to the media at FIFA’s headquarters in Zurich before flying to Russia for his first World Cup as FIFA president, Infantino said the organization’s finances had recovered enough to “show that FIFA is healthy.”
“While people were predicting bankruptcies of FIFA or other very dark visions, I think the vision is very bright based on figures coming from different parts of the world, including Asia,” he said.
Still, the mood hasn’t recovered sufficiently to convince wealthy companies to take up the 2018 World Cup’s corporate hospitality. The sponsorship program has collapsed since the 2014 World Cup and is producing revenue closer to the amount FIFA earned in South Africa in 2010. The $360 million FIFA will make at the event through corporate hospitality is a decrease of more than 40 percent compared with what it took in Brazil. There, 62 percent of buyers were from the domestic market. That figure is just 35 percent in Russia.
And Infantino promised before his election to the presidency to quadruple the amount that FIFA gives to its members, meaning the overall increased revenue may not be enough for Infantino. That may explain why he is exploring a controversial $25 billion deal with a group of investors, including Japan’s SoftBank, for two new tournaments. Infantino said last week that almost half of FIFA’s entire membership relies on the organization’s cash disbursements for the entirety of their budgets.
FIFA has also demanded more documentation from the national soccer federations that receive the disbursements. That has led to delays in paying some associations, and a change in approach from FIFA. Now many associations are allowed money on the condition they provide detailed reports, documentation and bank statements that correspond with the payments made.
Source: New York Times and Boston