Does Soccer Need FIFA?

shiny! - Harold Cunningham

The first of a two part look at FIFA, what it does, why it exists, and what the future might hold for soccer.

A couple weeks ago, FIFA announced its various awards and prizes for 2012. Lionel Messi, unsurprisingly, won the Ballon d'Or; that's not the problem, nor is the problem that Abby Wambach and Pia Sundhage won Women's Player Of The Year and Women's Coach Of The Year, respectively. The problem, or more accurately a symptom of the problem, is that FIFA also named a World XI. This World XI consisted of players from one league, and ten of those players were from one of two teams. So according to FIFA, "the world" consists of Spain. OK, then. As I was reading about the awards ceremony, a question kept popping into my head, and this article was born as an attempt to answer it. The more I thought about it, the question I had became two questions, both of which are simple:

What's the point of FIFA? Is there a need for FIFA?

To tackle the first question, we first need to understand where FIFA came from and what it does. At the turn of the century (the 20th century; it's kind of cool that we live in an era where the century in the phrase "turn of the century" has to be specified), nations stopped being inward-looking, and started playing matches against other nations. With this trend came a desire for some structure around the rules of these competitions; countries wanted to bind their citizens to their national team so they couldn't just go play for a different country, and there was a need to standardize the playing of the game under the Laws Of The Game as written by the English FA.

So, in 1904, representatives of the national federations of France, Belgium, Denmark, Switzerland, The Netherlands, Sweden, and Switzerland, as well as representatives of Real Madrid (Spain didn't have a national federation at the time), got together in Paris and wrote the first set of FIFA statutes. You'll notice that England wasn't a part of the origin of FIFA, nor was Germany; England joined in 1905 and Germany joined shortly thereafter. At the time, there was already some buzz around the idea of a competition between member nations, so FIFA enacted its first set of statutes, governing how member associations should run their business, which was passed in 1904. FIFA began holding an annual congress, during which FIFA set its mission in stone - stipulating that all member nations use the Laws of the Game as established by the English in their competitions, defining what comprised a national team match, and most crucially to FIFA's development, forbidding "outsiders" (non-FIFA members) from organizing teams involving FIFA member federations or their teams.

FIFA expanded beyond Europe in the late 1900's/early 1910s, with South Africa joining in 1908, Argentina and Chile joining in 1912, and the US and Canada joining in 1913. FIFA almost didn't survive World War 1, though, as the English Home Nations withdrew from the association; they did not want to compete in sporting events against a country with which they were just at war. After the Home Nations withdrew, it was left to the Dutch head of FIFA, Carl Hirschmann, to guide FIFA during the WW1 years and immediately after, in which FIFA's membership dropped to 20 nations and was in danger of dissolving entirely due to geopolitical events beyond its control. Hirschmann basically kept the organization alive until 1921, when Frenchman Jules Rimet was made president of FIFA. Rimet basically rebuilt FIFA from the ground up - he was president for 33 years, and during his tenure FIFA became, by and large, the organization it is today. It grew in numbers (by 1954, there were 85 member federations), and more importantly it suffered no dip in membership during World War II as it had during the first war.

Rimet's larger legacy, though, was that he drove FIFA to host its first tournament of member federations, which he named the World Cup. This was one of the main reasons that FIFA was founded, and Rimet's role in creating it cannot be understated - and in fact was honored by having the championship trophy of the tournament be named the Jules Rimet Trophy in recognition of his role within the federation and his services to the game (that trophy was given permanently to Brazil after their 1970 WC win, as the first nation to win three world cups they got to keep the trophy as stipulated by Rimet - but the trophy was stolen and has never been recovered. The World Cup trophy is now nameless). FIFA decided that they would hold a quadrennial tournament, and the first one was to be held in Uruguay in 1930.

That 1930 tournament featured 13 teams, seven from South America, four from Europe, and two from North America. European nations strongly objected to the tournament being held in Uruguay, as travel was long and arduous - in those pre-airplane days, remember, intercontinental travel was done by train and by ship - but Rimet used his influence to get Belgium, France, Romania and Yugoslavia to participate. The entire tournament took place in Montevideo, and after a semi-final that featured Argentina, Uruguay, the US, and Yugoslavia - yes, kids, the US has been to a World Cup semi-final! - Argentina and Uruguay played the final, which Uruguay won 4-2. FIFA had a hit on their hands; the world loved the idea of the World Cup, and FIFA's main mission became organizing, running, and promoting the World Cup in all its member nations and around the world. Over the years, the size and shape of the tournament has changed, but FIFA has retained control of the entire event, from controlling who can participate to deciding who can advertise, and even encouraging host nations to change their laws for the duration of a tournament in order that FIFA can run their tournament the way they please.

Everyone who follows soccer, casually or seriously, now knows that FIFA holds an immense amount of power over the game, and they make bucketloads of money doing it; and by bucketloads, I mean a bucket approximately the size of the Grand Canyon. And they fill that bucket repeatedly. But here are two things you might not know about FIFA and its bucketloads of money:

1. FIFA is a non-profit organization. Which theoretically means that, minus reasonable operating expenses, all of those bucketloads of money should be going directly back into the game on some level, be it at the grassroots youth level, the national team level, or what have you. The question you'll have upon reading this is undoubtedly "does that happen?" And the answer is….kinda. Some money trickles down, but South Africa is a good example of where this didn't happen - when SA was awarded the 2010 World Cup, there were all sorts of pronouncements (from both FIFA and the South African government) about how the World Cup would "transform" the game in South Africa from the ground up, provide safe places for kids to play, and provide a lasting legacy of the tournament in the form of a new generation of soccer players, leagues, and facilities for South Africans. Has this happened? By and large, it has not - most of the money FIFA poured in to South Africa was to build stadiums for their tournament, despite promises of support for local soccer, and three years later many are still angry about how they were misled as to FIFA's true intent.

You want some numbers? OK! Here's some financial information. This is all taken from FIFA's own website, and I am by no means an accountant or a financial analyst, so I am taking FIFA at their word on these numbers. In 2011,the last year for which FIFA has reported their numbers, their money breaks down thusly:

INCOME:

  1. Event-related revenue (broadcasting/marketing rights, sponsorship, etc): $988 million (92% of total)
  2. Other Operating Revenue (Brand licensing, levies, rental income, film sales): $52 million (5%)
  3. Financial Revenue (interest, investments, etc): $30 million (3%)

TOTAL INCOME: $1,070,000,000

EXPENSES:

  1. Event-Related Expenses (2014 World Cup): $589 million (57% of total)
  2. Development-Related Expenses (financial assistance programs for member associations, federations, referees, Football For Hope, etc): $183 million (18% of total)
  3. Other Operating Expenses (FIFA payroll, communications, taxes, and "other" (IT, travel, logistics, etc) ): $173 million (17% of total) (including a $34 million line item for "other")
  4. Football Governance (Committees and Congress, legal) $52 million (5%)
  5. Financial Expenses (Foreign Currency Losses): $22 million (2%)
  6. Exploitation Of Rights (broadcasting/media/marketing/licensing rights): $15 million (1%)

TOTAL EXPENSES: $1,034,000,000

On the surface, FIFA seems fairly well-run financially - they spend less than they make, and their governance and non-football operating expenses don't seem too out of whack for an organization of that size. FIFA is spending the lions share of their money, more than half, on their next tournaments - $428 million of that total is for the World Cup, the rest is for "other tournaments" (the age-class World Cups, the Confederations Cup, and other small tournaments). I only have access to the line-item numbers in the 2011 financial report, and again I'm not a financial analyst, but the numbers they provide seem to pass a sanity test as far as operating expenses as a proportion of total income. The bit that troubles me, though, is this: they make far, far more from the World Cup than they spend; in 2011 alone, the income from the 2014 World Cup exceeds the expenditure by half a billion dollars.

I fully understand that the World Cup isn't until next year and there's money to be spent between now and then, but overall I have no idea what happens to that money. Does it all go back to FIFA? Does it go to individuals? Does it carry over to the next tournament? I don't know, and FIFA doesn't make that clear. I can't help thinking, though, that much more of the vast pot of money FIFA earns from putting on its showpiece tournament should go to that whole "development-related expenses" category, the one that represents only 18% of this supposed non-profit's expense stream.

To make a comparison to an actual World Cup year, in 2010, FIFA earned $3.4 billion on the World Cup, and spent $1.2 billion. So the proportion of money earned to money spent on the WC remains fairly constant, if by "constant" you mean "completely out of whack for a non-profit entity". This article is not going to ask the question "WHAT HAPPENS TO ALL THAT EXTRA MONEY?", although it does tie in with my concern, which is that the vast pile of money that FIFA makes on the tournament isn't being funneled to what is arguably the mission of FIFA, development of the game around the world. The World Cup is a great mechanism for making money; should not more of that money be making its way to the lowest levels of the game than is currently the case? FIFA made $560 million on the World Cup in 2011, and only $183 million went to developing the game around the world. What else is that money for if not development? Why is only 32% of the profit from the Cup going to developing the game around the world?

2. FIFA is self-regulating and self-policing, and they are not accountable to anyone but themselves. Which means that if you're angry about anything FIFA does, you can feel free to take that complaint, print it out on a nice piece of paper in a lovely font, wad it up tight, and throw it away, because FIFA has absolutely no outside oversight. There are no checks and balances, there's no opposition party to the current leadership; it's an entirely closed society in which they make the rules, they enforce the rules, and they have absolutely no reason to listen to any criticism, internal reform ideas, or thoughts on changing the game that they don't see fit to care about.

You want to think a little forward about the game, and for instance introduce replay technology in elite leagues? Too bad, FIFA says no! You want transparency in how FIFA is run, so maybe you can suggest some changes to their organization or hierarchy? Sorry, ladies and gents! You want to start a movement to oust Sepp Blatter as FIFA president? Nope, not gonna happen. And that's just scratching the surface. FIFA has been hit by many corruption scandals over the years around the World Cup host bidding process; bribes by national federations to FIFA officials were commonplace, and FIFA has long been alleged to have run on a "cash for contracts" basis for many years - charges all outlined in a book written by Andrew Jennings called "Foul! The Secret World Of FIFA: Bribes, Vote Riggng, And Ticket Scandals".

These allegations are widespread and go back decades, further back than Sepp Blatter; his predecessor Joao Havelange was accused of accepting a £1 million bribe in 1997. FIFA has long had the reputation of being a corrupt, pay-for-play type organization that existed mostly to line the pockets of its executives, and the accusations of bid-rigging and bribery in Jennings' book are very damning. I'm not sure how FIFA can be seen as a "guardian of the game" in light of all the bribes, kickbacks, scandals and power grabs it has been both accused of and found to actually have done over the years. Does anybody take them seriously as an organization any more? Are they truly acting in the best interests of the game?

To get back to the original question, "what is the point of FIFA?", I guess that depends on who you ask. If you ask FIFA, they will tell you it's to protect, develop, and grow the game; if you ask South Africa, you might get a different answer, and if you ask the average soccer fan, you'll probably get either "they put on the World Cup", or a shrug and a blank stare. This ties nicely into my second question, which I will address tomorrow: is there a need for FIFA?

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