However, as we look into this once-every-four year behemoth of an event, I wonder what the context and the finances are saying for the FIFA team and look into the 2009 financial statements. What is FIFA really in business to do?
There are possible missions that I thought about that bring with it a few interesting facts that you can bring with you into the World Cup and quote.
1)FIFA is in the business of making employees rich.
73% of expenditure is directly invested back into the game of football
From an accounting perspective this means that 23% of the expenditure is not invested in football. I thought it was a little funny to quote an expense figure as an investment target. Usually I would expect it to be a percentage of profits. However, the expenses grew steadily from around 500M a year to around 800M a year in the last 3 years. This would suggest that over the last 3 years approximately $207M was non-football related expenditure. Don't be alarmed. When you look at the projects on offer and the development funding that is being pooled this figure is reasonable.
2)FIFA in in the business of advertising
Two words. Revenue Streams. FIFA relies on a variety of revenue streams for success. Most of these are linked to TV broadcasting and marketing (which are 90% of the income streams). In fact in 2009 the total revenue from these streams was just over $1bn dollars which underlines just how successful the World Cup is in bringing people together but more importantly for business.
3)FIFA is in the business of acquiring assets and holding cash. Lots of it. muhuhaha.
Debt Ratio. The FIFA asset base is relatively large and with a debt leverage ratio of roughly 50%. Looking at the 2009 cash balance of 1.44 Bn you think ... wow that's a lotta money! It's got to be sitting in one big bank account.
4)FIFA is in the business of developing football - a $2.4Bn investment in football
The biggie for FIFA is the business of developing football. Looking at the development of new stadiums, growing the game, training and international coverage there is just under $2.4Bn invested by FIFA - no wonder half the world plays soccer.
The conclusion?
As we enter the World Cup it's clear that financially FIFA is all of the above. However, the business of developing football is the predominant theme for FIFA, and interestingly it is more than just football that the world gets. Internationalism, cultural understanding and a genuinely entertaining tournament that brings as much the local patriots as the globe together.
I can't think of anything better. All we need to find out now is what the World Cup Song this year will be!
Happy Watching!
What's up Jono? www.whatsupjono.com Breaking Business News, Analysis, Trends, Charts and Opinion
Jonathan thank you for the nice comment on my blog. It is always a nice surprise when we get a comment from a new blog friend.
ReplyDeleteI have 3 grandsons that love soccer and have played on teams since they were little. They are quite good and one was even on the Utah state championship team. I know that they would love to go to a world cup game. Too bad that they are so far away from us.
I have friends that just returned to the states from Sidney. They have been living in Australia for a year and a half. They love it there. I hope that I can visit your beautiful city one day. Have a great week.