Sepp Blatter’s Magical Money Making Machine

March 23rd, 2009 | by: Daryl |

If you’ve been reading the real world non-football news (and I don’t recommend it right now) then you’ll know there’s a whole world of economic bleakness out there. But in FIFA-land? All is sunshine, lollipops and big profits.

FIFA announced their 2008 figures on Friday, and… ker-ching! Revenues are up and profits are good. Sepp Blatter and friends took in $957 million in 2008 (compared to $882m in 2007) and spent just $773m (compared to $883m in 2007) for a total profit of $184m.

And while most financial institutions were either wobbling or collapsing at the end of last year, FIFA even did some smart financial stuff that I don’t quite understand:

“FIFA even made a profit of $16 million in managing its assets last year. Its equity stands at $902 million, boosted by a successful policy of hedging foreign currency.”

(Does that mean they dropped foreign currency in a hedge, and then came back a year later to find it was still there, and worth more than when they left it?)

In a way, it’s good news that FIFA is doing well. Because if the governing body goes under, that would spell trouble for the beautiful game.

But seeing FIFA – which is supposed to be a governing/administrative body and not a for-profit business – make out so well in 2008 while everyone else struggled is pretty remarkable.

It basically underlines the idea/fact that FIFA is now a corporate monolith that makes a fortune selling TV licensing, merchandise and sponsorship. The estimated revenue for World Cup 2010 is apparently $3.2 billion. Imagine how many AIG retention bonuses you could pay with that?

International Football News – World Cup Blog RSS Feed

http://epl.theoffside.com Wayne

Am I being incredibly naive when I say that I think that some of this money should be pumped into lower league football to stop clubs from going into administration every 2 minutes?
http://juventus.theoffside.com alessio

No, Wayne.

Is FIFA a non-profit organization? I thought so. Who gets all of their money, I don’t have a clue who they could possibly be owned by.

(Does that mean they dropped foreign currency in a hedge, and then came back a year later to find it was still there, and worth more than when they left it?)

Actually, kind of….yeah.
Shazback

FIFA is a non-profit association, so they actually do re-invest the money they recieve into various projects.

However, unlike Wayne, I don’t see why they should save clubs from bankruptcy, unless FIFA is also going to save clubs in similar positions all over the world…
John

I’m no economist, but aren’t hedge funds essentially gambling on the world market? For example, maybe FIFA had a lot invested in the US dollar but sold their assets for euros right before the dollar started tanking. In this global economic recession maybe Sepp just got lucky. It seems to me FIFA just as easily could have lost 183m instead of gain it.
MAD

Financial hedges are like an insurance policy that, in this case of hedging foreign currency, are supposed to reduce risks against the fluctuations of currency value.

You would use a “foreign currency hedge” to reduce “gambling” on the world market.