News Coronavirus takes heavy toll on budgeted FIFA revenues for...

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Coronavirus takes heavy toll on budgeted FIFA revenues for 2020

News Coronavirus takes heavy toll on budgeted FIFA revenues for 2020

FIFA

FIFA is now budgeting for this year’s revenues to come in a little more than half of its original projections, as a consequence of coronavirus.

A revised budget published last week puts total revenue for the current year at just $250 million (£200 million/€220 million).

This is 48.3 per cent down on the $484 million (£387 million/€426 million) originally forecast in a detailed budget for 2020 published as part of the world governing body’s 2018 financial report.

The COVID-19 pandemic has forced the postponement of several competitions originally scheduled for this year.

These include the men’s and women’s Olympic football tournaments in Japan, as well as the under-17 and under-20 Women’s World Cups in India and Costa Rica-Panama respectively, plus the 2020 Futsal World Cup in Lithuania.

Expected revenues – and expenses – associated with these tournaments have broadly been pushed out into 2021.

Provided they can ultimately take place, the main financial impact on FIFA will be on originally projected cash flows, with associated revenues materialising later than originally expected, rather than being lost altogether.

For example, FIFA would normally have expected to receive the bulk of the approximately $25 million (£20 million/€22 million) it can expect from Tokyo 2020 this coming September or thereabouts.

Now, even if the Games take place, the money will not appear until September 2021.

One other tournament, the 2020 FIFA Club World Cup in Qatar, probably the last in the present format, is currently still planned for this coming December.

It looks possible that licensing rights may now be the biggest single revenue source for FIFA this year.

Licensing revenue for 2020 was originally forecast at $112 million (£90 million/€99 million) and, since much of this is thought to be linked to esports, there seems scant reason why it should be much – if at all – reduced.

Surging licensing revenue was already instrumental in helping FIFA out in its previous 2015-18 financial cycle, as it battled to counter the impact on its business of the reputational issues that engulfed it as the Sepp Blatter era drew to a tumultuous close.

In 2018 alone, the $185 million (£148 million/€163 million) contribution to revenue from licensing rights was said to be “206 per cent higher than budgeted”, mainly driven by the FIFA eWorld Cup 2018 Grand Final.

Budgeted costs for 2020 are now put at $1.04 billion (£832 million/€915 million) – down just $64 million (£51 million/€56 million), or 5.8 per cent, from the just under $1.11 billion (£888 million/€977 million) originally stipulated.

Budgeted spending on competitions and events has been cut by $78 million (£62 million/€69 million) to $122 million (£98 million/€107 million).

As well as the tournament costs that have been pushed into 2021, FIFA has shaved $5 million (£4 million/€4.4 million) off the original $31 million (£25 million/€27 million) projected cost of the club protection programme.

By contrast, the budgeted development and education spend has been lifted to $620 million (£496 million/€546 million) from $578 million (£462 million/€509 million).

Projected FIFA governance and administration costs have come down by $28 million (£22 million/€25 million) to $211 million (£169 million/€186 million), with nearly half the saving accruing from an expected $13 million (£10 million/€11.5 million) reduction in the cost of the annual Congress and committee meetings.

The overall picture is that this year’s deficit before taxes and any financial result is now projected to be a hefty $794 million (£635 million/€699 million), up from $624 million (£499 million/€549 million) originally budgeted.

The FIFA World Cup, next scheduled for Qatar in 2022, generates the vast bulk of the body’s well over $6 billion (£4.8 billion/€5.3 billion) quadrennial revenues.

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