Buoyed from the success of last year’s World Cup in Germany, world football governing body FIFA has unveiled its latest set of financial figures, reporting a rise in profit to CHF 303 million (£127m) for the twelve months of 2006.
The latest accounts, drawn up in accordance with International Financial Reporting Standards (IFRS), revealed that FIFA recorded income of CHF 912m (£383m) against outgoings of CHF 609m (£256m).
In addition to the income derived from the 2006 World Cup the successful conclusion of the securitisation of marketing income, a strategy launched in 2001, has furthered aided FIFA’s finances leaving the governing body with an overall surplus of CHF 752m (£316m) at the end of 2006.
‘FIFA is still not rich, but we have now created a comfortable position for ourselves,’ said FIFA president Sepp Blatter following the governing body’s executive committee meeting at which the results were announced.
‘Only a few years ago, FIFA was being criticised for its financial situation. Today, we have proved that the facts are somewhat different.’
By means of securitisation, in 2001 FIFA pre-financed a portion of future marketing revenue for the 2003-2006 period on the capital market. As a result, the governing body was able to enhance its liquidity and ensure that it was always in a position to fulfil all of its commitments to its member associations.
As the transaction was based on conservative projected figures, only part of the anticipated revenue was securitised allowing FIFA to use the funds received in advance. Since that securitisation loan, FIFA has been able to conclude all outstanding sponsorship deals for the 2003-2006 period with the help of the newly formed FIFA Marketing division.
FIFA general secretary Urs Linsi stressed the importance of the securitisation process: ‘With the equity we now have at our disposal, we have taken our first step in the right direction. Having sufficient equity is vital because FIFA virtually finances its many activities from the World Cup alone, and we have to be able to react to any unforeseen circumstances that may arise.’
In a further change to FIFA’s financial structures, as most of the governing body’s activities take place in the “dollar zone”, it has converted its balance sheet and income statement from Swiss francs into US dollars moving forward, a switch that was completed on 1st January 2007.