FIFA publishes new annual reports and confirms target result of USD 100 million for cycle
–Early adoption by FIFA of the new IFRS 15 revenue recognition standard, more accurately reflecting the organisation’s business model over a four-year World Cup cycle
–A restructured administration with clear rules and procedures to foster best practices including a dedicated Compliance Division
–Detailed disclosure of compensation of key management personnel
Reassuring financial outlook with positive bottom-line result of USD 100 million for four-year cycle ending in 2018:
–FIFA has confirmed its revenue targets despite stagnant global trade and investigations surrounding previous FIFA officials
–By the end of 2016, 76% of the forecast revenue for the 2015-2018 cycle had been contracted
–The net result for 2016 amounted to USD -369 million due to IFRS 15 revenue recognition, increased investment in football development and one-off extraordinary expenses
–Positive operating cash flow in 2016 of USD 149 million
–Positive net result expected by the end of the cycle in the region of USD 100 million
Growing the game:
–Tripling of direct investment in continental, regional and local football development through the Forward Programme
–More oversight of a diligent, efficient and transparent use of development funds
–Anticipated investment in football activities of 82% of the total investment for the full cycle
FIFA today published its Financial, Governance and Activity Reports for 2016, which will go down as a landmark year in the history of FIFA, with the approval of much-needed governance reforms after a period of deep crisis and the arrival of new leaders. The financial results for this pivotal year are reassuring, with 76% of forecast revenue for the 2015-2018 cycle already contracted and an estimated positive net result of USD 100 million at the end of the period.
This continued revenue growth alongside focused cost containment measures have allowed direct investment in regional and local football development to be tripled through the new FIFA Forward Programme. Within a four-year cycle, every member association is entitled to receive up to USD 5 million, up from a maximum of USD 1.6 million under the previous structure. This money will be invested in efficient, tailor-made projects, and member associations scrutinised closely to verify that the funds have been used appropriately. Overall for the 2015-2018 cycle, 82% of the forecast expenses will be invested directly in football activities.
One of the key goals of the reforms is to ensure that FIFA tightens its control over money flows and treats its finances with full transparency. This is reflected in this year’s Financial Report as FIFA has been early to adopt the new revenue recognition standard IFRS 15. This method more accurately reflects the organisation’s income pattern over a four-year FIFA World Cup™ cycle, in which three years of steady outgoings are typically offset by the revenue of the fourth.
As a consequence of the adoption of IFRS 15 and of significant one-off expenses in 2016 due to legal investigations, the Extraordinary FIFA Congress and the impairment following ill-considered previous investments (FIFA World Football Museum and Hotel Ascot), the net result reported for 2016 amounted to USD -369 million, whereas the operating cash flow was positive at USD 149 million. While a negative result is also expected in 2017, a significant surplus is foreseen in 2018, the year of the FIFA World Cup™, leading to a positive result over the four-year cycle in the range of USD 100 million.
“2016 was the turning point when the first and vital steps to restore trust in the organisation were taken. This includes employing a responsible and transparent way of managing revenue and expenditure. We are building a solid framework to ensure thorough oversight and proper accountability, and placing football at the heart of everything that our organisation does: after all, we need to ensure that every bit of revenue is well invested in the game. The FIFA Forward Development Programme is an embodiment of this commitment,” said FIFA President Gianni Infantino.
A key illustration of FIFA’s increased transparency is reflected in the disclosure of the compensation of committee members and key management personnel. Detailed information concerning the principle of remuneration defined by the Compensation Sub-Committee as well as the compensation of the President, the Secretary General, the Council members and the chairperson of the Audit and Compliance Committee as well as the costs of the judicial bodies are disclosed in the Governance Report.
“With the new framework in place, 2016 was a year for FIFA to set up the mechanisms and processes that will safeguard its principles in the future. One of the foremost actions in this regard was the establishment of a dedicated Compliance Division. By adopting an unyielding compliance attitude, FIFA has given a much-needed signal of intent to evolve and never again face the problems of the all-too-recent past. Clear rules and principles of good governance have led to unwavering action,” said Tomaž Vesel, the chairperson of the Audit and Compliance Committee.