FIFA sees widening losses after corruption scandal

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… Confirms $369m loss in 2016. FIFA expects widening losses in 2017, world soccer’s ruling body said on Friday, as costs linked to its biggest ever corruption scandal and failed investments contributed to a US$391 million (315 million pound) pretax shortfall in 2016. The 2016 loss, up from a restated US$117 million shortfall for 2015, was blamed on increased legal costs and the extraordinary general congress called to elect a new president after Sepp Blatter resigned after graft allegations emerged in 2015. Legal costs more than doubled to US$50 million during 2015, but FIFA expects these to go down considerably in future. What FIFA called “ill-considered previous investments,” like its struggling football museum and hotel in Zurich as well as a new accounting standard were also behind the shortfall. It also increased its spending on what it calls education and development to US$428 million during 2016 from US$187 million a year earlier. As a result of the losses, disclosed in FIFA’s annual financial report, the organisation’s reserves fell to US$1.048 billion from US$1.41 billion in 2015. FIFA said it expects a US$489 million loss in 2017 but should turn a US$1.07 billion profit in 2018 when the World Cup is held in Russia, pushing its financial result for the 2014 to 2018 period into a US$100 million profit. Despite the shortfall, FIFA President Gianni Infantino said he would stick to his plans to increase the payout to soccer associations around the world to develop the sport. “We need to ensure that every bit of revenue is well invested in the game,” he said in a statement. “The FIFA Forward Development Programme is an embodiment of this commitment.” Infantino’s salary was confirmed at US$1.5 million, less than half the 3.53 million Swiss francs paid to Blatter, who was banned for six years for ethics violations. Infantino, former head of the European soccer organisation UEFA, was elected president in 2016 promising to lead FIFA into a new era. As part of his campaign, he pledged more money to the 211 soccer associations around the world. He had promised to distribute US$5 million every four years for football development for every country, from rich large members like Germany to tiny ones like the Cook Islands. He also promised to deliver US$40 million to each of the six continental associations over the same period. FIFA kept its projected revenue at US$5.65 billion, saying it had already contracted 76 per cent of the revenue. It gets money from sponsors on three levels, with the top FIFA partners, which include Coca-Cola, Gazprom, Chinese conglomerate Wanda Group, Adidas, Visa and Hyundai, paying an estimated US$100 million to US$300 million every four years to support the World Cup. FIFA expects to sign up more sponsors in the coming months. It also expects its legal expenses to decrease due to the end of its internal investigations into corruption. The post FIFA sees widening losses after corruption scandal appeared first on BusinessDay : News you can trust.
Source: Business Day Online