The Business Of Sports Administration

Feb 12 / Sean Roe
Sean Roe looks at some of the business and ethical questions raised by the FIFA World Cup in Brazil.

TOPIC 1 – The administration of world sport (this subject could also apply to Formula 1 and the IOC, among others).a) One question concerns the charitable status of FIFA.b) The other is about monopoly and accountability.The background.

TOPIC 2 – About the financial benefits of hosting a world cup.

The administration of world sport

This subject could also apply to Formula 1 and the IOC, among others.

a) One question concerns the charitable status of FIFA.
b) The other is about monopoly and accountability.

The background.

FIFA (Féderation Nationale de Football Association) started out as a small voluntary body, but now has more member nations than the United Nations. Its revenue between 2007 and 2010 was $4bn, and profits have only increased since then.
Why are these points particularly relevant now?
These questions have reared their heads recently because of accusations of improper behaviour in the awarding of the 2018 and 2022 World Cups. British newspapers, among others, have suggested that bribes and other inducements were offered to FIFA delegates to secure their votes. These auctions were held at the same time – which has never happened before in the history of the World Cup – and against the backdrop of the presidential elections for the post of president.It is a fact that FIFA personnel have accepted kick-backs in the past – Blatter’s predecessor Joao Havelange was found to have accepted payments in the 90, but “commercial bribery” was not a crime in Switzerland at the time. As Blatter says “such payments could even be deducted from tax as a business expense”.
Questions have also been asked about FIFA’s charitable and not-for-profit status, especially as it is believed to hold $1.4 bn in reserves. FIFA also demands exemption from tax in host countries.

So two main groups of questions present themselves:
a) Charitable status.Is it right that such a body, whose business partners include Coca-Cola, McDonald’s, major banks and television companies etc, should hold charitable status? Does it seem reasonable that a not-for-profit body should have over a billion dollars in its bank accounts?
b) Accountability. Sepp Blatter has held four consecutive tenures as president of FIFA, and during his last campaign he declared that he would not seek the post in 2015. However Mr Blatter has since reneged on this promise, and is now standing for re-election.

Who decides that a certain entity is the custodian and arbiter of a sport? To whom are the directors and officers of this body accountable? Given that this role is monopolistic, should there be more checks and balances to regulate the conduct of FIFA and similar organisations?

The financial benefits of hosting a world cup.

a) Why do countries vie to hold the World Cup?
b) Are they right to do so?
A few interesting points: Visits to London were lower than during an average summer during the 2012 Olympic Games. The 2010 World Cup in South Africa is generally held to have cost the country enormous amounts of money, and FIFA sponsorship deals prevented local business from benefiting.
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