The FIFA headlines keep on coming. And they are not good news for either FIFA or the broader sports management community. Yesterday, the FIFA Ethics Committee announced that it was investigating eleven more FIFA officials or former officials for “suspicion of infringements of the FIFA Code of Ethics”. Several of these individuals are also facing criminal corruption charges.
The consequences for the largest regional association in soccer, the European league called UEFA, are unprecedented. First, longtime UEFA President and former Turin Juventus soccer star Michel Platini was pressured to take a 90 day leave suddenly following controversies that payments Platini received from FIFA appeared too large. Then yesterday, acting UEFA President Ángel María Villar Llona was named as one of the eleven officials under investigation by the FIFA ethics committee. This would be bad enough in any case, but the most important competition UEFA organizes, the UEFA Euro Cup, will take place June 10 to July 10 next year in France. Respectable leadership will be important for maintaining the UEFA brand and achieving goals for ticket sales and sponsorships.
Sponsors are no longer standing on the sidelines. An independent fan group is already organizing a boycott of FIFA sponsors, lead sponsor VISA is cajoling FIFA’s leaders to eliminate any appearance of corruption, and IOC President Thomas Bach has attempted to contain the damage from bad FIFA news with harsh criticism. Bach’s message was unambiguous: “Enough is enough.” The IOC President has called for a prompt and full investigation into the latest series of allegations about corrupt practices at FIFA. At this point, the International Olympic Committee and other sports organizations have to be concerned that months of highly negative reports about FIFA will taint the rest of the industry.
There is so much bad news related to FIFA, the leading international federation for soccer, that it has overshadowed an extremely important change impacting law enforcement for FIFA and most other sports federations. The criminal cases against FIFA are being spearheaded by prosecutors in Switzerland, where FIFA, the IOC and most other international sports federations have their headquarters. Last Sunday, October 18, voters in Switzerland sent their own version of Thomas Bach’s message “enough is enough.” They collectively voted one-quarter of incumbent representatives in the Swiss Parliament out of office and boosted the dominance of conservative parties.
There are unconventional technical reasons that these unexpected changes in the Swiss government could impact standards for governance and legal compliance at FIFA and most other international sports federations. First, for seventy years, Switzerland has been governed by multi-party coalitions. This year’s election results give conservatives enough seats in Parliament to govern without support from other parties. Second, lobbying by industry associations like FIFA in Switzerland has an unusual and unique constraint. Industry association lobbyists need accreditation by a Member of Parliament and the number of accreditations is very limited. Now one-quarter of those accreditations will expire, leaving much uncertainly about what direction key policies will take in the future, including the budget for investigating FIFA corruption allegations.
Meanwhile, FIFA continues to amaze the media with the weakness of its efforts to preserve its image. Media were effectively shut out from covering yesterday’s internal FIFA meetings and FIFA’s image is becoming synonymous with the term “no comment.”
FIFA is missing good opportunities to present a positive image as a success story in the world of non-profit management. After two decades of carefully managing expenses and seeking good marketing opportunities, FIFA’s reserves (the non-profit equivalent of corporate equity) have increased to US$ 1.5 billion. By contrast, the US Soccer Federation posted a $6.1 million operating loss in Fiscal Year 2012-13 and an even larger operating loss the following year. That sets a relatively low standard for financial management and makes it look odd for the US government to be investigating allegations of financial mismanagement at a foreign sports federation when one of the most obvious cases of poor financial management is so nearby.
There are plenty of other cases in sports management that make FIFA look better by comparison, although even FIFA supporters must see substantial room for FIFA improvement. X-Games launched a Global X series in France, Germany, Spain and Brazil in 2013 to much fanfare. The launch lost $30 million in its first year and was permanently discontinued thereafter.
Then there is the comparison of massive, continued fraud at Verizon. In an October 2010 article titled “Verizon gets caught stealing from its customers,” Fortune Magazine explained that Verizon was forced to refund $90 million for systematically overbilling customers and threatening their credit ratings if they did not pay the excess charges. Those kinds of threats are normally considered criminal extortion, but no one at Verizon has been prosecuted. Of course, Verizon does something that no at FIFA ever thought of and employs over a thousand relatives of federal government officials and congressional staff in high paying jobs.
“Enough is enough” is taking on a new dimension. Most reports about FIFA are being written by people who have never taken elementary accounting and have no frame of reference for standard financial management. It is time for FIFA to act more responsibly and that includes an effective effort to educate the public about the realities of sports economics.