FIFA (International Federation of Association Football) is a nonprofit football organization. It was formed in 1904 to organize and promote international football competitions. Football has the most extensive fan base and is played in over 200 countries. We know the football industry is prosperous, but if the FIFA world cup is played every four years and is a nonprofit organization, how does FIFA makes money? In this article, we’ll explore FIFA’s business model and understanding. Let’s dig into the details!

What is FIFA?

FIFA was established on 21st May 1904 with the aim to modernize the football game, protect its game and bring the game everywhere in the world. Now, FIFA is governing body of the football (soccer) association. FIFA was formed to promote football competitions internationally and to make sure the game is accessible to everyone.

Being a nonprofit organization, FIFA invests a major portion of its earnings into developing a game to build a more vital institution. The earnings come from marketing and managing the international world cup, including FIFA Confederations Cup, The Continental Championships, Futsal World Cup, U-20 World Cup, Beach Soccer World Cup, and Men’s & Women’s World Cups. According to the organization’s annual financial report, FIFA generated revenue of more than 4.6 billion dollars on World cup events. Let’s take a look at FIFA’s business model.

FIFA Business Model

The World Cup tournament- one of the most popular and lucrative sporting events in the world where teams from all over the globe participate is the primary source of FIFA’s revenue. Although the event occurs every four years, FIFA makes significant income from it. Moreover, FIFA generates revenue b selling television rights, marketing rights, licensing rights, and hospitality rights, plus ticket sales. In addition, the organization’s costs are minimal to keep enough money to reinvest into the development of the sport.

Television Broadcasting Rights

In 2018, FIFA generated $4.6 billion in revenue, out of which approximately 3.13 billion (49%) came from television rights. Fifa collaborates with television stations and broadcasting institutions to broadcast football games and other related events in specific regions.

As football is a trendy sport with a huge fan following and people are crazy about it, competition between broadcasters for licensing rights can be serious. ESPN and FOX entered a bidding war for television rights through the 2022 World Cup, and Twenty-First Century Fox won the bid from Disney’s ESPN and paid 400 million dollars to FIFA for television broadcasting rights in the coming world cup.

Besides that, Meta Inc. (Facebook), Snap Inc. (SNAP), and Twitter Inc. (TWTR) offered million dollars to FOX for highlights rights.

In short, television broadcasting rights is a vast revenue-generating stream for the football federation.

Marketing Rights

The next major source of revenue for FIFA is selling marketing rights. These rights generated 26% (about $1.66 billion) out of 4.6 billion dollars in the four years leading up to the following World Cup. This is an impressive amount and is a big reason for the corruption scandal in which many high-level leaders of FIFA were involved.

Furthermore, marketing rights helps the organization to promote game & tournaments by leveraging the popularity of sponsors and audience. It enables the brand to become FIFA World Cup Sponsors, FIFA Partners, and supporters for the long-term and can access the organization’s intellectual property.

Licensing Rights

In the 2015-2018 cycle, FIFA generated $600 million (9% of total revenue), which was 114% greater than in the previous cycle. In licensing rights, brands use FIFA marks and elements on products like apparel, stickers, watches, electronic games, music, timekeepers, and more. Football fans from all over the globe buy these cobranded products to show their passion for the game & tournament.

Hospitality Rights & Ticket Sales

The last yet important component of FIFA’s revenue stream includes hospitality rights, accommodation rights, and ticket sales. FIFA made $712 million in hospitality rights and ticket sales from 2015-2018. In the 2018 FIFA World Cup, in Russia, more than 10 million tickets were requested. Also, revenue from ticket sales is 100% owned by FIFA.

Ticket sales are divided into the following customer groups.

• Public (70%)
• Member Associations Participants (14%)
• Hospitality (6%)
• Commercial Affiliates (5%)
• Other (5%)

FIFA’S Expenses

According to the 2015-2018 FIFA financial report, FIFA’s expenses were $5.36 billion, which were divided into the following categories:

• Event-related expenses- 2.56 billion dollars
• Development & education projects - 1.677 billion dollars
• FIFA governance & administration- 797 million dollars

In addition to these expenses, other expenditures were information technology, legal costs, and building expenses, which cost $124 million. Finally, FIFA spent 211 million dollars on television broadcasting and marketing rights.

FIFA’s Future Plans

As long as football (soccer) remains the biggest popular sport in the world with a diverse fan base, FIFA will keep making massive revenue from World Cup and other related events. However, FIFA’s future plans include:

• Reinvesting in-game.
• Developing the host bidding process.
• Promoting gender equality in football sports.

Moreover, the federation improved its sponsorship model to promote the World Cup and its brand.

Bottom Line

FIFA makes its highest revenue from FFA World Cup. Besides, the popularity of the Women’s World Cup is growing rapidly. Television broadcasting rights and marketing rights account for a majority portion of FIFA’s revenue. However, good governance and positive changes in management are required to get more success and prevent corruption & deceit.

Being a popular and nonprofit organization, FIFA reinvests the revenue in marketing, broadcasting, competitions, game development, and events.