Cleaning up FIFA will take more than elbow grease.

Photographer: FABRICE COFFRINI/AFP/Getty Image

FIFA Needs an IPO

Mark Gilbert is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was London bureau chief for Bloomberg News and is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
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Executives arrested amid allegations of corruption and bribery; a chief executive who resigned in disgrace after damaging one of the world's most lucrative brands; and the looming threat that the biggest contributors to revenue will take their business elsewhere. If FIFA were a public company, its shareholders would be in revolt by now.

It isn't, of course. But perhaps it should be. The disinfectant of corporate transparency -- glaringly absent from FIFA in its current incarnation as a nonprofit (albeit one that generated more than $5 billion of revenue in the last four-year World Cup cycle) -- might be the solution soccer's global overseer needs.

World Cup

FIFA's alleged bribery and corruption in soccer isn't a victimless crime. Every dollar siphoned from the organization, whether into someone's pocket via suitcases full of cash or onto someone's wrist courtesy of a $20,000 watch, is a dollar that's not available to foster the development of the world's most-watched sport. Every World Cup tournament illegally awarded to an undeserving applicant denies some more worthy bidder the chance to play host. So FIFA shouldn't be allowed to carry on with business as usual, even after Sepp Blatter's announcement Tuesday that he intended to step down as president.

As a public company, FIFA wouldn't be able to bury the compensation for Blatter's successor in its catch-all “personnel expenses” expenditure of $397 million. (“We have hidden it so you cannot find it,” Markus Kattner, FIFA's head of finance and administration, said in this article published in April.) Private jets and vanity movie projects would at least have to be signed off by a board that would be obliged to have shareholders' interests at heart.

Once the board ensures that the organization's expenses -- ahem -- are back under control, there should be plenty available to pay transparent dividends to shareholders, as well as fund federations around the world. And the new company ought to be structured to ensure that FIFA continues to spend significant sums on developing the sport. (The organization says it spent $1 billion building facilities and helping hire coaching staffs in various countries in the four years prior to the Brazil World Cup.)

Would investors be interested? Well, FIFA's finances go from strength to strength, corruption allegations notwithstanding; global marketing rights in the run-up the Brazil World Cup, for example, raked in $1.6 billion, a third higher than in the four years prior to the previous competition in South Africa. And soccer investments already exist: Manchester United, for example, one of Europe's most successful teams in recent years, has shares listed in the U.S. that are owned by investors including Fidelity, Blackrock and Janus Capital.

The biggest question, though, is whether anyone could compel FIFA to pursue public ownership through an initial public offering. At present, FIFA is effectively “owned” by the 209 national football federations that form its membership. The smaller members would have little incentive to abandon the current system outlined by my colleague Mark Whitehouse, in which Tahiti is the most powerful committee member relative to the size of its economy while Germany, Japan and the U.S. have the least influence.

But Europe's governing soccer body, the Union of European Football Associations, could play a leading role in forcing a shift. UEFA has been vocal in its criticism of FIFA. If it decided to boycott the organization -- taking its 53 member associations with it, more than a quarter of the total -- it could amass the power to bully FIFA into changing its ways. And that's precisely what UEFA should aim to do.

(Updates first, third and fourth paragraphs with news of Sepp Blatter's resignation.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Mark Gilbert at magilbert@bloomberg.net

To contact the editor on this story:
Cameron Abadi at cabadi2@bloomberg.net