Finance Uncategorized

Where does FIFA’s profit stack up against Fortune 500 companies?

FIFA's projected profit on this year's World Cup places it above some corporate heavyweights on Fortune's 500 list.

(AP Photo/Mohammad Hannon)
(AP Photo/Mohammad Hannon)

According to Business Insider, FIFA is on pace to make a cool $2.61 billion profit from this year’s World Cup — an exceptionally lucrative bottom line for world soccer’s governing body. To put this bounty into perspective, we compared FIFA’s profit against those of major Fortune 500 companies to see where FIFA would rank on the battlegrounds of corporate multinationals.

For simplicity, we assumed that this $2.61 billion in profit is for one fiscal year. While the actual World Cup occurs over a few weeks time, it’s safe to say that FIFA has been preparing for a year — probably more — to put on this summer’s event.

This assumption is backed by the fact the organization was steadily recording many World Cup-related expenses in 2013, according to its Annual Financial Report (more on those expenses below).

Photo Credit: Kia
Photo Credit: Kia

FIFA PROFIT VS. TOP COMPANIES

While its bottom line is nowhere close to Apple’s $37 billion or Berkshire Hathaway’s $19 billion for the year, FIFA’s $2.61 billion in profit beats out many household names you most likely encounter on a daily basis, such as FedEx, Target and Amazon.

Below are large, highly-regarded companies that generated fewer profits than FIFA for the year according Fortune’s famed 500 list:

FIFA profits pic v2

FIFA SIZE VS. TOP COMPANIES

The figures above say nothing of the size of company that can be measured in a number of ways like total assets, market capitalization, or enterprise value. Without a true market capitalization for FIFA, we will use total assets as our basis.

As of Dec. 31, 2013, FIFA held $3.17 billion in total assets. By comparison, FIFA’s closest enterprise by profit — WellPoint — had total assets of approximately $60 billion in fiscal year 2013.

The company with the lowest profit in the above table — Amazon.com — had total assets of $40 billion in fiscal year 2013.

At first pass, $3.17 billion in assets compared to $40-$60 billion makes FIFA appear quite small when standing shoulder-to-shoulder with these corporations. Now consider that almost 40 percent of FIFA’s assets are cash and cash equivalents rather than corporate infrastructure, and you’ll see that this $2.61 billion return on FIFA’s asset base is an even more astounding feat . . . almost unbelievable.

It should be noted that the business models for the above companies vary significantly and do not match that of FIFA — which I suppose would fall into the Media & Entertainment sector given that its main revenue drivers are broadcasting and television rights. Most of the companies above are retailers, service providers, or consumer goods companies in other industries.

Still, stacking FIFA up against some of the top Fortune 500 companies is an exercise in perspective and just one more way we can marvel at the cash machine that is the world’s biggest soccer tournament.

Photo Credit: Wikipedia
Photo Credit: Wikipedia

A NON-PROFIT?

The irony is that FIFA is registered in Switzerland as a not-for-profit organization, meaning it does not pay taxes on any of its profits.

According to FIFA’s Financial Report, under Swiss Civil Code, FIFA’s objective as a non-profit is “to improve the game of (soccer) constantly and promote it globally, particularly through youth and development programmes.”

Drilling down into the numbers, only 14 percent of FIFA’s total expenses in 2013 — or $183 million — was spent on what’s labeled “Development-related” expenses according to this report. Conversely, the majority of its expenses — 58 percent — was spent on preparation for the 2014 FIFA World Cup and other FIFA events that produce its revenue.

FIFA’s 2013 Financial Report — which reads like a marketing pamphlet — can be found here.

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