To coincide with the FIFA presidential elections, euronews has an in-depth report on how in 2015 world football’s embattled governing body plunged into the worst corruption crisis in its 111-year history.
We also examine how FIFA makes its millions to become the sporting world’s richest such organisation.
How FIFA works
FIFA’s mission statement is simple: ‘Develop the Game, Touch the World, Build a Better Future’.
As of 2016 there are 209 members to help achieve that mission, a bigger membership than the United Nations.
To be eligible for FIFA membership, the national associations and federations first have to belong to one of the six continental confederations.
Those are UEFA, for Europe, CAF which covers Africa, CONCACAF for North America, Central America and the Caribbean, the AFC for Asia and Australia, CONMEBOL is the confederation for South America and OFC covers the Oceania nations.
A total of 209 members from these confederations form the FIFA Congress – world football’s parliament, which is the supreme and legislative body of FIFA.
It makes decisions relating to the governing statutes, the acceptance of new national associations, holds elections – most notably for the FIFA presidency – and since 2011 has voted on which country hosts the World Cup.
Each member association gets one vote, as well as an equal slice of the FIFA revenue pie regardless of its size and footballing might.
It is a democratic principle, but one that many argue increases the vulnerability to corruption from bribery as it gives smaller countries over sized influence.
A vote from the tiny Carribean island of Montserrat with a population of around 5,000 people weighs exactly the same as a vote from football powerhouse Germany.
Above the congress is the FIFA executive committee – the top brass – who decide on the organisation of competitions and the development of football in general.
Where did the troubles begin?
During former President Joao Havelange’s 24 year reign there was always a whiff of corruption.
And according to Swiss court documents released in 2011, Havelange and his son-in-law Ricardo Teixeira – a former FIFA official and former president of the Brazilian football federation – pocketed millions of dollars in the 1990s from a marketing company in exchange for FIFA broadcasting rights.
But neither faced trial.
Havelange was president until 1998 when Sepp Blatter, his longtime secretary general and right hand man, took charge.
A culture of corruption was already there, but it was on Blatter’s watch that FIFA imploded.
An initial investigation into the suspicious awardings of the 2018 and 2022 World Cups was broadened by the FBI, with the help of Swiss authorities, to cover FIFA’s dodgy financial dealings dating back decades.
Football’s Mr 10 percent
It almost certainly wouldn’t have happened without Charles ‘Chuck’ Blazer – a corrupt former FIFA executive committee member turned FBI informant.
Once the sport’s No. 1 power broker in the United States, Blazer inhabited a world of private jets, famous friends, secret island getaways and offshore bank accounts.
He also had an $18,000 a month apartment at Trump Tower in New York, plus a $6,000 per month unit in the same building just for his pet cats to live in.
Over a 20 year period Blazer misappropriated tens of millions of dollars.
After failing to pay taxes for 10 years the FBI and the US tax authorities got their man and flipped him.
In 2011, football’s Mr 10 percent pleaded guilty to tax evasion, money laundering, racketeering and wire fraud.
He then agreed to blow the whistle on his FIFA bigwig buddies – notably disgraced former CONCACAF president Jack Warner. Warner was Blazer’s former boss and one of the most influential men in world football.
The 73-year-old Trinidadian conveniently resigned in 2011 amid corruption allegations, but was finally banned for life last year for violating the organisation’s code of ethics several times.
Warner allegedly bought the Caribbean Football Union rights for the 2010 and 2014 World Cups from FIFA for five percent of the true market value. That allowed him to make millions of dollars in profit when he sold them on.
He also allegedly accepted a $10 million bribe to vote for South Africa’s World Cup bid.
These are just drops in the Warner ocean.
Warner is said to have used his influence and exploited his official positions for personal gain and is now wanted by the US on corruption charges, but has – so far – avoided extradition.
Why the US?
So why would the US – which is far from football’s biggest supporter – head the charge against alleged FIFA corruption?
FIFA and its confederations make jaw-dropping sums of money by selling the marketing and media rights to the World Cup and other tournaments they organise.
Bribes and kickbacks paid to FIFA officials by marketing executives hoping to win contracts were sometimes organised during meetings in the US, and some of the money was transferred through US bank accounts.
As FBI Director James B Comey once explained, if corrupt members of an organisation use the US financial system, or even just use the country for shady meetings, the FBI and the US Department of Justice will act.
US officials are using the same RICO or Racketeer Influenced and Corrupt Organizations Act that then prosecutor Rudolph Giuliani used to shut down the heads of the five Mafia families in the 1980s.
In 2015 a total of 41 people and entities connected with FIFA were charged in the US.
And of the 24 Executive Committee members from 2010 when the Russia and Qatar World Cups were awarded, 12 have been accused of corruption, been exposed as being corrupt or are under investigation for wrongdoing.
That includes banned outgoing president Sepp Blatterand the man many thought would replace him – Michel Platini.
The finances of sport’s richest and most powerful governing body
For a ‘non-profit’ organisation FIFA generates a significant amount of profit.
Money wise FIFA does not have a long history, but it is a successful one.
In 2003, FIFA voluntarily began drawing up its financial statements in accordance with International Financial Reporting Standards, which at the time only applied to listed companies in Europe.
The Federation describes itself as an: “association of associations with a non-commercial, not for profit purpose”.
Most of FIFA’s activities take place in the “dollar-zone” so its balance sheet and income are drawn up in US dollars.
So, here is a breakdown of how FIFA has been doing since it started publishing its results.
In 2003 the governing body’s revenue was $575 million and it has been growing ever since. In 2009 FIFA earned its first billion, 2014 saw it reach $2 billion.
FIFA insists that almost 70 percent of its money goes back into football in the form of financial support, development programmes and funding of competitions.
FIFA’s most famous event is the World Cup and that is what brings in most of its revenue.
The 2014 World Cup in Brazil was a “big success”, FIFA says.
In cash terms the tournament generated total revenues of over $4.8 billion between 2011 to 2014.
How sponsorship works
There are three categories of FIFA sponsors.
In the top spots are FIFA’s Partners, limited to just six businesses, which benefit from the closest links with the organisation and can sponsor all the events.
Sony and Emirates have severed their ties with FIFA saying only that they would not renew their contracts beyond 2014.
The next level of sponsorship is time limited, covering just one FIFA World Cup and one FIFA Confederation Cup.
And the third category is called the National Supporters. That is tailored to sponsors with roots only in the country hosting the event.
What does the host nation get, apart from the glory?
Countries are in fierce competition to be chosen as the location for the most popular single sporting event in the world.
And winners have to pay all the costs of any infrastructure needed.
The World Cup in Brazil cost around $15 billion (13.6 billion euros).
Only $2 billion (1.81 billion euros) of that came from FIFA as the organisation says spending – for example on infrastructure – is not directly linked to the cost of the World Cup, and some of that money would have been spent by the country involved anyway.
Remember it’s a not-for-profit organisation, and it says it does not insist that countries putting on the event build stadiums. What it does is make sure the host follows certain basic guidelines, including being fully socially responsible, guaranteeing any newly built stadiums are environmentally friendly.
That social responsibility does not seem to include taxes.
As a not-for-profit organisation registered in Switzerland, FIFA is subject to Swiss income taxes according to the Swiss taxation rules that apply to associations. So FIFA is taxed on its taxable income – that is revenue minus expenditure.
Let’s see how that works in practise.
For the period from 2011 to 2014, revenue minus expenditure was $338 million (307 million euros) and FIFA paid $75 million (68 million euros) in taxes.
That was 22 percent of its profit, profit being the amount left after FIFA’s expenses.
But the tax it paid was only just over one percent of its total revenue during that four year period.
And the tax bill was just 1.5 percent of the World Cup revenue, which is the most profitable event linked to this non-profit organisation.
You would think that if the host country of the event was the source of that money for FIFA, that would be where it would pay tax. But it isn’t because FIFA enjoys tax-exempt status at the World Cup.
The organisation does not directly ask for that, but the wording of the bidding process for host countries requires “a comprehensive tax exemption to be given to FIFA and further parties involved in the hosting and staging of an event”.
Brazil’s Internal Revenue Service claimed – in a cautious estimate – that such exemptions could mean nearly $250 million (227 million euros) of lost revenue for Brazil.
With all that in mind, the presidential elections could not have come soon enough as FIFA looks to rebuild its battered reputation.