Applying the Framework: Case Study No. 4 — FIFA Forward Enterprise

Introduction

The eventual decision on FIFA Forward Enterprise may reshape not only FIFA’s commercial structure, but the relationship between its competitions, its governance responsibilities and the development of football worldwide for decades to come.

FIFA announced its intention to create a company bringing together the commercial and event activities associated with its principal competitions. External investors would reportedly invest up to US$4.2 billion for a minority interest in a business valued at approximately US$20 billion.

The proposal could provide immediate capital, build commercial capability and increase funding for FIFA’s 211 Member Associations. It could also transfer part of the future economic value of FIFA’s principal competitions to private investors.

This is more than an ordinary commercial transaction. FIFA’s competitions (or more accurately, the FIFA World Cup™) generate most of the income used to fund its development programmes, institutional operations and wider competition portfolio. A decision affecting their future value affects FIFA’s entire operating model.

FIFA performs two intrinsically connected roles. As world football’s governing body, it establishes and enforces regulations, oversees the international competition calendar and supports football governance and development through its Member Associations and regional confederations. As an Event Owner, it creates and delivers the competitions that generate most of the income required to fulfil those responsibilities. FIFA’s institutional model depends on both roles remaining connected.

This case study applies the framework established in Power, Legitimacy and the Illusion of Control in Sport. It considers the distinction between formal authority, practical control and institutional legitimacy where FIFA proposes to transfer commercial and event operations into a separately financed company. FIFA may be able to delegate functions and retain majority ownership. It cannot assume that legitimacy transfers with those functions, or that formal ownership alone preserves effective control.

FFE therefore raises a question beyond the ownership of commercial rights. If the commercial and event activities of FIFA’s principal competitions move into a separately financed company, how will the connection between FIFA’s income-generating events and its wider responsibilities to global football be preserved?

Commercial negotiations are normally confidential, but the discussion is being played out with much public outcry and scrutiny. The real issue is whether those responsible for approving the proposal have enough information to understand what they are approving, why this structure has been selected and what its long-term consequences may be.

Good governance is not measured by how much information reaches the newspapers. It is measured by whether the people making the decision understand the decision they are making.

1. What Problem Is FIFA Trying to Solve?

FIFA has a genuine commercial problem. Its long-term financial model depends heavily on the men’s World Cup, held once every four years. Regional confederations benefit from recurring club and national-team competitions, while FIFA has fewer mature commercial products generating substantial income between World Cups.

There is a legitimate case for developing stronger standalone products, creating more regular income and improving the commercial performance of competitions beyond the men’s World Cup.

The issue is whether selling an interest in the future value of FIFA’s principal competition portfolio is the right way to achieve this.

FIFA’s events are its principal sources of income. External investment may help them grow, but investors will expect a return. Part of the value they generate will flow to investors rather than remain within FIFA and football.

The relevant test is not how much capital FIFA receives at the start. It is whether the proposed structure leaves FIFA and football better off over the full life of the investment.

2. What Is Actually Being Proposed?

The original reporting and FIFA’s subsequent explanation do not describe the position of Member Associations in the same way.

The Times reported on 28 July that FIFA’s 211 Member Associations would collectively receive approximately 20 per cent of FIFA Forward Enterprise through individual, tradeable interests.

FIFA’s subsequent statement describes a different structure. FIFA would retain control of FFE, while external investors would purchase minority, non-controlling interests. Member Associations could apply for up to US$20 million in optional one-off funding through a separate Fast-Forward programme, alongside increased FIFA Forward funding.

Reuters, the Associated Press and the Financial Times have since broadly reported that second structure: investors would acquire interests in FFE, while Member Associations would receive funding rather than shares.

The distinction matters. A shareholder owns an asset whose value depends on the company’s future performance. A recipient of funding receives money but has no continuing economic interest in the company.

One point in the reported figures requires particular explanation:

FIFA has reportedly offered each of its 211 Member Associations an initial payment of $20 million, with a total payment of $40 million if the proposal proceeds.

$20 million × 211 Member Associations = $4.22 billion initially.

$40 million × 211 Member Associations = $8.44 billion in total.

The initial distribution therefore appears broadly equivalent to the previously reported $4.2 billion external investment. The source, timing and conditions of the further $4.22 billion have not been clearly explained. Decision-makers need to understand whether that second payment would come from additional investment, FIFA reserves, FFE’s future earnings or some other source—and what obligations would attach to it.

They also need a clear account of:

• the company being created;
• the activities and rights being transferred;
• the ownership structure and investor rights;
• what Member Associations would receive;
• where that funding would come from; and
• what FIFA would retain.

That should include whether existing global and competition-specific broadcast, sponsorship, licensing, hospitality and ticketing agreements will remain with FIFA, transfer to FFE or be managed by FFE on FIFA’s behalf. These rights are currently packaged differently across competitions, territories and commercial cycles, often with category exclusivity and operational obligations. Decision-makers should therefore know whether FIFA or FFE will package and tender future rights, select and contract commercial partners and providers, and which decisions will remain subject to FIFA approval.

Without that information, the proposal cannot be assessed properly.

3. What Is Economically and Institutionally at Stake?

The assets supporting FIFA Forward Enterprise are FIFA’s principal competitions and the income they generate. They provide the financial foundation for FIFA’s wider responsibilities.

This creates two separate tests.

The first is economic.

The proposal must generate enough additional value to compensate for the share of future income transferred to investors. Higher revenue alone would not demonstrate success if a significant part of that increase were paid outside football.

Decision-makers must understand the valuation, investor return, operating costs and assumptions about future broadcasting, sponsorship, ticketing and licensing income. They also need to know how the arrangement performs if growth is lower than forecast.

That assessment should also consider FIFA’s existing commercial partners. Their long-term investment depends not only on the reach of FIFA’s competitions, but on confidence in FIFA’s governance, independence and reputation. Those relationships will need to be managed carefully: if leading partners withdraw or reduce their investment, the financial consequences will be felt not only by FIFA, but by the football development programmes that depend on its income.

This also reflects the principle established in Consistency, Trust, and Forward Stability in Global Sport Governance that financial stability is part of institutional stewardship. If FIFA’s principal revenue-generating assets are weakened, the consequences will extend beyond FIFA itself to its Member Associations, regional confederations and the development of football worldwide.

The second test is institutional.

The value of FIFA’s competitions is shaped by decisions about their size and frequency, the selection of hosts, the international calendar, qualification structures, ticketing and the commercial obligations imposed on hosts and Local Entities.

External investors will have a financial interest in those decisions. FIFA must therefore define clearly which matters remain exclusively within its sporting and institutional authority.

Majority ownership is not enough on its own. FIFA must retain the practical ability to make decisions in the interests of football, including decisions that may not maximise the value of the company.

A high financial return cannot compensate for weakened institutional independence. Formal control cannot compensate for poor economics. The proposal must pass both tests.

4. Who Developed the Proposal and Who Must Approve It?

FIFA’s administration may properly develop proposals concerning the commercial future of its competitions. The governance issue is how responsibility has been divided between the FIFA President, the Secretary General and administration, the FIFA Council and the FIFA Congress.

Decision-makers should know:

• who authorised and led the development of the proposal;
• what mandate was provided;
• what oversight the FIFA Council exercised;
• what alternatives were considered;
• which elements require Council or Congress approval; and
• what commitments have already been made.

This matters because Member Associations have reportedly been invited to commit to the Fast-Forward programme before FIFA Forward Enterprise has received final approval.

Member Associations may also face a conflict between their responsibilities. They are being asked to consider a major change to FIFA’s structure while potentially receiving a substantial immediate financial benefit from its approval.

That benefit does not invalidate their decision, but the conflict must be recognised and managed. Member Associations must judge whether the proposal protects FIFA and football over the long term, not simply whether it provides more money now.

The approval process must remain a genuine decision. It should not become the endorsement of a transaction whose commercial terms, political support and financial distributions have already made rejection practically impossible.

The absence of consultation is no longer disputed by only one part of football. UEFA and its 55 Member Associations have unanimously rejected the proposal and agreed to boycott FIFA competitions if it proceeds. The AFC has stated that it was not consulted and received no detailed governance, financial or legal analysis. Concacaf has expressed concern about the lack of due process, while CAF has called an Executive Committee meeting to assess the proposal.

These reactions demonstrate the institutional consequences of developing a proposal of this scale without first securing the understanding and involvement of the confederations through which much of world football is organised. The issue is no longer simply whether FIFA has the formal authority to establish FFE. It is whether the proposal can retain institutional legitimacy and commercial value if significant parts of the football system refuse to participate.

5. What Decision-Makers Must Be Able to Establish

Before deciding whether to approve FIFA Forward Enterprise, decision-makers should be able to establish six things.

The transaction is clearly defined

• They should know what company is being created, what will move into it, who will own it and what rights each shareholder will receive. They must also know whether Member Associations will be shareholders, recipients of funding or both.

The economics are demonstrated

• The valuation, investor return and assumptions supporting future growth should be clear. The analysis must show the effect on FIFA’s income over time, including what happens if the expected growth is not achieved.

The future business and development model is clear

• Member Associations should understand how FIFA will operate and fund its responsibilities once FFE is established. That includes how revenue, costs, profits and distributions will flow between FFE and FIFA; which activities will be funded by each organisation; and what income FIFA will retain to finance its governing, regulatory, development and competition responsibilities.
• The proposal should also explain what development funding will be guaranteed, how Member Associations and regional confederations will qualify for and access it, who will approve distributions and what happens if FFE underperforms or investor returns place pressure on the money available for development.
• What business model will FIFA operate after FFE is established, and how will that model preserve a clear, reliable and accessible flow of funding from FIFA’s principal competitions to football development through its Member Associations and regional confederations?

FIFA’s independence is protected

• The governing documents and shareholder agreements must preserve FIFA’s independent authority over sporting, regulatory, hosting and development decisions. The matters reserved to FIFA and any matters requiring investor consent should be explicit.

The approval process is valid

• The roles of the President, administration, Council and Congress must be clear. Decision-makers should know what has already been negotiated, what remains conditional and whether previous commitments could restrict the decision still to be taken.

Long-term safeguards are enforceable

• The proposal must address conflicts of interest, investor exit, future sales of shares, additional capital requirements and commercial underperformance. FIFA must also understand whether it could change, buy back or end the arrangement and at what cost.

These are not demands for every commercial detail to be published. They are the minimum matters the responsible decision-makers should understand before approval.

Conclusion

FIFA has a legitimate reason to strengthen its commercial model. External capital and expertise may help it develop more regular sources of income and increase funding across world football.

But FIFA Forward Enterprise concerns the competitions generating most of FIFA’s revenue. It may transfer part of their future economic value to private investors and place external financial interests alongside decisions FIFA must continue to make independently.

Decision-makers therefore need to know what FIFA is transferring, what investors will receive, what the arrangement will cost over time and how FIFA’s authority will be protected.

They must also be satisfied that the proposal has received proper oversight and is being presented for approval before financial or political commitments make that approval a formality.

UEFA’s decision to boycott FIFA competitions if the proposal is approved makes the consequences immediate rather than theoretical. A commercial vehicle built around FIFA’s competitions cannot retain its assumed value if leading national teams, competitions, audiences and commercial markets are removed from it. The governance process is therefore not separate from the commercial case. It is now one of the principal factors determining whether that commercial case remains viable.

Where a transaction may reshape the future of an institution, governance must precede the transaction rather than follow it.

This is a fast-moving story. As it develops, we will continue to map the emerging issues against the existing body of work in our Thinking Papers Library and update this case study where appropriate.

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