A Better FIFA Won’t Solve Football’s Ills

Authors: Stuart RussellMatt Andrews and Douglas Barrios

Recent accusations of corruption at the Fédération Internationale de Football Association (FIFA) are, unfortunately, entirely unsurprising. Allegations of bad governance, bribery and fraud have surrounded the organization for years, but repeated calls for reform have generated limited change. While FIFA needs reform, many of the recent calls for change seem excessively narrow when one considers that the organization is only marginally important in the general governance of football (or soccer). One needs to look beyond FIFA to seriously correct the governance problems plaguing football and sports more generally.

At the most basic level, governance is about the exercise of authority by some agents on behalf of others to affect a certain result or achieve a particular impact. Football governance is complex. It involves many different authorizing agents distributed across multiple levels of government or parts of society, acting on behalf of different groups and with different ends in mind. Besides supranational entities like FIFA, there are many other authorizing agents: national entities (central governments and national football organizations), regional and municipal governments, football clubs and teams, associated sports-related firms (broadcasting corporations and sponsoring businesses), and more.

Improving football governance requires recognizing this complexity, which has implications for how we think of the calls to reform FIFA. First, we need to recognize that FIFA does have some authority in the sport and that the organization can be better structured to exercise that authority. Second, we need to acknowledge that FIFA’s actual power is rather limited and many of the governance ills in the game require reforms in other jurisdictions and entities. Third, we should accept the need to carefully re-examine the roles of different governance agents, especially more important, but lower-profile authorizing agents like national and municipal governments.

FIFA’s limitations
FIFA’s limits become plain when one scrutinizes the organization's role and the tools at its disposal. To start, one might assume that FIFA controls the rules of football, but these standards are actually determined by the International Football Association Board (IFAB), an organization in which FIFA possesses some, but not complete, influence. One might also think that FIFA provides money to build the sport across the globe, especially in poor and emerging countries. However, FIFA’s Goal and Financial Assistance programs are actually quite limited in size and seem to be used less for large scale development and more as mechanisms for the FIFA leadership – and President Sepp Blatter in particular – to consolidate power. FIFA doles out financial assistance in return for pledges of support and votes in internal elections. The formula is simple pork-barrel politics, used by politicians all over the world to mobilize support, and seems to have been ineffective for actually developing the game.

The most important and obvious authorizing mechanism FIFA has is the power to award the rights to host the FIFA World Cup. However, despite the glitz and glamor that this mega-event attracts, the revenues FIFA derives from its premier championship pale in comparison to revenues in other parts of the football world.

During the period from 2011 to 2014, FIFA reported revenues of about $1.4 billion a year, with about 70% of these revenues flowing directly from the 2014 Brazil World Cup. In contrast, Deloitte’s Sports Business Group reports that the top five leagues in Europe generated over $15 billion in revenues in 2013/14. Likewise, the revenues of just the top three richest clubs in the 2013/2014 season (Real Madrid, Manchester United, and Bayern Munich) sum to more than the annual revenues of FIFA. If leveraged properly, the financial influence of Europe’s top leagues and clubs would clearly dwarf that of FIFA. The power, influence and authority of these leagues and their richest clubs are arguably much more important than that of FIFA.

Of course, FIFA’s limited authority shouldn’t undermine the public’s calls for change within the institution. This is especially important when one notes how much soft and manipulative power the organization seems to have had in the past. European leagues have not stood up as aggressively against FIFA as one might have expected, and national governments in Brazil and South Africa accepted a range of questionable demands from FIFA in order to get rights to host the World Cup. In many ways, FIFA has proved more effective at forcing governments to suspend laws and re-allocate resources than entities like the International Monetary Fund.

Given this, it is necessary to clarify the nature of FIFA as an authorizing agent in sports governance and ensure that it operates in a transparent and accountable manner. Right now, the organization operates, formally, as an “association” under Swiss law, but it acts in a de facto sense as an informal country club of elite soccer executives with minimal accountability. One way to fight backroom informalities would be to officially transform FIFA into a private business. If FIFA acted like a firm, the transparency demands of the market could force FIFA to become more accountable. Alternatively, FIFA could become quasi-governmental organization like the World Doping Agency, an institution partially composed of national governments. An intergovernmental structure could provide countries with direct oversight of the group’s actions.

Governments must do more
While these changes are needed, it is clear that reforms to the governance of football shouldn’t be limited to FIFA only. Put another way, if FIFA possesses limited authority over football, then which authorizing agents are actually relevant?

National governments play an important role, crafting sports-specific policies related to the incorporation of clubs and the regulation of leagues. Moreover, they enjoy broad authority over a range of policy domains that aren’t sports-specific but are still crucial for the sector to function. These include financing transportation systems, regulating the financial sector and labor markets, supervising television broadcasting, and structuring sound legal systems. Spectator sports behave like any other industry in that they rely heavily on the effectiveness of a national government’s authority in these arenas. When one compares FIFA’s authority with that of a national government, it is surprising that countries so often allow FIFA to bully or manipulate them. As agents possessing more significant direct authorities over football than FIFA itself, national governments are far too lenient with the organization and the sport in general. The ongoing American and Swiss investigations into FIFA’s corruption are steps in the right direction, but these inquiries should only be the beginning of national government efforts to use their clout and reform the system.

Regional or municipal administrations also play an important role with respect to the governance of football. At a most basic level, local governments control essential services like policing and utilities systems. These governments also control the use of land, perhaps the most important resource for sports in general (that are played in stadiums and on fields in front of crowds who need to be able to access the spaces via municipal infrastructure systems). Moreover, many municipalities either subsidize these stadiums or support the day-to-day operations of the teams in their jurisdiction. Some clubs, particularly those in central and eastern Europe or in the lower tiers of Europe’s bigger football leagues, operate like state-owned enterprises. Propped up by municipal assistance, these clubs face many of the problems associated with traditional state-owned enterprises: operating inefficiencies, corruption, and political interference. Municipal support often means these clubs have a soft budget constraint, given a reliance on city subsidies for financing rather than the private sector. Such dependence gives municipalities the opportunity to exert significant influence. Regional and municipal administrations need to be more strategic about how they use the influence of these authorizing mechanisms to control corruption and fight fraud in football.

Perhaps the most important lesson to be learned from the ongoing FIFA scandal is that football – and sports in general – has been given special treatment for too long. The Economist correctly diagnosed the problem in a recent article, observing that

Too often the authorities have shared the misconception that corruption in sport is essentially benign. Worried about appearing killjoys, they have let it be.

There is significant room for improvement amongst the many authorizing agents in football governance. Furthermore, international focus on the emerging FIFA scandal has masked ways in which other agents can effect positive change. National governments should crackdown on corruption in football just as they would in any other industry. As the American and Swiss governments have started to do, they should leverage their control of financial, broadcasting, and legal systems to improve the sector. Likewise, regional and municipal governments should consider ways to leverage the authorizing mechanisms under their control to reform football. Given the reliance of European clubs on local government support, these administrations have the power to force real reforms. Football and sports more broadly have many problems, only some of which can be solved through changes within FIFA. As for the rest, other authorizing agents – like national and municipal governments – ought to stop playing around and take the game of football more seriously.

This research is part of an ongoing collaboration with the International Centre for Sport Security (ICSS). This blog highlights some of the findings of this work.