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Unformatted text preview: 61st FIFA Congress FIFA Financial Report 2010 Zurich, 31 May and 1 June 2011 Foreword Facts & Figures 2007-2010 Facts & Figures 2010 2011-2014 Period Special Topics Annexe 2010 Annexe 2007-2010 Foreword FIFA President Chairman of the Finance Committee Chairman of the Internal Audit Committee 4 6 8 10 Facts & Figures 2007-2010 Overview Income statement Balance sheet Budget comparison 12 14 16 20 22 Facts & Figures 2010 Income statement 26 28 2011-2014 Period Detailed budget for 2012 30 32 Special Topics 2010 FIFA World Cup™ financial overview 2010 FIFA World Cup™ LOC 2010 FIFA World Cup™ Legacy Trust 2010 FIFA World Cup™ Ticketing 2010 FIFA World Cup™ 20 Centres for 2010 Development work 2007-2010 34 36 38 40 42 44 46 Annexe 2010 Consolidated financial statements 2010 Auditor’s report 50 52 106 Annexe 2007-2010 Consolidated financial statements 2007-2010 Auditor’s report Internal Audit Committee report 108 110 114 116 F O REW O RD Foreword “The first FIFA World Cup on African soil” DEAR MEMBERS OF THE INTERNATIONAL FOOTBALL FAMILY, This report marks the end of the 2007-2010 period, one that will be fondly remembered particularly because of the successful 2010 FIFA World Cup™, which was a historic event as it was the first to be held in Africa. FIFA placed its trust in South Africa right from the very start, and the organisers made sure that the event was a success by building a partnership that was always based on respect, efficiency and solidarity. The 2010 FIFA World Cup™ in South Africa was not just successful from a sporting point of view, however, as it also underlined the immense social and cultural power of our game. Thanks to the conservative and careful financial policies that we followed in the 20072010 period, we have been able to considerably increase our investment in football development programmes, and in 2010, we were able to give each member association a total extraordinary FAP payment of USD 550,000 and each confederation USD 5 million. I am delighted that even before this cycle drew to a close, we were able to conclude longterm contracts with many existing as well as new partners. This proves that although we are in challenging financial times, multinational companies still seek to identify with football in general and with the FIFA World Cup™ in particular. All of this fills me with great optimism and confidence for the period that lies ahead. I would like to thank you for your support, and I have no doubt that, together, we will meet all of the challenges that come our way. For the Game. For the World. Joseph S. Blatter FIFA President 7 Foreword “Revenue is being reinvested in football” DEAR SIR OR MADAM, The four-year 2007-2010 period, which was so important from a financial point of view, has now been completed and we can look back with a sense of pride upon the four challenging and exciting years that made up a financial period which was very successful for FIFA. Even as 2009 drew to a close, there were signs that the four-year cycle would not only be a sporting success but also leave FIFA on a solid financial footing. Ultimately, however, that depended on the FIFA World Cup™ in South Africa being a success and silencing the many critical voices that were heard right up until the end. We all know how it turned out: South Africa thrilled fans all around the world with an impeccably organised and colourful World Cup as well as with their incredible hospitality. The stadiums were virtually sold out (to 97% capacity) and the sponsors were delighted, which ensured that the tournament was a financial success for FIFA and the LOC. FIFA closed the 2007-2010 period with a result of USD 631 million and also increased its reserves to USD 1,280 million. In 2010, we once again managed to expand our football development programmes all around the world and we successfully organised all of our competitions. In addition, we also founded a legacy trust in South Africa that will work to ensure the sustainable promotion of football, education, health and humanitarian work. FIFA has contributed USD 100 million to this trust, USD 80 million of which will be invested directly in social community projects. The remaining USD 20 million was paid out to the South African Football Association (SAFA) before the World Cup to cover preparation costs and the construction of the association headquarters. Thanks to its solid reserves, FIFA will increase its investment in football development programmes over the upcoming 2011-2014 period from the USD 691 million that was in the budget for 2007-2010 to USD 800 million. Furthermore, given the healthy state of FIFA’s finances, plans have been put in place to ensure that a significant proportion of FIFA’s revenue is reinvested in football, which will generally lead to lower annual results than in previous years. I have no doubt whatsoever that these plans will be in your best interests, and I am looking forward to presenting this financial report in greater detail at the 61st FIFA Congress in Zurich. On behalf of the Finance Committee, I would like to thank you most sincerely for the trust you have placed in us as well as for the support you have given us over the last four years. Julio H. Grondona Chairman of the Finance Committee 9 Foreword “FIFA’s financial situation is very solid” DEAR SIR OR MADAM, With the four-year 2007-2010 period having now drawn to a close, the Internal Audit Committee regards FIFA’s financial situation as very solid and pleasing. The financial success of the last few years and the regular increase in FIFA’s reserves have resulted in FIFA becoming even more financially independent. In contrast to the previous four-year period, 2003-2006, FIFA did not need to borrow any money at all during the period that has just ended. In the space of just eight years, FIFA has been able to raise its reserves from negative figures to more than USD 1.2 billion by following a successful commercial strategy, strict cost control measures and a far-sighted, disciplined budgeting policy. Although FIFA’s financial success is still almost fully dependent upon the successful staging of the FIFA World Cup™, the World Cup risks are now partially covered and the financial risk has decreased thanks to this pleasing development. In addition, FIFA’s internal processes and controls have been continually expanded and improved in recent years. In doing so, FIFA has done more than is legally required and controls all financial, operative and compliance risks to our entire satisfaction. Dr Franco Carraro Chairman of the Internal Audit Committee 11 F ACT S & FI G UR E S 2 007- 2010 Facts & Figures 2007-2010 Overview Income statement and development of reserves This chapter provides an overview of the key annual figures for the 2007-2010 financial period and a comparison with the figures from the previous period (2003-2006). The following conclusions can be drawn for the 2007-2010 financial period: • The 2010 FIFA World Cup South Africa™ was a major success from both an organisational and a financial perspective. Overall, FIFA recorded a positive four-year result of USD 631 million. This result is based on total revenue of USD 4,189 million and total expenditure of USD 3,558 million. • FIFA has made it through the turbulence in the financial markets and the global financial crisis unscathed and has emerged in a stronger position. Revenue further increased compared to the previous four-year period as a result of higher income from the sale of rights, particularly in the areas of marketing and TV. • Expenditure also increased in comparison with the previous period for a number of reasons, including increased investment in football development projects worldwide, more prize money for the 2010 FIFA World Cup South Africa™ and an increase in the many association-specific tasks (e.g. legal matters). • Systematic cost control once again proved its worth and costs were almost in line with the expenses budget. • FIFA’s conservative investment policy and the broad diversification of investments protected it against losses and led to a positive financial result of USD 77 million. • The strategy of hedging foreign currencies also proved to be fully effective and protected FIFA against losses. • FIFA’s reserves were further strengthened and stood at USD 1,280 million on 31 December 2010. FIFA has reached a solid level of reserves. Having suf ficient reserves is of great importance to FIFA’s financial independence and to its ability to react to unexpected events. 14 Income statement 2007-2010 and 2003-2006 USD million 1,291 882 647 575 663 957 1,059 749 Revenue Total 2003-2006: 2,634* Total 2007-2010: 4,189 1,089 833 509 461 501 773 863 500 Expenses Total 2003-2006: 1,971* 138 114 Result 162 Total 2007-2010: 3,558 249 184 Total 2003-2006: 663* 2003 2004 196 202 49 2005 Total 2007-2010: 631 2006 2007 2008 2009 2010 * Conversion from CHF to USD using the year-end-rates of the respective years Development of reserves 2003-2010 USD million 1,280 1,061 902 617 643 2006 2007 350 208 76 Dec 2003 2004 2005 2008 2009 2010 15 Facts & Figures 2007-2010 Income statement Revenue 2007-2010 This chapter provides an overview of total revenue for the 2007-2010 financial period. The detailed financial statements are shown on pages 52-113 of the annexe. At the FIFA Congress in Zurich in 2007, it was decided that renowned international audit company KPMG would be asked to audit FIFA’s financial statements for the 2007-2010 financial period. KPMG’s report can be found in the annexe on page 114. The report from the Internal Audit Committee is on page 116. Total revenue amounted to USD 4,189 million, comprised of event-related revenue, other operating income and financial income. In terms of event-related revenue of USD 3,890 million, USD 2,448 million was attributable to the sale of television rights, of which the lion’s share – USD 2,408 million – were for the 2010 FIFA World Cup South Africa™. The second-biggest source of income was the sale of marketing rights worth USD 1,097 million, of which USD 1,072 million was generated by the FIFA World Cup™. The sale of hospitality rights generated USD 120 million and licensing rights USD 71 million. Other event-related income was made up primarily of revenue from the FIFA Club World Cup, which was matched, however, by comparable costs. The other operating income of USD 172 million was attributable in particular to income of USD 37 million from brand licensing and USD 33 million from the Quality Concept. FIFA’s financial income of USD 127 million was the result of the conservative investment strategy and was primarily made up of interest income of USD 51 million and foreign currency gains of USD 64 million. 16 Revenue 2007-2010 USD million Other operating income Financial income 14 Total Total 127 172 100% = USD 4,189 million 172 (4%) 127 (3%) Event-related revenue Total 3,890 FIFA Partners 17 Facts & Figures 2007-2010 Income statement Expenses 2007-2010 Total expenditure amounted to USD 3,558 million, arising from event-related expenses, development-related expenses, other operating expenses, football governance, exploitation of rights and financial expenses. In total, 70% of overall expenditure was invested directly in football. Of the event-related expenses of USD 1,713 million, USD 1,298 million was related to the 2010 FIFA World Cup South Africa™, with the majority spent on prize money (USD 348 million), the contribution to the LOC (USD 226 million) and TV production costs (USD 214 million). Further details on the World Cup can be found on page 36 of this report. The 23 other competitions organised by FIFA in the 2007-2010 period accounted for expenses of USD 415 million. FIFA spent a total of USD 794 million or 22% of overall expenditure on development projects, allocating USD 209 million to the Financial Assistance Programme (FAP), USD 120 million to the Goal Programme and USD 137 million for other development projects. In addition, in view of the financial success of the 2007-2010 period, FIFA made an extraordinary FAP payment of USD 144 million to all its member associations and the confederations (see also page 46). The other operating expenses of USD 707 million were mainly made up of personnel costs of USD 251 million and acquisition and production costs (e.g. FIFA.com and the extranet) of USD 78 million. Football governance expenses of USD 202 million covered the organisation of all committees and FIFA Congresses (USD 126 million), legal matters (USD 58 million) and football administration (USD 9 million). The USD 92 million for the exploitation of rights included the fulfilment of contractual obligations in relation to marketing, TV and media rights as well as licensing. Financial expenses of USD 50 million were primarily made up of foreign exchange losses, which were more than offset by corresponding foreign exchange gains. 18 Expenses 2007-2010 USD million Football governance Exploitation of rights Total 92 Financial expenses Total 50 202 100% = USD 3,558 million 202 (6%) 50 (1%) 92 (3%) 707 (20%) (48%) 794 (22%) Event-related expenses Other operating expenses Total 1,713 Development-related expenses Total 707 Goal Win in Africa with Africa Win in ... projects Total 71 53 794 19 Facts & Figures 2007-2010 Balance sheet Balance sheet and development of reserves As at 31 December 2010, FIFA’s balance sheet totalled USD 2,145 million, with reserves of USD 1,280 million. The increase in FIFA’s reserves arose from the annual result of USD 202 million and the change in the hedging reserves of USD 17 million. FIFA has thus reached a solid level of reserves. The increase in reserves is attributable to the financial success of the 2007-2010 financial period, particularly the staging of the 2010 FIFA World Cup South Africa™ according to plan, the realisation of the planned income and the effective management of the cost budget. Art. 69 of the FIFA Statutes states that: • The revenue and expenditure of FIFA shall be managed so that they balance out over the financial period; and • FIFA’s major duties in the future shall be guaranteed through the creation of reserves. FIFA met these statutory requirements in the 2007-2010 financial period. The creation of suf ficient reserves for the future is of major strategic importance to FIFA, particularly given its financial dependence on the FIFA World Cup™ and the fact that it is almost impossible to find cancellation insurance to cover an event of such magnitude. The specific amount of reserves required cannot, in principle, be given as an absolute value, but rather depends on FIFA’s overall costs and the associated operational risks during a four-year period. FIFA’s current reserves correspond to approximately one-third of total costs for the period. Having suf ficient reserves is of great importance to FIFA’s financial independence and to its ability to react to unexpected events. This has proved particularly vital in the light of the worldwide financial crisis. 20 Balance sheet as at 31 December 2010 USD million Assets 2,145 L iabili t i es a nd rese rv es Current assets 1,917 Current liabilities Non-current liabilities Non-current assets 228 Reserves 2,145 848 17 1,2 1 280 Development of reserves USD million 2010 result Change in hedge reserve 219 1300 202 +17 1,280 1200 1100 1,061 1000 900 800 700 600 500 400 300 200 100 31 Dec 2009 31 Dec 2010 21 Facts & Figures 2007-2010 Budget comparison Analysis of revenue for 2007-2010 FIFA’s accounting system is based on International Financial Reporting Standards (IFRS). As IFRS is not suitable for budgeting and daily cost control on account of its many technical rules and regulations, the budget is drawn up on a cash basis before being approved by the Congress. A transition from IFRS is necessary in order to enable the actual revenue to be compared with the cash budget. Hence, from the total amount of revenue according to IFRS, an adjustment was made for the revenue that could not be included for a budget comparison. The resultant cash-in component was then compared with the budget. In order to carry out a budget comparison, USD 384 million in non-cash items had to be adjusted from the overall revenue of USD 4,189 million for the 2007-2010 period, leading to a cash-in component of USD 3,805 million. The non-cash items consisted, in particular, of gross effects and value-in-kind revenue, which were not taken into account in the cash budget. The FIFA Congress passed a revenue budget of USD 3,200 million for the 2007-2010 period, which was exceeded by USD 605 million. This extra revenue is due to the very successful sale of TV and marketing rights of the 2010 FIFA World Cup South Africa™. This success underscores the huge appeal of FIFA’s flagship tournament. 22 Revenue 2007-2010: Components USD million 5000 4500 4,189 4000 384 3,805 3500 3000 2500 2000 1500 1000 500 Total revenue Non-cash items Cash-in component Revenue 2007-2010: Budget comparison USD million 5000 4500 4000 605 3,805 3500 3,200 3000 2500 2000 1500 1000 500 Cash-in component Budget 2007-2010 (approved by FIFA Congress) Positive deviation (i.e. over budget) 23 Facts & Figures 2007-2010 Budget comparison Analysis of expenses for 2007-2010 The basic principle described for the analysis of revenue also applies to expenditure. A transition from IFRS is necessary in order to enable the actual expenses to be compared with the cash budget. Hence, from the total amount of expenses according to IFRS, an adjustment was made for the expenses that could not be included for a budget comparison. The resultant cash-out component was then compared with the budget. In order to carry out a budget comparison, USD 493 million in non-cash items had to be adjusted from the overall expenses of USD 3,558 million for the 2007-2010 period, leading to a cash-out component of USD 3,065 million. The non-cash items consisted, in particular, of value-in-kind transactions, gross effects and depreciation. The FIFA Congress passed an expense budget of USD 2,960 million for the 20072010 period, which was exceeded by USD 105 million. The excess was attributable in particular to additional costs for the 2010 FIFA World Cup South Africa™, as well as additional investments in the area of development. 24 Expenses 2007-2010: Components USD million 5000 4500 4000 3,558 3500 493 3,065 3000 2500 2000 1500 1000 500 Total expenses Non-cash items Cash-out component Expenses 2007-2010: Budget comparison USD million 5000 4500 4000 3500 3000 3,065 2,960 105 Cash-out component Budget 2007-2010 (approved by FIFA Congress) Negative deviation (i.e. over budget) 2500 2000 1500 1000 500 25 F ACT S & FI G UR ES 2010 Facts & Figures 2010 Income statement Income statement for 2010 This chapter provides an overview of the income statement for 2010. The detailed financial statements are shown on pages 52 to 113 of the annexe. FIFA ended the year 2010 with a net result of USD 202 million. Revenue of USD 1,291 million was recorded, compared with expenses of USD 1,089 million. The revenue and expenses directly related to the FIFA World Cup™ are recognised in the income statement using the percentage-of-completion method according to IFRS. The revenue and expenses relating to additional FIFA events are listed in the income statement when the event takes place. FIFA’s competitions and the 2010 FIFA World Cup South Africa™ in particular had a significant impact on revenue and expenditure in the 2010 financial year. Revenue was comprised of event-related revenue of USD 1,179 million, other operating income of USD 58 million and financial income of USD 54 million. Expenses were comprised of event-related expenses of USD 430 million, developmentrelated expenses of USD 335 million, football governance of USD 58 million, exploitation of rights of USD 31 million, other operating expenses of USD 195 million and financial expenses of USD 40 million. Overall, 70% of total expenditure was invested directly in football. 28 Income statement 2010 USD million 1300 1,291 1,089 1200 1100 1000 900 800 700 600 500 400 300 200 202 100 Revenue Expenses Result Income statement 2010 USD million Revenue Event-related revenue Other operating income Financial income 1,291 1,179 58 54 Expenses Event-related expenses Development-related expenses Football governance Exploitation of rights Other operating expenses* Financial expenses 1,089 430 335 58 31 195 40 Result 202 * including expenses for personnel, depreciation and amortisation (shown separately in the consolidated income statement, p. 55) 29 2 0 1 1 - 2 0 1 4 PERI O D 2011-2014 Period Detailed budget for 2012 Revenue and investments in 2012 The detailed budget for 2012 has been approved by the FIFA Finance Committee and the FIFA Executive Committee and it now requires ratification from the 2011 FIFA Congress. The detailed budget for 2012 was part of the overall budget approved by the 2010 Congress for the 2011-2014 period. 32 Budget 2012: Revenue USD million 750 700 650 676 17 Other (e.g. licensing, hospitality) 600 550 500 Marketing rights 450 296 400 350 300 250 200 150 363 TV broadcasting rights 100 50 Revenue 2012 Budget 2012: Investments USD million 2014 FIFA World Cup™ Development 162 750 700 177 Goal 666 650 600 177 550 500 Exploitation of rights 24 450 400 162 Other FIFA events 350 300 Operational expenses and services 143 250 100 200 ’ ’ 24 150 100 60 ’ 100 50 143 Football governance 60 33 S P E CI AL TO PI CS Special Topics 2010 FIFA World Cup South Africa™ Financial overview The 2010 FIFA World Cup South Africa™ was a huge success, a fact that was reflected by its financial result. The figures shown here refer to FIFA’s income statement for the entire financial period from 2007 to 2010. The income statement for the 2010 FIFA World Cup Organising Committee South Africa is shown on page 39. The 2010 FIFA World Cup™ generated total revenue of USD 3,655 million for FIFA (excluding ticketing revenue) and incurred total expenses of USD 1,298 million. Total revenue for the 2010 FIFA World Cup™ comprised in particular income from the sale of TV rights of USD 2,408 million, marketing rights of USD 1,072 million, hospitality rights of USD 120 million and licensing rights of USD 55 million. USD 348 million of the total expenses was prize money for the participating member associations. FIFA made a direct financial contribution of USD 226 million to the Local Organising Committee. In addition, FIFA made available USD 100 million as a World Cup legacy for South Africa. Further details of this can be found on page 40. TV production accounted for USD 214 million. An expenses budget of USD 1,080 million had been drawn up and approved for the 2010 FIFA World Cup South Africa™. The total costs amounted to USD 1,298 million and included USD 187 million in non-cash items. The cash-relevant costs therefore came to a total of USD 1,111 million and exceeded the budget by USD 31 million (3%). 36 2010 FIFA World Cup™: Revenue USD million Revenue 2007-2010 TV rights – Europe – North America – Rest of the world Marketing rights Hospitality rights Licensing rights 3,655 2,408 1,289 211 908 1,072 120 55 2010 FIFA World Cup™: Expenses USD million Expenses 2007-2010 Contributions to the Local Organising Committee World Cup legacy for South Africa – South African Football Association (SAFA) – 2010 FIFA World Cup™ Legacy Trust Prize money Preparation cost payment to participating member associations Team lodging and travel Ticketing and accommodation services/IT solution TV production Benefit for clubs Refereeing matters Preliminary competitions Insurance Other (e.g. marketing costs, FIFA Fan Fest™, Kick-off Celebration Concert) 1,298 226 100 20 80 348 32 29 44 214 40 14 22 25 204 Prize money Winner Runners-up Third place Fourth place 5th-8th place (each) 9th-16th place (each) 17th-32nd place (each) Total 30 24 20 18 14 9 8 348 37 Special Topics 2010 FIFA World Cup South Africa™ 2010 FIFA World Cup Organising Committee South Africa The 2010 FIFA World Cup Organising Committee South Africa achieved a slight positive result*. The committee posted total income of USD 526 million, consisting of USD 226 million in direct support from FIFA (cash and value in kind) added to FIFA’s net revenue of USD 300 million from World Cup ticket sales, which FIFA passed on to the Organising Committee. FIFA has received audited financial reports on the transfer of funds to the Organising Committee for every year up to 2009. The Organising Committee’s operational expenses amounted to a total of USD 516 million. While the overall costs exceeded the original budget, these were covered by higher revenue from ticket sales, resulting in an anticipated profit of USD 10 million. In other words, FIFA covered all of the Organising Committee’s operational expenses. The majority of the costs were attributable to stadium operation (USD 260 million), personnel costs (USD 58 million), transport (USD 34 million) and information technology (USD 26 million). Stadium operation includes the costs for temporary structures (USD 89 million), power supply (USD 87 million), security (USD 22 million) and volunteers (USD 14 million), as well as payments totalling USD 23 million made to the government, the provinces and the venues for the rental of the stadiums. In addition to covering the operational expenses of the FIFA World Cup™, FIFA also made a substantial contribution to the 2010 FIFA World Cup™ Legacy Trust (see page 40). *Provisional figures: the LOC’s income statement assumes full recovery of open financial commitments from third parties, the final accounts remain subject to audit and have not been submitted to FIFA at the date of reporting. 38 Organising Committee World Cup 2010: Financial situation* USD million 600 500 526 516 400 300 200 100 10 Revenue Expenses Surplus *Provisional figures: the LOC’s income statement assumes full recovery of open financial commitments from third parties, the final accounts remain subject to audit and have not been submitted to FIFA at the date of reporting. Organising Committee World Cup 2010: Income statement* USD million Revenue 526 E xpenses 516 *Provisional figures: the LOC’s income statement assumes full recovery of open financial commitments from third parties, the final accounts remain subject to audit and have not been submitted to FIFA at the date of reporting. 39 Special Topics 2010 FIFA World Cup South Africa™ 2010 FIFA World Cup™ Legacy Trust By launching the 2010 FIFA World Cup™ Legacy Trust, FIFA kept its promise that South Africans would continue to benefit from the 2010 tournament long after the final whistle had been blown. The trust supports a variety of charitable initiatives, focusing on football development, education, health and humanitarian activities in South Africa. FIFA has contributed USD 100 million to the trust, USD 80 million of which will be invested directly in social community projects. The remaining USD 20 million was already paid out to the South African Football Association (SAFA) before the tournament to cover World Cup preparations and the construction of the association headquarters. For the first project financed by the trust, FIFA purchased 35 team buses and 52 vehicles which were handed over to SAFA on 13 December 2010 for its regional teams. The trust is managed by international audit firm Ernst & Young. The trust’s board is made up of representatives of FIFA, SAFA, the South African government and the private sector, who decide on how the funds are to be spent. All projects must be presented to the board for approval. The projects must fall into one of the following four areas: • Football: administration, development, coordination and promotion of amateur football • Education and development: education in accordance with the South African Schools Act • Health: medical care for communities in need, including prevention of HIV infection and other prevention and education programmes • Humanitarian work: help for people in need and combating poverty The 2010 FIFA World Cup™ Legacy Trust is one of several legacy initiatives launched by FIFA in connection with the 2010 FIFA World Cup™ since 2005, including in particular 20 Centres for 2010, Win in Africa with Africa, “11 for Health”, and the 2010 FIFA World Cup™ Ticket Fund. 1 T he Football for Hope Festival 2010 in the township of Alexandra, Johannesburg 2 Children drinking from the water fountain at the Football for Hope Centre in Namibia 3 Girls enjoying the game 4 A training session for young people in Namibia 5 Each Football for Hope Centre has an arti ficial turf pitch with solar-powered floodlights 40 1 2 3 4 5 41 Special Topics 2010 FIFA World Cup South Africa™ Ticketing The success of the 2010 FIFA World Cup South Africa™ was reflected in the attendance figures for the matches, with 2 ,967,349 of the 3 million available tickets sold, or 97.5%. This counts as a major success, particularly given the widespread concerns before the World Cup that the stadiums would be empty. About two-thirds of the tickets were bought by fans directly via FIFA.com, at the ticket centres in the Host Cities or at branches of First National Bank (FNB). International guests were also able to buy tickets as part of the tour operator programme, which included travel to South Africa, hotel accommodation and transport from the hotel to the stadium. About 5% of tickets were sold by participating member associations (PMAs) to their fans. The hospitality programme was directed in particular at corporate clients and was marketed independently by MATCH Hospitality AG. FIFA also wanted to make it possible for people without the financial means to buy tickets to attend a match. To this end, 120,000 free tickets were provided to the stadium construction workers and children through the Ticket Fund. A fourth ticket category was also introduced exclusively for South Africans, with tickets for group-stage matches costing ZAR 140 (approx. USD 20) in this category. 42 Total ticket sales As a percentage 100% = 2,967,349 Other (Category 1-3*, Category 4*, Premier, Wheelchair, Sky box) 7% Category 4 30% 28% 20% Category 1 15% Category 3 Category 2 * with obstructed view Ticket sales by customer group As a percentage 100% = 2,967,349 FIFA/LOC/ 21% Other 14% 65% 43 Special Topics 2010 FIFA World Cup South Africa™ 20 Centres for 2010 FIFA’s social responsibility comprises projects in various fields all around the world. One of the key projects related to the 2010 FIFA World Cup South Africa™ is the Official Campaign, 20 Centres for 2010, the aim of which is to effect social change by building 20 Football for Hope Centres in African communities. Many of these communities still face huge social problems, thus adding to the importance of the campaign. FIFA visits the communities and works together with a reputable local organisation to evaluate their requirements. The Football for Hope Centre and the programmes (e.g. HIV/Aids education, dyslexia, equality, environmental protection, the integration of disabled people) are then geared towards meeting these requirements. Following the opening of the first Football for Hope Centre in Khayelitsha (South Africa) in December 2009, three more centres in Kenya, Namibia and Mali were opened in 2010. Further centres in Lesotho, Rwanda, Ghana and four South African communities are currently being developed and constructed and will be completed in 2011. All 20 centres in Africa are due to open by 2012, supporting more than 70,000 girls and boys in their personal development. FIFA has guaranteed its ongoing support for a period of three to five years. In 2010, as part of the project to implement these Football for Hope Centres, FIFA provided financial resources for staf fing, development and construction and also to support local organisations. In addition to basic funding of the project to the tune of USD 4 million, FIFA donated its disciplinary fines from the FIFA World Cup™ preliminary and final competitions to the project. 1 A dental hygiene programme at the Football for Hope Centre in Namibia 2 Katutura Football for Hope Centre, Namibia 3 Mathare Football for Hope Centre, Kenya 4 Each Football for Hope Centre is equipped with a football turf pitch 5 A project leader works with a group of young people 44 1 2 3 4 5 45 Special Topics Develop the Game Development work 2007-2010 Although 2010 was mostly about the FIFA World Cup™ in South Africa, FIFA’s development activities continued apace and in line with FIFA’s major principles for the development of world football: financial assistance, infrastructure projects, providing international expertise and donating sporting equipment. Overall, during the 2007-2010 period, a total of USD 794 million was invested in development work. USD 209 million of this total was through the Financial Assistance Programme (FAP). The FAP is still one of FIFA’s main programmes, enabling many member associations around the world to finance development projects and football activities, and many more simply to carry out their work. Over the same period, the six confederations received financial assistance amounting to USD 60 million, which was used for activities in various areas. Furthermore, thanks to the financial success of the 2007-2010 period, FIFA also gave each member association a total extraordinary FAP payment of USD 550,000 as well as each confederation USD 5 million, which amounted to USD 144 million in total. The Goal Programme, which has total funds of USD 120 million, is the continuation of an initiative that was launched more than ten years ago and is still going from strength to strength, financing 504 football development projects all around the world. These projects have had a positive impact, most notably in terms of the development of technical infrastructure at associations, the improvement of technology and the strengthening of administrations. Educational and training activities have also continued at the same pace as last year with more than 400 courses and seminars held in various areas (training, refereeing, women’s football, grassroots football, futsal, beach soccer, etc.). As well as these educational activities, FIFA also organised more than 130 visits to provide advice, all with the objective of improving the general administration of football. 1 FIFA grassroots participant in Swaziland 2 Win in CONCACAF with CONCACAF coaching course in Honduras 3 Technical centre in the Cook Islands 4 Football turf pitch in the Bahamas 46 1 2 3 4 47 Special Topics Develop the Game Development work 2007-2010 The chapter that was the 2010 FIFA World Cup™ in South Africa may now be closed, but FIFA’s work for almost six years to ensure that the event had a positive long-term impact on the entire continent continued throughout 2010. The Win in Africa with Africa project, which had total funds of USD 71 million, is now drawing to a close four years after it was launched. The last coaching course has been held, the remaining associations have received a player registration and competition management system, and the final touches have been applied to football turf pitches. In short, this project will soon be completed. Since 2008, however, FIFA has also been working on other Win in… projects that have similar objectives and total funds of USD 53 million: a USD 8 million project has been launched in Oceania, for example, which is aimed at developing national leagues, media coverage, football marketing, futsal and a medical project in the region. In South America, another special project, again with a budget of USD 7 million, is focusing on the installation of football turf pitches for each CONMEBOL member association. Finally, a USD 10 million project has been devised for CONCACAF with three objectives: to develop national leagues, to develop youth football and to support the CIES programme of the University of the West Indies (UWI). Other development projects include the Football for Hope humanitarian programme, which has total funds of USD 34 million, the Refereeing Assistance Programme with USD 36 million, and additional projects such as courses. A look back at the 1995-1998 period reveals that there has, so far, been a 57-fold increase in FIFA’s total investment in development projects, which underlines the strategic and statutory importance of this area for FIFA. 48 Development-related expenses 2007-2010 USD million Total Financial Assistance Programme (FAP) Contributions to confederations Extraordinary FAP payments Goal Programme Win in Africa with Africa Win in … projects Other projects 794 209 60 144 120 71 53 137 Development-related expenses 1995-2010 USD million 1000 Factor of 57 900 800 794 700 144* 600 500 437 400 380 650 300 200 100 14 1995-1998 1999-2002 2003-2006 2007-2010 49 A NNE XE 2010 Annexe 2010 Consolidated financial statements according to International Financial Reporting Standards (IFRS) as at 31 December 2010 Page Consolidated income statement 55 Consolidated balance sheet 56 Consolidated cash flow statement 57 Consolidated statement of changes in reserves 58 Consolidated statement of comprehensive income 59 Notes to the consolidated financial statements Accounting policies 60 A. General information and statement of compliance 60 B. Basis of presentation 60 C. Basis of consolidation 61 D. Foreign currency translation 61 E. Income statement 62 F. Revenue recognition 62 G. 63 Development-related expenses 64 I. Operating lease payments 64 J. Financial expenses and financial income 64 K. Income taxes 65 L. Cash and cash equivalents 65 M. Derivatives 66 N. Hedging 66 O. Receivables 67 P. Property and equipment 67 Q. Intangible assets 68 R. Financial assets 68 S. Impairment 69 T. Payables 69 U. Interest-bearing liabilities 70 V. Employee benefit obligations 70 W. Provisions 70 X. Reserves 71 Y. 52 Event-related expenses H. Use of estimates and judgments 71 Notes to the consolidated income statement 72 1. Revenue from television broadcasting rights 72 2. Revenue from marketing rights 73 3. Revenue from licensing rights 74 4. Revenue from hospitality rights 74 5. Other event-related revenue 75 6. Event-related expenses 76 7. Other operating income 79 8. Development-related expenses 79 9. Football governance 82 10. Exploitation of rights 83 11. Personnel expenses 83 12. Other operating expenses 87 13. Financial income 87 14. Financial expenses 88 15. Income taxes 88 Notes to the consolidated balance sheet 89 16. Cash and cash equivalents 89 17. 89 Receivables 18. Prepaid expenses and accrued income 90 19. Property and equipment 91 20. Intangible assets 92 21. Financial assets 93 22. Payables 94 23. Accrued expenses and deferred income 94 24. Provisions 95 25. Reserves 96 53 Annexe 2010 Other disclosures 97 26. Financial risk management 97 27. Hedging activities and derivative financial instruments 101 28. Legal matters and contingent liabilities 102 29. Capital commitments 102 30. Contingent revenue 102 31. Operating leases 103 32. Related-party transactions 103 33. Consolidated subsidiaries 105 34. Post-balance-sheet events 105 These consolidated financial statements are published in English, German, French and Spanish. If there is any divergence in the wording, the English original text is authoritative. 54 Consolidated income statement in TUSD Note 2010 2009 Revenue from television broadcasting rights 1 717,978 649,957 Revenue from marketing rights 2 342,936 277,266 Revenue from licensing rights 3 26,100 10,184 Revenue from hospitality rights 4 40,000 40,500 Other event-related revenue 5 52,215 43,843 1,179,229 1,021,750 Event-related revenue Total event-related revenue Event-related expenses FIFA World Cup™ expenses 6 –345,269 –316,834 Other FIFA event expenses 6 –84,174 –139,223 –429,443 –456,057 749,786 565,693 Total event-related expenses Event-related gross result Other operating income 7 57,681 22,070 Development-related expenses 8 –335,067 –172,415 Football governance 9 –57,966 –50,179 Exploitation of rights 10 –31,040 –26,142 Personnel expenses 11 –77,433 –63,080 19-20 –13,471 –14,187 12 –103,858 –79,259 188,632 182,501 Depreciation and amortisation Other operating expenses Operating result before financial items Financial income 13 54,066 15,630 Financial expenses 14 –39,859 –926 202,839 197,205 –893 –789 201,946 196,416 Result before taxes Income taxes Net result for the year 15 55 Annexe 2010 Consolidated balance sheet in TUSD Note 31 Dec 2010 31 Dec 2009 Cash and cash equivalents 16 1,609,436 1,447,577 Receivables 17 218,039 260,258 Derivative financial assets 27 19,344 22,109 Financial assets 21 30,173 46,407 Prepaid expenses and accrued income 18 39,842 85,426 Assets Current assets 1,916,834 1,861,777 Property and equipment 19 189,244 200,337 Intangible assets 20 1,084 1,625 Derivative financial assets 27 9,734 0 Financial assets 21 40,041 242,003 2,144,805 Total assets 27,909 227,971 Non-current assets 2,103,780 Liabilities and reserves Payables 22 179,485 55,633 Income tax liabilities 15 659 710 Derivative financial liabilities 27 0 12,906 Accrued expenses and deferred income 23 667,709 960,856 847,853 1,030,105 16,816 12,595 16,816 12,595 864,669 1,042,700 Current liabilities Provisions 24 Non-current liabilities Total liabilities Association capital 25 4,104 4,104 Hedging reserves 27 26,338 9,203 –141 –116 1,047,889 851,473 Currency translation adjustment Restricted reserves Net result for the year 25 196,416 1,280,136 1,061,080 Total liabilities and reserves 56 201,946 Reserves 2,144,805 2,103,780 Consolidated cash flow statement in TUSD Note 2009 201,946 Net result for the year 2010 196,416 Depreciation and amortisation 19-20 13,471 14,187 Net financial result 13-14 –14,207 –14,704 4,742 –4,457 893 789 Decrease in receivables 42,219 15,277 Decrease in prepaid expenses and accrued income 45,760 6,498 123,850 12,558 –2,741 0 –293,146 296,802 4,221 268 –944 –1,002 126,064 522,632 Other non-cash items Income taxes 15 Increase in payables Purchase of foreign currency hedging derivatives (Decrease)/Increase in accrued expenses and deferred income Increase in provisions 24 Income taxes paid Net cash provided by operating activities Purchase of property and equipment 19 –1,849 –513 Investment in financial assets 21 –21,750 –12,320 Repayments and sale of financial assets 21 49,457 219,202 Interest received 13 5,759 7,227 42 42 31,659 213,638 –427 –508 –427 –508 157,296 735,762 1,447,577 706,358 4,563 5,457 1,609,436 1,447,577 Income from investments in financial assets Net cash provided by investing activities Interest paid 14 Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents as at 1 January 16 Effect of exchange rate fluctuations Cash and cash equivalents as at 31 December 16 57 Annexe 2010 Consolidated statement of changes in reserves Association capital Hedging reserves Restricted reserves Currency translation adjustment Total 4,104 46,736 851,473 –103 902,210 Effective portion of changes in fair value of hedging instruments 0 –11,544 0 0 –11,544 Net change in fair value of hedging instruments transferred to income statement 0 –25,989 0 0 –25,989 Currency translation adjustment 0 0 0 –13 –13 Total other comprehensive income 0 –37,533 0 –13 –37,546 Net result for the year 2009 0 0 196,416 0 196,416 Total comprehensive income for the year 0 –37,533 196,416 –13 158,870 4,104 9,203 1,047,889 –116 1,061,080 Association capital Hedging reserves Restricted reserves Currency translation adjustment Total 4,104 9,203 1,047,889 –116 1,061,080 Effective portion of changes in fair value of hedging instruments 0 26,338 0 0 26,338 Net change in fair value of hedging instruments transferred to income statement 0 –9,203 0 0 –9,203 Currency translation adjustment 0 0 0 –25 –25 Total other comprehensive income 0 17,135 0 –25 17,110 Net result for the year 2010 0 0 201,946 0 201,946 Total comprehensive income for the year 0 17,135 201,946 –25 219,056 4,104 26,338 1,249,835 –141 1,280,136 in TUSD Balance as at 1 January 2009 Balance as at 31 December 2009 in TUSD Balance as at 1 January 2010 Balance as at 31 December 2010 58 Consolidated statement of comprehensive income in TUSD 2010 2009 Effective portion of changes in fair value of hedging instruments 26,338 –11,544 Net change in fair value of hedging instruments transferred to income statement –9,203 –25,989 –25 –13 17,110 –37,546 Net result for the year 201,946 196,416 Total comprehensive income for the year 219,056 158,870 Other comprehensive income Currency translation adjustment Total other comprehensive income 59 Annexe 2010 Notes to the consolidated financial statements Accounting policies A. General information and statement of compliance Fédération Internationale de Football Association (FIFA), domiciled in Zurich, Switzerland, is an international non-governmental, non-profit organisation in the form of an association according to Swiss law. FIFA consists of 208 associations af filiated to six confederations. FIFA’s principal mission is to promote the game of association football in every way it deems fit. FIFA uses its profits, reserves and funds in pursuit of its principal mission. FIFA prepares the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Based on the FIFA Statutes, the financial period of FIFA is four years and begins on 1 January in the year following the final competition of the FIFA World Cup™. The reporting financial period therefore runs from 1 January 2007 until 31 December 2010. B. Basis of presentation The consolidated financial statements are presented in US dollars (USD). Until 31 December 2006, the financial statements were presented in Swiss francs (CHF). FIFA changed its functional currency to USD because the majority of revenues and expenses in the statutory financial period 2007–2010 are in USD. The consolidated financial statements are prepared on a historical cost basis, except that the following assets and liabilities are stated at fair value: derivative financial instruments and certain financial assets are classified as “at fair value through profit or loss”. Several new and revised standards and interpretations came into effect in 2010. None of the new or revised standards or interpretations had a significant influence on the financial statements. FIFA is currently assessing the potential impacts of the new and revised standards that will be effective from 1 January 2011 or later. FIFA does not expect the new and revised standards to have a significant effect on the group’s financial position. 60 C. Basis of consolidation The term “FIFA” is hereafter also used for the consolidated group, which represents FIFA and its subsidiaries. Subsidiaries are those enterprises that are controlled by FIFA. Control exists when FIFA has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commenced until the date that control ceased. The individual subsidiaries included in this consolidation are shown in Note 33. Intra-group balances and transactions and any unrealised gains arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. D. Foreign currency translation a) Foreign currency transactions and balances Transactions in foreign currencies are converted at the foreign exchange rate ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies on the balance sheet date are converted at the foreign exchange rate ruling on that date. Foreign exchange differences arising from conversion are recognised in the income statement. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are converted at the foreign exchange rate ruling on the dates the values were determined. b) Financial statements of foreign subsidiaries For FIFA’s foreign subsidiaries, assets and liabilities including fair value adjustments arising on consolidation are converted into USD at the foreign exchange rate ruling on the balance sheet date. The revenue and expenses of foreign subsidiaries are converted into USD on the average foreign exchange rates of the period. Exchange differences arising from conversion of the accounts of foreign subsidiaries are recognised directly in other comprehensive income. 61 Annexe 2010 The foreign exchange rates used are as follows (USD per unit): 31 Dec 2010 Average 2010 31 Dec 2009 Average 2009 1.0560 0.9505 0.9539 0.9079 EUR 1.3291 1.3443 1.4365 1.3858 GBP 1.5444 1.5517 1.6075 1.5470 CHF E. Income statement The consolidated income statement has the following elements: event-related revenue, event-related expenses, other operating income, development-related expenses and other expenses. This structure reflects FIFA’s objectives to improve the game of football constantly and promote it globally, particularly through youth and development programmes. Event-related revenue and expenses are directly related to the organisation and realisation of the FIFA World Cup™ and other FIFA events. For accounting purposes, FIFA defines other FIFA events as all other football events, such as the FIFA Women’s World Cup™, FIFA U-20 World Cup, FIFA U-17 World Cup, FIFA U-20 Women’s World Cup, FIFA U-17 Women’s World Cup, Olympic Football Tournaments, FIFA Futsal World Cup, FIFA Confederations Cup, FIFA Club World Cup, FIFA Beach Soccer World Cup, Blue Stars/FIFA Youth Cup, FIFA Interactive World Cup, etc. F. Revenue recognition Event-related revenue primarily relates to the sale of the following rights: • • • • Television broadcasting rights Marketing rights Hospitality rights Licensing rights Under these revenue-generating contracts, FIFA receives either fixed royalty payments or royalties in the form of guaranteed minimum payments plus additional sales-based payments (profit share). 62 Revenue directly related to the FIFA World Cup™ event is recognised in the income statement using the percentage-of-completion method, if it can be estimated reliably. The stage of completion of the FIFA World Cup™ event is assessed as incurred evenly over the project preparation period, which is four years. While this generally applies to fixed royalty and guaranteed minimum payments, additional sales-based revenue (profit share) is included in the percentage-of-completion method only when the amount is probable and can be measured reliably. Revenues from rendering of services are recognised in the accounting period in which the services are rendered. Revenue relating to other FIFA events is deferred during the preparation period and is recognised in the income statement when the event takes place. Ticket sales in connection with the 2010 FIFA World Cup South Africa™ and the FIFA Confederations Cup South Africa 2009 are not recognised, since the 2010 FIFA World Cup Organising Committee South Africa is the beneficiary of the related net revenue. FIFA receives value-in-kind revenue from several Commercial Af filiates. This value-in-kind revenue consists of pre-determined services and delivery of goods to be used in connection with the 2010 FIFA World Cup South Africa™ or other FIFA events. The revenue is recognised when the services/goods have been received and the equivalent costs are accounted for in the same period as an event-related expense. G. Event-related expenses Event-related expenses are the gross out flow of economic benefits that arise in the ordinary activity of organising an event. Since FIFA organises the FIFA World Cup™ event over a period of four years, expenses relating to the event are recognised based on the stage of completion of the event, as determined for event-related revenue recognition purposes. 63 Annexe 2010 During the four-year preparation period, differences between event-related expenses recognised and event-related expenses incurred are presented as event-related accrued expenses and deferred expenses respectively. Expenses relating to other FIFA events are deferred during the preparation period, consistent with the treatment of related revenues, and are recognised in the income statement in the period in which the event takes place. H. Development-related expenses FIFA gives financial assistance to member associations and confederations in return for past or future compliance with certain conditions relating to their activities. During the four-year period under review, FIFA is providing each member association and confederation with funds under the Financial Assistance Programme (FAP). The Goal Programme provides member associations with specific funding for tailor-made projects. The expenses are recorded in the income statement once FIFA has approved the project in question. For other development projects, expenses are recognised as incurred. I. Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the respective lease. J. 64 Operating lease payments Financial expenses and financial income Financial income comprises interest income from interest-bearing receivables and debt securities, foreign exchange gains, gains on derivatives that are not accounted for as hedging instruments and gains arising from a change in the fair value of financial assets designated at fair value through profit or loss. Financial expenses consist of interest on financial liabilities, foreign exchange losses, losses on derivatives not accounted for as hedging instruments and losses arising from a change in the fair value of financial assets designated at fair value through profit or loss. Interest income is recognised in the income statement using the effective interest rate method. Dividend income is recognised in the income statement on the date that the dividend is declared. K. Income taxes FIFA was established in the legal form of an association pursuant to articles 60ff. of the Swiss Civil Code. Pursuant to article 2 of its Statutes, FIFA’s objective is to improve the game of football constantly and promote it globally, particularly through youth and development programmes. FIFA is a non-profit organisation and is obliged to spend its reserves for this purpose. Income tax recognised in the income statement comprises current tax. FIFA is taxed in Switzerland according to the ordinary taxation rules applying to associations. The non-profit character of FIFA and the four-year accounting cycle are thereby taken into account. The subsidiaries are taxed according to the relevant tax legislation. Current tax is the expected tax payable on the taxable income for the year using ordinary tax rates applicable to an association or a corporation, respectively. L. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, post and bank accounts, as well as short-term deposits with an original maturity of 90 days or less. 65 Annexe 2010 M. Derivatives FIFA uses derivative financial instruments to hedge its exposure to foreign exchange rate risks arising from operating activities. FIFA does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Derivatives are initially recognised at fair value. Subsequent to initial recognition, all derivatives are also stated at fair value. Gains and losses on re-measurement of derivatives that do not qualify for hedge accounting are recognised in the income statement immediately. The fair value of forward exchange contracts is their market price at the balance sheet date, being the present value of the quoted forward price. N. Hedging Where a derivative financial instrument hedges the exposure to variability in future cash flows from highly probable forecast transactions, the effective part of any gain or loss on re-measurement of the hedging instrument is recognised directly in the hedging reserves. The ineffective part of any gain or loss is recognised in the income statement immediately. Gains or losses on a hedging instrument are reclassified from hedging reserves in the same period in which the hedged forecasted cash flows affect profit or loss. When a hedging instrument or hedge relationship is terminated but the hedged transaction is still expected to occur, the cumulative gain or loss recognised in hedging reserves remains in hedging reserves and is recognised in accordance with the above policy. If the hedged transaction is no longer expected to occur, the cumulative gain or loss recorded in hedging reserves is recognised in the income statement immediately. 66 O. Receivables Receivables from the sale of rights and other receivables are stated at amortised cost, which equals nominal value for short-term receivables less any allowance for doubtful debts. Allowances are made for specific known doubtful receivables. Accounts receivable and payable are offset and the net amount is presented in the balance sheet when FIFA has a legally enforceable right to offset the recognised amounts and the transactions are intended to be settled on a net basis. P. Property and equipment Property and equipment are stated at acquisition cost less accumulated depreciation and impairment losses. Where parts of an item of property and equipment have different useful lives, they are accounted for as separate items of property and equipment. Repairs and maintenance costs are recognised in the income statement as an expense as they are incurred. Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of property and equipment. Land is not depreciated. The estimated useful lives are as follows: Operational buildings Of fice and other equipment 20-50 years 3-20 years 67 Annexe 2010 Q. Intangible assets Intangible assets acquired by FIFA are stated at acquisition cost less accumulated amortisation and impairment losses. Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives unless lives are indefinite. The estimated useful lives are as follows: Film archive 10 years Expenditure on internally generated goodwill and brands is recognised in the income statement as an expense as it is incurred. R. Financial assets Financial assets comprise debt securities, equity securities and other receivables. Classification Loans and receivables are those created by FIFA when providing money or services to third parties. FIFA manages and evaluates the performance of its investments on a fair-value basis in accordance with its documented investment strategy. Therefore the investments are designated at fair value through profit or loss. Instruments include debt and equity securities. Recognition and measurement FIFA recognises marketable securities and other investments at fair value, including transaction costs in the case of financial assets or financial liabilities not measured at fair value through profit or loss on the settlement date (the date they are transferred to FIFA). Loans and receivables are recognised when FIFA becomes a party to the respective contract and has a legal right to receive cash or other considerations. Subsequent to initial recognition, all investments at fair value through profit or loss are measured at fair value. Any instrument that does not have a quoted market price in an active market and for which fair value cannot be reliably measured is classified as available for sale and stated at cost less impairment losses. 68 Loans and receivables are measured at amortised cost less impairment losses. Amortised cost is calculated using the effective interest rate method. Premiums and discounts, including initial transaction costs, are included in the carrying amount of the related asset and amortised based on the effective interest rate of the instrument. Allowances are made for specific known doubtful loans and receivables. Gains and losses on subsequent measurement Gains and losses arising from changes in the fair value of a financial asset at fair value through profit or loss as well as any impairment losses on loans and receivables are recognised in the income statement. Offsetting Financial assets and liabilities are offset and the net amount is reported in the balance sheet when FIFA has a legally enforceable right to offset the recognised amounts and the transactions are intended to be settled on a net basis. S. Impairment The carrying amounts of FIFA’s property and equipment, intangible assets, loans and other investments are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount, being the greater of its fair value less costs to sell and its value in use, is estimated. An impairment loss is recognised in the income statement whenever the carrying amount of an asset or its cash-generating unit exceeds the respective recoverable amount. An impairment loss is reversed if the impairment loss no longer exists and there has been a change in the estimates used to determine the recoverable amount. T. Payables Payables are stated at amortised cost, which equals nominal value for shortterm payables. 69 Annexe 2010 U. Interest-bearing liabilities Interest-bearing liabilities are recognised initially at fair value, less attributable transaction costs. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the borrowing term using the effective interest rate method. V. Employee benefit obligations FIFA has established a retirement benefit plan for all of its employees, which is maintained by an insurance company. The plan is funded by employee and employer contributions and has certain defined benefit characteristics. Accordingly, the plan is accounted for as a defined benefit plan. The financial impact of this plan on the consolidated financial statements is determined in accordance with the projected unit credit method. Any pension surplus is only recognised as an asset if the asset embodies future economic benefits that are actually available to FIFA in the form of refunds or reductions in future employer contributions. Actuarial gains and losses arising from periodic reassessments are recognised to the extent that they decrease or increase a pension deficit or pension surplus respectively, if and to the extent that they exceed 10% of the higher of the projected benefit obligations and the fair value of plan assets. The amount exceeding this “corridor” is amortised over the expected average remaining working lives of the employees participating in the plan. W. 70 Provisions A provision is recognised when FIFA has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time, value of money and, where appropriate, the risks specific to the liability. X. Reserves Reserves consist of association capital and restricted reserves, as well as hedging reserves and foreign currency translation reserves. As FIFA is an association, no dividends are paid. Based on article 69 of the FIFA Statutes, the revenue and expenditure of FIFA shall be managed so that they balance out over the financial period. FIFA’s major duties in the future shall be guaranteed through the creation of reserves. Such reserves are presented as restricted reserves in the balance sheet. In the event of the dissolution of FIFA, its funds shall not be distributed, but transferred to the supreme court of the country in which the headquarters are situated. The supreme court shall invest them in gilt-edged securities until the re-establishment of the federation. Y. Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: • Note 11 Personnel expenses: accounting estimates and judgments • Note 21 Financial assets: accounting estimates and judgments 71 Annexe 2010 Notes to the consolidated income statement 1 Revenue from television broadcasting rights in TUSD 2010 2009 – Europe 334,089 354,142 – Asia and North Africa 157,625 146,673 – South and Central America 85,528 83,550 – North America and the Caribbean 51,767 53,090 – Rest of the world 34,425 17,796 0 5,728 Revenue from television broadcasting rights – FIFA World Cup™ – Value-in-kind transactions – Other revenues 110,954 0 – Sales commission –59,244 –38,042 Total revenue from television broadcasting rights – FIFA World Cup™ 715,144 622,937 2,834 27,020 717,978 649,957 Other FIFA events Total revenue from television broadcasting rights Other revenues Other revenues contain the service revenues from broadcasters for the 2010 FIFA World Cup™ and the sale of 3D rights. This item includes also the revenue from public viewing licences, which will be donated by FIFA to the “20 Centres for 2010” initiative. Sales commission The broadcasting rights in certain countries, especially in part of Africa and part of Asia, are sold in cooperation with agencies. Other FIFA events The revenue from the television broadcasting rights for other FIFA events includes the revenue from the sale of television broadcasting rights and services offered to the broadcasters in connection with the FIFA U-20 Women’s World Cup Germany 2010 and the FIFA U-17 Women’s World Cup Trinidad & Tobago 2010. 72 2 Revenue from marketing rights in TUSD 2010 2009 148,500 148,500 98,175 76,528 8,333 8,333 Revenue from marketing rights – FIFA World Cup™ – FIFA Partners – FIFA World Cup Sponsors – National Supporters 7,034 0 – Value-in-kind transactions – FIFA Fan Fest™ 83,414 34,185 – Sales commission –4,967 –3,431 340,489 264,115 2,447 13,151 342,936 277,266 Total revenue from marketing rights – FIFA World Cup™ Other FIFA events Total revenue from marketing rights Value-in-kind transactions FIFA receives value-in-kind revenue from several Commercial Af filiates. This value-in-kind revenue consists of pre-determined services and delivery of goods to be used in connection with the 2010 FIFA World Cup South Africa™ or other FIFA events. The revenue is recognised when the services/goods have been received and the equivalent costs are accounted for in the same period as an event-related expense. In 2010, the value of the services or goods received amounted to TUSD 83,414. Other FIFA events The revenue from other FIFA events includes National Supporter payments in connection with the FIFA U-20 Women’s World Cup Germany 2010 and the FIFA U-17 Women’s World Cup Trinidad & Tobago 2010. The major part of these payments is transferred to the Local Organising Committees. The relevant costs are shown as event-related expenses (Note 6). 73 Annexe 2010 3 Revenue from licensing rights in TUSD 2010 2009 FIFA World Cup™ 24,542 8,769 Other FIFA events 1,558 1,415 26,100 10,184 Total revenue from licensing rights The revenue from licensing rights includes the minimum guarantee payments and additional royalty payments in connection with the sale of licensed products of the 2010 FIFA World Cup South Africa™. 4 Revenue from hospitality rights in TUSD 2010 2009 FIFA World Cup™ 40,000 40,000 Other FIFA events 0 500 40,000 40,500 Total revenue from hospitality rights The hospitality rights for the 2010 FIFA World Cup South Africa™ have been granted to MATCH Hospitality AG for USD 120 million. 74 5 Other event-related revenue in TUSD 2010 2009 38,661 37,425 923 3,753 1,105 2,243 Various event-related revenue 11,526 422 Total other event-related revenue 52,215 43,843 Revenue from the FIFA Club World Cup Match levies from qualifying competitions Penalties/appeals from qualifying competitions The FIFA Club World Cup was hosted by the United Arab Emirates Football A ssociation. FIFA appointed Dentsu as the exclusive promoter and producer of the event. Various event-related revenues include the revenue from the Tour Operator Programme of the 2010 FIFA World Cup South Africa™. 75 Annexe 2010 6 Event-related expenses in TUSD 2010 2009 FIFA World Cup™ 345,269 316,834 Other FIFA events 84,174 139,223 429,443 456,057 Total event-related expenses Expenses related to the 2010 FIFA World Cup™ in TUSD Contributions to the Local Organising Committee 2007-2010 226,500 Legacy for the South African Football Association (SAFA) 20,000 Legacy for the 2010 FIFA World Cup™ Legacy Trust 80,000 Prize money 348,000 Preparation cost payment to participating member associations 32,000 Team lodging and travel 29,164 Ticketing and accommodation services/IT solution 43,570 TV production 214,319 Benefit for clubs 40,000 Refereeing matters 14,083 Preliminary competitions 22,268 Insurance Other (e.g. marketing costs, FIFA Fan Fest™, Kick-off Celebration Concert) Total expenses related to the 2010 FIFA World Cup™ 76 24,940 203,136 1,297,980 The accumulated expenses incurred in connection with the 2010 FIFA World Cup South Africa™ amount to USD 1,298 million. The prize money paid out to the 32 participating member associations amounted to USD 348 million, of which the winner of the final received a total amount of USD 30 million. The 2010 FIFA World Cup Organising Committee South Africa received financial support from FIFA in the amount of USD 200 million in cash and USD 26.5 million value-inkind. In addition, the 2010 FIFA World Cup Organising Committee South Africa received the net ticketing revenue in the amount of more than USD 300 million. As part of the World Cup legacy for South Africa, the host association, the South African Football Asssociation (SAFA), received the amount of USD 20 million. Due to the success of the event, FIFA decided to contribute USD 80 million to the 2010 FIFA World Cup™ Legacy Trust, which will be established. TV production includes the cost for the production of the TV signal in the ten venues but also the costs of the International Broadcasting Centre, located in Soweto. For the first time, FIFA also paid a contribution to the clubs of the participating players. The clubs received USD 1,600 per player per day. Other expenses include marketing costs in connection with the FIFA World Cup™, other events such as the FIFA Fan Fest™ and the Kick-off Celebration Concert and travel and accommodation of the delegates. 77 Annexe 2010 Expenses related to other FIFA events in TUSD 2010 2009 FIFA Club World Cup UAE 2010 26,894 0 FIFA U-17 Women’s World Cup Trinidad & Tobago 2010 17,462 0 FIFA U-20 Women’s World Cup Germany 2010 21,211 0 2,526 0 89 44,494 0 42,759 Youth Olympic Football Tournaments Singapore 2010 FIFA Confederations Cup South Africa 2009 FIFA U-17 World Cup Nigeria 2009 FIFA Club World Cup UAE 2009 0 4,171 1,074 Blue Stars/FIFA Youth Cup 21,473 0 FIFA Beach Soccer World Cup Dubai 2009 29,513 908 FIFA U-20 World Cup Egypt 2009 1,038 Host Announcement/Bidding 2018/2022 FIFA World Cup™ 9,350 0 2014 FIFA World Cup Brazil™ 3,638 0 Other events 1,022 26 FIFA U-20 World Cup Canada 2007 0 1 FIFA Women’s World Cup China 2007™ 0 –12 FIFA Club World Cup Japan 2008 0 –33 FIFA Beach Soccer World Cup Marseille 2008 0 –41 Olympic Football Tournaments Beijing 2008 0 –104 FIFA Futsal World Cup Brazil 2008 0 –506 FIFA U-17 Women’s World Cup New Zealand 2008 0 –1,571 FIFA U-20 Women’s World Cup Chile 2008 0 –1,985 84,174 139,223 Total expenses related to other FIFA events The expenses for the other FIFA events are recognised in the year when the event takes place. The expenses related to other FIFA events include the financial support to the Local Organising Committee, travel and accommodation costs of the FIFA of ficials and the participating teams and other expenses. Part of the expenses are incurred as value-in-kind transactions. The costs in connection with the Host Announcement/Bidding 2018/2022 FIFA World Cup™ include the costs of the announcement which took place in Zurich in December 2010 and the costs in connection with evaluation reports and inspection visits of the 11 bidding countries. The start-up costs in connection with the 2014 FIFA World Cup Brazil™ incurred until 31 December 2010 are also included. 78 7 Other operating income in TUSD 2010 2009 Quality Concept 11,183 6,500 Income from sale of film and video rights 11,978 5,499 Brand licensing 24,474 4,767 Penalties/appeals from friendly matches 1,515 1,602 Rental income 1,024 1,108 Match levies from friendly matches 1,689 872 Other 5,818 1,722 57,681 22,070 Total other operating income Quality Concept contains the revenue in connection with the test programmes for footballs and football turf. Brand licensing relates to licences granted to use the brand “FIFA”. 8 Development-related expenses in TUSD Financial Assistance Programme (FAP) Contributions to confederations 2010 2009 52,255 52,287 15,000 15,000 144,400 0 Goal Programme 42,481 28,179 Win in Africa with Africa 11,834 4,548 Extraordinary FAP payments Win in ... projects 17,706 34,085 Football for Hope 10,587 5,734 Refereeing Assistance Programme 15,788 8,654 Other projects 25,016 23,928 335,067 172,415 Total development-related expenses FAP and contributions to confederations FAP is a financial aid programme under which USD 1 million is granted to each member association and USD 10 million to each confederation during the four-year cycle to improve their administrative and technical infrastructure (see accounting policy H. Development-related expenses). 79 Annexe 2010 FIFA grants this assistance for projects that fulfil the following objectives: • Develop and implement a modern, ef ficient and functional administrative or sports infrastructure; • Facilitate the recruitment, training and remuneration of administrative and technical staff employed by the member association; • Promote youth football; • Provide basic and further training for member association members, as well as others seconded to the member associations for administrative and technical duties; • Promote technical and sports development; • Support member associations in arranging and taking part in of ficial football competitions. All member associations and confederations have to provide FIFA with an audited financial statement every year. Additionally, FIFA arranges a central audit of 21 member associations and one confederation each year through its statutory auditors KPMG to ensure that all financial assistance payments are in compliance with the FAP Regulations. As at 31 December 2010, funds committed but not yet paid out amounted to USD 21.7 million (2009: USD 8.7 million). Extraordinary FAP payments Due to the financial success of the 2010 FIFA World Cup South Africa™, FIFA was in a position to increase the Financial Assistance Programme with extraordinary payments. The first payment of USD 250,000 to all 208 member associations and USD 2.5 million to the confederations was announced at the FIFA Congress in June 2010. The second payment of USD 300,000 to all 208 member associations and USD 2.5 million to the confederations has been approved by the members of the Emergency Committee and the chairman of the Finance Committee. The total extraordinary financial support amounts to USD 144.4 million. The FAP Regulations as described above also apply to the extraordinary FAP payments. This means that the usage of the funds by the member associations and the confederations is restricted to the purposes defined in the Regulations and is also subject to external audits. Goal Programme Goal is a development programme created by FIFA for the benefit of member associations. Goal offers funding for tailor-made projects to meet the individual needs of the member associations in the following areas: • Administration – setting up national and regional associations, including team and of fice equipment; • Training – administration, coaching, refereeing, sports medicine; 80 • Youth football – training youth team coaches, regional and national youth training centres and football schools, talent promotion; • Infrastructure – the renovation and construction of football pitches, physical training and tuition centres, of fice buildings; • Other tailor-made development projects – projects catering to other specific needs of member associations may also be considered if deemed appropriate. The maximum amount that can be awarded per project is limited to USD 400,000. As at 31 December 2010, funds committed but not yet paid out to Goal projects amounted to USD 50.6 million (2009: USD 39.7 million). These commitments are recognised and stated under accrued expenses. Win in Africa with Africa The Win in Africa with Africa initiative was launched following ratification from the FIFA Congress in 2006. The goal of this initiative was to support football in Africa with a view towards the 2010 FIFA World Cup South Africa™. A major part of the initiative focuses on laying an artificial turf pitch in 52 African countries. Additionally, FIFA is supporting African leagues and clubs and helps to develop partnerships with African universities to provide executive education and develop sports medicine in Africa. The total approved budget for the Win in Africa with Africa initiative is USD 70 million. As at 31 December 2010, funds committed but not yet paid amounted to USD 8.9 million (2009: USD 8.7 million). Win in ... projects The Special Projects Bureau approved additional Win in ... projects, such as Win in CONMEBOL with CONMEBOL, Win in CONCACAF with CONCACAF, Win in India with India and Win in Oceania with Oceania. The total approved budget amounted to USD 50 million of which 23.7 million has been committed but not yet paid out (incl. Grassroots Programme). These programmes focus on the construction of football turf pitches, youth development and sports executive education. Football for Hope Football for Hope is a social responsibility programme which uses the power of the game for social development. Part of Football for Hope is the 20 Centres for 2010 initiative. Its aim is to create 20 Football for Hope Centres to promote public health, education and football in disadvantaged communities across Africa. Other projects Other development-related expenses primarily include contributions to the development efforts supported by FIFA such as the Humanitarian Support Fund, courses such as Com-Unity and FUTURO III, F-MARC (FIFA Medical Assessment and Research Centre) and refereeing. 81 Annexe 2010 9 Football governance in TUSD 2010 2009 Committees and Congress 33,070 32,403 Legal matters 18,433 12,802 Football administration 4,008 3,013 CIES 2,455 1,961 57,966 50,179 Total football governance Committees and Congress The costs for committees and the Congress comprise the costs incurred in connection with the 60th FIFA Congress in Johannesburg which took place at the beginning of June 2010, plus the costs of the meetings of more than 25 standing committees and three FIFA judicial bodies (Disciplinary Committee, Appeal Committee and Ethics Committee). The cost for travel and accommodation of the committee members as well as of the of ficial delegates of the 208 member associations, the six confederations and guests for the FIFA Congress are paid by FIFA. CIES Together with the International Centre for Sports Studies (CIES) at the University of Neuchâtel in Switzerland, FIFA has set up two special programmes: a master’s degree in the business, law and humanities of sport and a scholarship (“João Havelange Scholarship”). FIFA supports both programmes with yearly financial contributions. 82 10 E xploitation of rights in TUSD Marketing Broadcasting and media rights Licensing Total exploitation of rights 2010 2009 9,060 12,403 19,802 11,510 2,178 2,229 31,040 26,142 The costs for exploitation of rights reflect the costs incurred by the FIFA TV & Marketing Division for the commercialisation of marketing and broadcasting rights. 11 Personnel expenses in TUSD 2010 2009 Wages and salaries 65,280 49,599 Social benefit costs 8,818 6,447 Other employee benefit costs 1,992 4,583 Other 1,343 2,451 77,433 63,080 Total personnel expenses The average number of employees during the year ending 31 December 2010 was 387 (2009: 361). The pension plan for FIFA employees is funded by employee and employer contributions. Since the plan has certain defined benefit characteristics, the figures presented below have been determined according to the accounting provisions for defined benefit plans as described in IAS 19. 83 Annexe 2010 Change in present value of defined benefit obligations in TUSD 2010 Defined benefit obligations at beginning of year 2009 64,414 55,225 Current service cost 7,729 6,807 Past service cost 1,136 681 Interest on obligations 2,086 1,601 Actuarial loss 5,531 252 Benefits paid –2,025 –1,389 8,499 1,237 87,370 64,414 2010 2009 65,324 56,206 1,952 1,629 Employer contribution 6,346 6,087 Employees’ contribution 1,939 1,882 –2,025 –1,389 –338 –339 7,866 1,248 81,064 65,324 Foreign exchange effect Defined benefit obligations at end of year Change in fair value of plan assets in TUSD Fair value of plan assets at beginning of year Expected return on plan assets Benefits paid Actuarial loss on plan assets Foreign exchange effect Fair value of plan assets at end of year The actual annual return on plan assets for the year ending 31 December 2010 amounted to TUSD 1,614 (2009: TUSD 1,290). 84 Amount recognised in the balance sheet in TUSD Present value of defined benefit obligations 2010 2009 87,370 64,414 –81,064 –65,324 6,306 –910 –6,306 0 Unrecognised pension fund surplus 0 910 Net asset 0 0 Fair value of plan assets Funded status Unrecognised net actuarial (loss)/gain The expected contribution to be paid into the plan for 2011 is TUSD 7,191. Components of pension expenses in TUSD 2010 2009 Current service cost 7,729 6,807 Past service cost 1,136 681 Interest on obligations 2,086 1,601 –908 –82 Change in unrecognised plan assets Net actuarial loss recognised in the year Expected return on plan assets Adjustment due to IAS 19 Net periodic pension cost Employees’ contribution Total pension expenses 0 591 –1,952 –1,629 194 0 8,285 7,969 –1,939 –1,882 6,346 6,087 85 Annexe 2010 Historical information in TUSD Present value of defined benefit obligations 2010 2009 2008 2007 87,370 64,414 55,225 39,906 –81,064 –65,324 –56,206 –46,905 Funded status 6,306 –910 –981 –6,999 Change in assumptions in plan liabilities 5,091 –2,415 4,977 2,389 Experience loss/(gain) on plan liabilities 440 2,667 779 –3,254 Experience loss/(gain) on plan assets 338 339 691 –89 5,869 591 6,447 –954 31 Dec 2010 31 Dec 2009 Discount rate 2.60% 3.25% Expected rate of return on plan assets 2.75% 3.00% Future salary increases 2.00% 2.50% Future pension increases 0.50% 1.00% Fair value of plan assets Total actuarial loss/(gain) Principal actuarial assumptions All assets are invested through an insurance contract, therefore the plan assets cannot be split into different categories. Accounting estimates and judgments The rates and parameters applied above are based on past experiences. Future developments in capital and labour markets could make adjustments of such rates necessary, which could significantly affect the calculation of pension obligations. 86 12 Other operating expenses in TUSD 2010 2009 Transport, travel and accommodation expenses 5,188 9,315 IT expenses 7,937 8,933 Translation services 3,993 1,790 Rental of properties/maintenance and running costs 5,583 5,509 Office equipment and telecommunication costs 2,381 2,522 PR and promotional costs 5,820 8,221 Acquisition and production costs 30,184 19,779 Other 42,772 23,190 103,858 79,259 2010 2009 Interest income from cash and cash equivalents 5,936 6,034 Total interest income 5,936 6,034 Foreign currency gains 46,225 2,240 Total foreign currency gains 46,225 2,240 Change in fair value 1,905 7,356 Total income from financial assets designated at fair value through profit or loss 1,905 7,356 54,066 15,630 Total other operating expenses 13 Financial income in TUSD Total financial income Foreign currency gains result mainly from the valuation of the net asset in foreign currency such as CHF. 87 Annexe 2010 14 Financial expenses in TUSD 2010 2009 Interest expenses 427 508 Total interest expenses 427 508 Foreign currency loss 39,432 397 Total foreign currency loss 39,432 397 Change in fair value 0 21 Total loss from financial assets designated at fair value through profit or loss 0 21 39,859 926 Total financial expenses Foreign currency loss results mainly from the valuation of the net assets in foreign currency such as GBP or EUR. 15 Income taxes in TUSD 2010 2009 Current tax expenses 893 789 Total income tax expenses 893 789 FIFA is taxed according to the Swiss taxation rules for associations. Pursuant to these taxation rules, the statutory financial statements are the basis for taxation. In FIFA’s statutory financial statements, the character of a non-profit organisation, the obligation to spend the net result, reserves and funds on the development of football, the long-term perspective of development projects, the four-year accounting cycle and the financial risks inherent to FIFA’s core event, the FIFA World Cup™, are duly considered (see also Note 26 Financial risk management). FIFA’s subsidiaries are taxed based on the applicable local tax regulations. Therefore, a reconciliation of the effective tax rate to the consolidated profits before tax would not be meaningful. Consequently, this calculation has not been carried out. There are no tax loss carry-forwards. No income tax was recognised directly in other comprehensive income. 88 Notes to the consolidated balance sheet 16 Cash and cash equivalents in TUSD 31 Dec 2010 Cash on hand, post and bank accounts Weighted average interest rate 31 Dec 2009 587,377 565,806 Overnight deposits and fixed-term deposits with maturities of up to 3 months 1,022,059 881,771 Total cash and cash equivalents 1,609,436 Weighted average interest rate 0.35% 1,447,577 0.59% The fixed-term deposits have an average maturity of 42 days. A bank account in the amount of TUSD 652 is pledged to cover a bank guarantee towards a third party. 17 Receivables in TUSD 31 Dec 2010 31 Dec 2009 181,589 236,505 –3,101 –2,840 178,488 233,665 4,899 7,834 212 277 – Due from third parties 25,414 18,482 Total other receivables 30,525 26,593 – Due from related parties 6,646 0 – Due from third parties 2,380 0 Total short-term loans 9,026 0 218,039 260,258 Receivables from exploitation of rights – Due from third parties – Provisions for bad debts Total receivables from exploitation of rights Other receivables – Due from member associations and confederations – Due from related parties Short-term loans Total receivables, net The major part of the open receivables relates to contractual payments from broadcasters and sponsors for the 2014 FIFA World Cup™ which are due in January 2011. 89 Annexe 2010 Provisions for bad debts in TUSD 31 Dec 2010 31 Dec 2009 2,840 2,661 –1,442 –354 1,661 526 Provisions for bad debts Balance as at 1 January Use Additions Reversal 0 7 3,101 2,840 31 Dec 2010 31 Dec 2009 212,703 247,322 195 Balance as at 31 December 0 42 Foreign exchange effect 9,820 Ageing structure of receivables in TUSD Receivables Not due Overdue – less than 30 days Overdue – less than 60 days 793 649 7,449 5,307 221,140 263,098 Note 31 Dec 2010 31 Dec 2009 – 2010 FIFA World Cup™ 1-4 10,368 43,619 – Other FIFA events 1-5 0 3,390 10,368 47,009 Overdue – more than 60 days Total receivables 18 Prepaid expenses and accrued income in TUSD Accrued income Total accrued income Prepaid expenses – 2010 FIFA World Cup™ 6 0 19,949 – Other FIFA events 6 21,651 15,759 – Development programmes 8 1,157 1,943 22,808 37,651 6,666 766 39,842 85,426 Total prepaid expenses Other prepaid expenses and accrued income Total prepaid expenses and accrued income 90 19 Property and equipment Land Office and other equipment Total 224,577 15,124 21,892 261,593 0 0 513 513 725 0 –725 0 0 0 65 65 225,302 15,124 21,745 262,171 563 0 1,286 1,849 Foreign exchange effects 0 0 49 49 Disposals 0 0 –337 –337 225,865 15,124 22,743 263,732 Balance as at 1 January 2009 38,244 0 9,916 48,160 Depreciation 11,342 0 2,303 13,645 256 0 –256 0 0 0 29 29 Balance as at 31 December 2009 49,842 0 11,992 61,834 Depreciation 11,414 0 1,516 12,930 Foreign exchange effects 0 0 24 24 Disposals 0 0 –300 –300 61,256 0 13,232 74,488 As at 1 January 2009 186,333 15,124 11,976 213,433 As at 31 December 2009 175,460 15,124 9,753 200,337 As at 31 December 2010 164,609 15,124 9,511 189,244 in TUSD Operational buildings Cost Balance as at 1 January 2009 Acquisitions Reclassifications Foreign exchange effects Balance as at 31 December 2009 Acquisitions Balance as at 31 December 2010 Accumulated depreciation Reclassifications Foreign exchange effects Balance as at 31 December 2010 Net carrying amount The column “operational buildings” includes the Home of FIFA, FIFA House and two other buildings in Zurich. 91 Annexe 2010 20 Intangible assets Film archive in TUSD 2010 2009 5,418 5,418 0 0 5,418 5,418 3,793 3,251 541 542 4,334 3,793 As at 1 January 1,625 2,167 As at 31 December 1,084 1,625 Cost Balance as at 1 January Acquisitions Balance as at 31 December Accumulated amortisation Balance as at 1 January Amortisation Balance as at 31 December Net carrying amount 92 21 Financial assets in TUSD Debt securities Other Current financial assets Debt securities Equity securities 31 Dec 2010 31 Dec 2009 30,173 22,463 0 23,944 30,173 46,407 0 34,130 1,159 911 Other 26,750 5,000 Non-current financial assets 27,909 40,041 Total financial assets 58,082 86,448 Investments in capital-protected participations and capital-guaranteed participations are considered to be structured investments similar to debt securities that limit FIFA’s risk of fair-value losses but offer FIFA the chance of market value appreciation of the investment. Interest payments are generally due upon the redemption of the investments before 2011. The counter-party risk has been assessed as remote. The major part of the investments in capital-protected participations was sold in 2009 and 2010 at a profit. All debt securities and equity securities are designated at fair value through profit or loss and are therefore stated at fair value. Investments in capitalprotected participations, which are not quoted, are valued by using valuation techniques. Other In 2009, FIFA granted a loan to the Local Organising Committee for the 2014 FIFA World Cup Brazil™ in order to finance the tasks related to the preparation of the competition. This loan was further increased in 2010. Accounting estimates and judgments Debt securities with a value of USD 30.2 million are not quoted and are therefore valued by using valuation techniques. The factors determining the discount rate may change in the future and therefore have an impact on the valuation of the financial assets in future periods. 93 Annexe 2010 22 Payables in TUSD 31 Dec 2010 31 Dec 2009 156,651 45,226 6,554 140 16,280 10,267 179,485 55,633 Note 31 Dec 2010 31 Dec 2009 – 2010 FIFA World Cup™ 6 20,213 466,589 – Other FIFA events 6 16,336 12,410 – Development programmes 8 212,068 110,184 248,617 589,183 304,868 – Due to member associations and confederations – Due to related parties – Due to third parties Total payables 23 Accrued expenses and deferred income in TUSD Accrued expenses Total accrued expenses Deferred income – 2010 FIFA World Cup™ 0 – 2014 FIFA World Cup™ 1-3 297,466 0 – 2018 FIFA World Cup™ 1-3 6,000 0 – Other FIFA events 1-3 2,625 6,093 Total deferred income 306,091 310,961 Other accrued expenses and deferred income 113,001 60,712 Total accrued expenses and deferred income 94 1-3 667,709 960,856 24 Provisions in TUSD Balance as at 1 January 2010 2009 12,595 12,327 Provisions made during the year 4,399 1,042 Provisions used during the year –308 –237 130 –537 16,816 12,595 Adjustments Balance as at 31 December The provisions cover the future costs of the pension plan for members of the FIFA Executive Committee. An annual pension payment will be made to all long-serving FIFA Executive Committee members retiring from 2005 onwards. Under this retirement plan, Executive Committee members receive pension payments if they have served as a member of the committee for eight or more years. The pension is paid for up to a maximum of the number of years that the member served on the committee. Only the FIFA Executive Committee members may benefit from this scheme. Family members or relatives of the Executive Committee member are not entitled to receive any payments. The retirement payments start in the financial year following retirement. Additional provisions have been created in connection with the earthquake in Haiti in January 2010. FIFA is assisting the reconstruction of the football infrastructure in Haiti with the amount of USD 3 million. In addition, the 32 member associations participating in the 2010 FIFA World Cup South Africa™ were asked to donate 2% of their preparation match revenue to this project. There are no other legal or constructive obligations that require the establishment of provisions. 95 Annexe 2010 25 Reserves Association capital The association capital is CHF 5 million. Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash-flow hedging instruments where the hedged transaction has not yet occurred (see Note 27). Restricted reserves Pursuant to articles 2 and 69 of the FIFA Statutes, FIFA has to balance out revenue and expenditure over the financial period and has to build up sufficient reserves to guarantee the fulfilment of its major duties. The purpose of the reserves is to protect FIFA against risks and unforeseen events, in particular in relation to the FIFA World Cup™. The financial dependency of FIFA on the FIFA World Cup™, which takes place only every four years, needs to be considered, since the FIFA World Cup™ is FIFA’s main revenue source. The usage of the reserves is restricted to FIFA’s statutory duties such as organisation of international competitions, in particular the FIFA World Cup™, and implementation of football-related development programmes. Capital management FIFA was established in the legal form of an association pursuant to articles 60ff. of the Swiss Civil Code. Pursuant to article 2 of its Statutes, FIFA’s objective is to improve the game of football constantly and promote it globally, particularly through youth and development programmes. FIFA is a non-profit organisation and is obliged to spend its profits, reserves and funds for this purpose. As FIFA is an association, no dividends are paid. In the event of the dissolution of FIFA, its funds shall not be distributed, but transferred to the supreme court of the country in which the headquarters are situated. The supreme court shall invest them in gilt-edged securities until the re-establishment of the federation. FIFA’s strategy is to increase reserves to cover inherent risks in connection with the FIFA World Cup™ (see also Note 26). 96 Other disclosures 26 Financial risk management Exposure to currency and interest risks as well as credit and liquidity risks arises in the course of FIFA’s normal operations. Credit risk In line with FIFA’s marketing and TV strategy, FIFA sold the television broadcasting rights in the key markets for the final competitions of the 2010 and 2014 FIFA World Cups™ directly to broadcasters. For the 2006 FIFA World Cup™, the rights were sold in packages to intermediaries. In the area of marketing, FIFA implemented a new strategy from 2007 onwards and now distinguishes between FIFA Partner, FIFA World Cup Sponsor and National Supporter. In this context, the number of FIFA Partners was reduced from 15 in the 2003-2006 period to six for the 2007-2010 cycle. The revenue from television and marketing rights is received from large multinational companies and public broadcasters. Part of the outstanding revenue is also covered by bank guarantees. Additionally, the contracts include a default clause, whereby the contract terminates as soon as one party is in default. In the event of a Commercial Af filiate defaulting, FIFA is not required to reimburse any of the services or contributions received. FIFA is also entitled to replace terminated contracts with new marketing or broadcasting agreements. Material credit risks could potentially arise if several Commercial Af filiates were unable to meet their contractual obligations and if FIFA was unable to find a replacement in due time. The FIFA management monitors the credit standing of Commercial Af filiates very closely on an ongoing basis. Given their good credit ratings and the high diversification of the Commercial Af filiates portfolio, FIFA management believes that this scenario is very unlikely to occur. Investments and derivative financial instruments are executed only with counter-parties with high credit ratings. 97 Annexe 2010 Interest rate risk FIFA is exposed to fluctuations in interest rates on its short-term placements in fixed-term deposits. Since the interest rate of all short-term deposits is fixed at year end, there is no direct interest rate exposure. An interest rate risk arises on the valuation of the financial assets valued by using valuation techniques. If the interest rates on 31 December 2010 had been 1% higher (lower), the net result would have been USD 0.3 million lower (higher). As at 31 December 2010, there is no interest rate risk arising from financing transactions because FIFA is fully self-financed. Foreign currency risk On 1 January 2007, FIFA changed its functional currency from the Swiss franc to the US dollar because the majority of its cash flows are denominated in the latter. Exposure to foreign currency exchange rates arises from transactions denominated in currencies other than USD, especially in EUR, CHF and GBP. FIFA receives foreign currency cash inflows in the form of revenue from the sale of certain rights denominated in EUR, GBP or CHF. On the other side, FIFA has substantial costs, especially employee costs and operating costs in connection with FIFA’s of fices in Zurich, denominated in CHF, while no major costs are expected in EUR or GBP. For the 2011-2014 period, FIFA will also have costs in connection with the 2014 FIFA World Cup Brazil™ denominated in BRL. The Controlling & Strategic Planning Department regularly forecasts the liquidity and foreign exchange requirements up to the 2014 FIFA World Cup™. If any foreign currency risks are identified, FIFA uses forward currency exchange contracts and structured derivative products to hedge this exposure (see also Note 27). As at 31 December 2010, FIFA is exposed to the following foreign exchange fluctuation risks: • If the EUR had gained (lost) 10% against the USD as at 31 December 2010, the net result would have been USD 15.3 million higher (lower). • If the CHF had gained (lost) 10% against the USD as at 31 December 2010, the net result would have been USD 21.0 million higher (lower). • If the GBP had gained (lost) 10% against the USD as at 31 December 2010, the net result would have been USD 0.2 million higher (lower). This fluctuation analysis only shows the effect from an accounting perspective and not realised gains or losses. 98 Positions exposed to foreign currency risk as at 31 December 2010 in thousands CHF 718 35,750 62 280 0 0 0 Prepaid expenses and accrued income 86,512 10,920 Receivables GBP 194,050 Cash and cash equivalents EUR 2,062 0 Financial assets Total assets in foreign currency 205,250 124,324 780 Payables 3,628 9,469 6 Accrued expenses and deferred income 2,474 0 0 Total liabilities in foreign currency 6,102 9,469 6 199,148 114,855 774 Net exposure in foreign currency Liquidity risk As at 31 December 2010, FIFA is fully self-financed. Additionally, FIFA has access to contractual or secured short-term credit facilities in the amount of CHF 158 million, guaranteed by its own properties, which could be used to cover any additional liquidity needs. Maturity of financial liabilities 31 December 2010 in TUSD Payables – associations and confederations Payables – related parties Payables – third parties Derivative financial liabilities Total 31 December 2009 90 days 1 year or less 90 days 1 year or less 0 156,651 0 45,226 6,554 0 140 0 16,280 0 10,267 0 0 0 0 12,906 22,834 156,651 10,407 58,132 Payables and receivables to/from associations and confederations do not have a specific maturity date. Generally, the accounts are used to settle new invoices to and from associations and confederations. In accordance with the FIFA Statutes, payables and receivables can be netted. 99 Annexe 2010 Cancellation risk FIFA’s financial position depends on the successful staging of the FIFA World Cup™ because almost all contracts with Commercial Af filiates are related to this event. In the event of cancellation, curtailment or abandonment of the FIFA World Cup™, FIFA would run the risk of some of the revenues already received and accounted for having to be repaid. Until the 2002 FIFA World Cup™, FIFA was able to cover this risk through an insurance company. However, since 9/11, it has practically been impossible to find comparable insurance coverage. For the 2006 FIFA World Cup™, part of the risks were transferred to the capital market by means of a capital market transaction (“cancellation bond”). At its meeting on 24 October 2008, the Executive Committee decided to insure against the risk of postponement and/or relocation of the 2010 and 2014 FIFA World Cups™. The risks covered include natural catastrophe, accidents, turmoil, war, acts of terrorism, non-participation of teams and epidemic diseases. The cancellation of the event is not covered by the insurance and would need to be covered by FIFA’s own financial resources. The maximum insurance volume is USD 650 million to cover FIFA‘s additional costs in case of a postponement and/or relocation of the event. A s at 31 December 2010, the insurance coverage for the 2014 FIFA World Cup™ has been fully placed on the insurance market. Classification of financial assets 31 December 2010 31 December 2009 in TUSD Loans and receivables Financial assets at fair value through P&L Cash and cash equivalents 1,609,436 0 0 1,447,577 0 0 218,039 0 0 260,258 0 0 Receivables Derivative financial assets Derivates used for hedging activities Loans and receivables Financial assets at fair value through P&L Derivates used for hedging activities 0 0 29,078 0 0 22,109 Financial assets 26,750 31,332 0 28,944 57,504 0 Accrued income 10,368 0 0 47,009 0 0 1,864,593 31,332 29,078 1,783,788 57,504 22,109 Total Due to their short maturity, the carrying amount of the financial assets approximates the fair value. 100 Classification of financial liabilities 31 December 2010 in TUSD Payables 31 December 2009 Financial liabilities at fair value through P&L Financial liabilities at amortised costs Derivates used for hedging activities Financial liabilities at fair value through P&L Financial liabilities at amortised costs Derivates used for hedging activities 0 179,485 0 0 55,633 0 Derivative financial liabilities 0 0 0 0 0 12,906 Accrued expenses 0 345,320 0 0 589,183 0 Total 0 524,805 0 0 644,816 12,906 Due to their short maturity, the carrying amount of the payables approximates the fair value. Fair value disclosure Financial assets designated at fair value through profit or loss in the amount of USD 1.2 million are traded in active markets and the fair value is based on unadjusted quoted market prices on the balance sheet date (Level 1). Financial assets designated at fair value through profit or loss in the amount of USD 30.2 million and derivatives used for hedging activities in the amount of USD 29.1 million are not traded in active markets and the fair value on the balance sheet date is determined by using valuation techniques (Level 2) with observable market data. 27 Hedging activities and derivative financial instruments FIFA uses foreign currency derivatives and forwards to hedge the exposure on revenue from TV rights denominated in EUR or GBP. Depending on the expected needs based on the forecast, the revenue is converted into CHF or USD. All hedging transactions cover revenue which is contractually defined. Additionally, FIFA hedges its exposure in BRL for future costs in connection with the 2014 FIFA World Cup Brazil™. All hedging transactions are in line with the strategy decided by the FIFA Executive Committee. FIFA uses hedge accounting in accordance with IFRS to reduce the volatility of earnings. All transactions are classified as “cash flow hedge”. All hedging transactions are expected to be highly effective, as the amount, the currency and the maturity of the underlying and hedging transaction are identical. 101 Annexe 2010 As of 31 December 2010, FIFA has hedged part of the broadcasting rights in connection with the 2014 FIFA World Cup™ in EUR in the amount of EUR 154.2 million and the expected costs in connection with the 2014 FIFA World Cup™ in BRL in the amount of BRL 186.9 million. 31 December 2010 31 December 2009 Positive fair value Positive fair value Negative fair value 19,344 0 22,109 12,906 9,734 0 0 0 29,078 0 22,109 12,906 26,338 in TUSD Negative fair value 0 9,203 0 Cash flow hedges – effective in the next year – effective in the following year Total whereof – recognised in hedging reserves The effective part of the hedge transactions has been recognised in the hedge reserves. As at 31 December 2010, there is no significant ineffectiveness. From the previous year’s hedge reserves, an amount of TUSD 9,203 was transferred to the income statement. The revenue from television broadcasting has been increased by TUSD 4,349. The difference reflects the change in fair value of the hedging instruments between the beginning of the year and the settlement date. 28 Legal matters and contingent liabilities There are no material lawsuits or other information to be disclosed. 29 Capital commitments As at 31 December 2010, FIFA has no capital commitments. 30 Contingent revenue Several agreements with Commercial Af filiates in connection with the rights granted for the 2010 and 2014 FIFA World Cups™ include contingent revenue in addition to the already recognised minimum payments. Such revenue elements are only recognised if it is likely that FIFA will receive additional payments. 102 31 Operating leases in TUSD 31 Dec 2010 31 Dec 2009 Less than 1 year 216 1,015 1-5 years 625 2 Total 841 1,017 FIFA leases of fice space, vehicles and of fice equipment under operating leases. The leases typically extend over an initial period of between one and five years, with an option to renew the lease after that period. None of the leases include contingent rentals. In 2010, a total amount of TUSD 1,068 (2009: TUSD 1,214) was recognised as an expense in the income statement for operating leases. 32 Related-party transactions Identity of related parties FIFA as an association has 208 members. The member associations affiliated to FIFA also form confederations. Additionally, from FIFA’s perspective, the following persons are regarded as related parties: members of the Executive Committee, the Finance Committee and other key management personnel. Transactions with related parties Each member of FIFA must pay an annual subscription fee, currently CHF 300, and for every international match – including friendly matches, tournaments and all the matches of the Olympic Football Tournaments – played between two international “A” teams, the member association of the country in which the match is being played pays a share of the gross receipts from the match to FIFA. Revenue from international matches totalled USD 2.6 million in 2010 (2009: USD 4.6 million). FIFA makes yearly contributions to the member associations and confederations (FAP, Goal Programme) to support their efforts in promoting and developing football in their region (see Note 8). These development expenses totalled USD 335.1 million in 2010 (2009: USD 172.4 million). The accumulated development expenses accrued as per 31 December 2010 totalled USD 212 million (2009: USD 110.2 million). 103 Annexe 2010 FIFA organises the FIFA World Cup™ and other FIFA events. In connection with these competitions, FIFA offers financial support to Local Organising Committees and compensates teams for travel and accommodation expenses. For the FIFA World Cup™, the qualifying teams also receive a subsidy to cover the cost of their preparations. In 2010, FIFA paid USD 348 million in prize money (2006: CHF 300 million) to the participating associations. The total financial support allocated to Local Organising Committees for other FIFA events amounted to USD 16.8 million. The total payments for teams and confederations for other FIFA events amounted to USD 19.6 million. FIFA has outstanding receivables from related parties amounting to USD 5.1 million (2009: USD 8.1 million), while outstanding payables total USD 163.2 million (2009: USD 45.4 million). Key management personnel Members of the Executive Committee, the Finance Committee and the FIFA management, in particular the directors, are regarded as key management personnel. In 2010, short-term employee benefits of USD 32.6 million were paid to the key management personnel (2009: USD 20.9 million). In addition to these short-term employee benefits, FIFA contributes to defined post-employment benefit plans. The recognised post-employment benefit expenses in 2010 amounted to USD 1.9 million (2009: USD 2.1 million). 104 33 Consolidated subsidiaries Activity Ownership interest 2010 Ownership interest 2009 Zurich, Switzerland Travel agency 100% 100% Early Warning System GmbH Zurich, Switzerland Service company 95% 95% FIFA Transfer Matching System GmbH Zurich, Switzerland Service company 95% 95% Barcelona, Spain Event management 70% 70% Location of incorporation FIFA Travel GmbH FIFA Beach Soccer S.L. 2010 FIFA World Cup Ticketing (Pty) Ltd Nasrec, South Africa Ticket sales 100% 100% FIFA World Cup South Africa (Pty) Ltd Nasrec, South Africa Service company 100% 100% FWC 2014 Assessoria Ltda Rio de Janeiro, Brazil Service company 95% n/a FIFA Marketing & TV AG Zurich, Switzerland No activity 100% 100% FIFA Ticketing AG (formerly FIFA Media AG) Zurich, Switzerland No activity 100% 100% Germany No activity In liquidation In liquidation FIFA Marketing & TV Deutschland GmbH The subsidiary in Brazil was incorporated in 2010. Due to legal requirements in Brazil, FIFA cannot own 100% of the shares. However, FIFA is the full beneficial owner of the company. 34 Post-balance-sheet events The FIFA Executive Committee authorised the issue of these consolidated financial statements on 3 March 2011. The consolidated financial statements for 2010 will be submitted to the FIFA Congress for approval on 31 May/1 June 2011. No events have occurred since 31 December 2010 that would require any adjustment to the carrying amounts of FIFA’s assets and liabilities as of 31 December 2010 and/or disclosure. 105 Annexe 2010 Auditor’s report to the FIFA Congress As statutory auditor, we have audited the accompanying consolidated financial statements of Fédération Internationale de Football Association (FIFA), which comprise the balance sheet, income statement, cash flow statement, statement of changes in reserves, statement of comprehensive income and notes for the year ended 31 December 2010. FIFA Executive Committee’s Responsibility The FIFA Executive Committee is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) and the requirements of Swiss law. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The FIFA Executive Committee is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is suf ficient and appropriate to provide a basis for our audit opinion. 106 Opinion In our opinion, the consolidated financial statements for the year ended 31 December 2010 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law. Report on Other Legal Requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the FIFA Executive Committee. We recommend that the consolidated financial statements submitted to you be approved. KPMG AG Fredy Luthiger Licensed Audit Expert Auditor in Charge Alex Fähndrich Licensed Audit Expert Zurich, 3 March 2011 107 A NNE X E 20 07-2010 Annexe 2007-2010 Consolidated income statement 2007-2010 2007 2008 2009 2010 Total 2007-2010 Revenue from television broadcasting rights 524,524 555,484 649,957 717,978 2,447,943 Revenue from marketing rights 223,398 253,406 277,266 342,936 1,097,006 19,388 15,105 10,184 26,100 70,777 0 40,000 40,500 40,000 120,500 19,325 38,502 43,843 52,215 153,885 786,635 902,497 1,021,750 1,179,229 3,890,111 FIFA World Cup™ expenses –290,957 –344,920 –316,834 –345,269 –1,297,980 Other FIFA event expenses –95,488 –96,504 –139,223 –84,174 –415,389 –386,445 –441,424 –456,057 –429,443 –1,713,369 400,190 461,073 565,693 749,786 2,176,742 60,108 32,185 22,070 57,681 172,044 –153,666 –133,189 –172,415 –335,067 –794,337 Football governance –46,742 –46,270 –50,179 –57,966 –201,157 Exploitation of rights –16,539 –17,602 –26,142 –31,040 –91,323 Personnel expenses –58,504 –52,372 –63,080 –77,433 –251,389 Depreciation and amortisation –16,084 –15,777 –14,187 –13,471 –59,519 –151,148 –60,125 –79,259 –103,858 –394,390 Operating result before financial items 17,615 167,923 182,501 188,632 556,671 Financial income 35,196 22,273 15,630 54,066 127,165 Financial expenses –2,732 –5,921 –926 –39,859 –49,438 Result before taxes 50,079 184,275 197,205 202,839 634,398 –833 –620 –789 –893 –3,135 49,246 183,655 196,416 201,946 631,263 in TUSD Event-related revenue Revenue from licensing rights Revenue from hospitality rights Other event-related revenue Total event-related revenue Event-related expenses Total event-related expenses Event-related gross result Other operating income Development-related expenses Other operating expenses Income taxes Net result 110 Aggregated consolidated income statement 2007-2010 in TUSD 2007-2010 2003-2006 Revenue from television broadcasting rights 2,447,943 1,320,993 Revenue from marketing rights 1,097,006 559,988 70,777 72,914 Revenue from hospitality rights 120,500 203,946 Other event-related revenue 153,885 185,567 3,890,111 2,343,408 –1,297,980 –691,135 –415,389 –191,100 –1,713,369 –882,235 2,176,742 1,461,173 172,044 96,920 Development-related expenses –794,337 –436,529 Football governance –201,157 –90,665 Exploitation of rights –91,323 –25,134 –251,389 –165,586 –59,519 –25,321 –394,390 –179,891 Operating result before financial items 556,671 634,967 Financial income 127,165 102,280 Financial expenses –49,438 –92,393 Result before taxes 634,398 644,854 –3,135 –2,842 631,263 642,012 Event-related revenue Revenue from licensing rights Total event-related revenue Event-related expenses FIFA World Cup™ expenses Other FIFA event expenses Total event-related expenses Event-related gross result Other operating income Personnel expenses Depreciation and amortisation Other operating expenses Income taxes Net result for the four-year period 111 Annexe 2007-2010 Consolidated balance sheet in TUSD 31 Dec 2010 31 Dec 2006 1,609,436 377,760 Assets Cash and cash equivalents 218,039 223,566 Derivative financial assets Receivables 19,344 0 Financial assets 30,173 0 Prepaid expenses and accrued income 39,842 93,989 Current assets Property and equipment Investment properties Intangible assets Derivative financial assets Financial assets Non-current assets Total assets 1,916,834 695,315 189,244 231,746 0 21,862 1,084 3,251 9,734 0 27,909 243,632 227,971 500,491 2,144,805 1,195,806 179,485 51,072 659 727 0 14,776 Liabilities and reserves Payables Income tax liabilities Interest-bearing liabilities Derivative financial liabilities Accrued expenses and deferred income Current liabilities Provisions Non-current liabilities Total liabilities Association capital Hedging reserves Restricted reserves 0 5,752 667,709 495,762 847,853 568,089 16,816 10,793 16,816 10,793 864,669 578,882 4,104 4,104 26,338 –5,752 618,572 1,280,136 616,924 Total liabilities and reserves 112 1,249,694 Reserves 2,144,805 1,195,806 Basis of preparation The financial information for the four-year period ended 31 December 2010 has been compiled as follows: Presentation of the consolidated income statements 2007 to 2010 as reported in the audited financial statements 2007, 2008, 2009 and 2010; aggregation to cumulative income statement for the four-year period Presentation of the consolidated income statements 2003 to 2006 as reported in the audited financial statements 2003, 2004, 2005 and 2006; aggregation to cumulative income statement for the four-year period, conversion from CHF to USD using the average rates of the respective years. The presentation of the aggregated consolidated income statement 2003 to 2006 has been adjusted to the presentation used in 2007 to 2010. Consolidated balance sheet as of 31 December 2010 as reported in the audited financial statement for the year ended 31 December 2010; except for currency translation adjustments, restricted reserves and the net result for the four-year period which are summarised in the line item “total restricted reserves” Consolidated balance sheet as of 31 December 2006 as reported in the audited financial statement for the year ended 31 December 2006; conversion from CHF to USD using the year-end rate as at 31 December 2006 (1.2182); except for currency translation adjustments, restricted reserves and the net result for the four-year period which are summarised in the line item “total restricted reserves” Each of the consolidated financial statements used to compile the financial information for the four-year period ended 31 December 2010 have been prepared in accordance with the International Financial Reporting Standards (IFRS). Changes in IFRS within this four-year period have not retroactively been applied to ealier years of the four-year period. The financial information for the four-year period ended 31 December 2010 does not contain all primary statements and the disclosures required by International Financial Reporting Standards (IFRS). Reading such financial information, therefore, is not a substitute for reading the audited financial statements of FIFA for each of the four years ended 31 December 2007, 2008, 2009 and 2010, respectively. 113 Annexe 2007-2010 Independent Assurance Report to the FIFA Congress on the consolidated financial information of FIFA for the four years ended 31 December 2010, based on Article 69 of the FIFA statutes We were engaged by the FIFA Executive Committee to provide reasonable assurance on the compilation of the consolidated financial information containing the consolidated income statements for each of the four years ended 31 December 2007, 2008, 2009 and 2010, respectively, the aggregated consolidated income statement for the four-year period ended 31 December 2010 and the consolidated balance sheet as of 31 December 2010. The consolidated financial information is derived from the annual consolidated financial statements of FIFA for each of the four years ended 31 December 2007, 2008, 2009 and 2010, respectively, which were audited by us. The FIFA Executive Committee is responsible for the consolidated financial information including adoption of the applicable financial reporting framework. Our responsibility is to carry out a reasonable assurance engagement and to express an opinion on the compilation of such consolidated financial information based on the work performed. We conducted our work in accordance with the International Standard on A ssurance Engagements 3000, Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. This standard requires that we plan and perform the engagement to obtain reasonable assurance about whether the consolidated financial information has been properly compiled, in all material respects, on the basis stated and that such basis is consistent with the basis of preparation and the accounting principles set out in the notes to the annual consolidated financial statements for each of the four years ended 31 December 2007, 2008, 2009 and 2010, respectively. 114 In our opinion, the consolidated financial information has been properly compiled, in all material respects, on the basis stated and such basis is consistent with the basis of preparation and the accounting principles set out in the notes to the annual consolidated financial statements for each of the four years ended 31 December 2007, 2008, 2009 and 2010, respectively. KPMG AG Fredy Luthiger Alex Fähndrich Zurich, 3 March 2011 115 Annexe 2007-2010 Internal Audit Committee report to the FIFA Congress In our function as the Internal Audit Committee of FIFA, we have assessed the consolidated financial statements (balance sheet, income statement, statement of changes in reserves, the cash flow statement, statement of comprehensive income and notes) of the Fédération Internationale de Football Association for the period from 1 January 2010 to 31 December 2010. Our responsibility is to express an opinion on these financial statements based on our assessment in compliance with the audit charter of 5 March 2003. We have assessed the 2010 financial statements through: • Examination of the audit reports of the external auditors; • Examination of the 2010 Comprehensive Auditor’s Report to the Executive Committee; • Discussion of the financial statements during the meetings of the Internal Audit Committee held on 6 June 2010 and 1 March 2011 in the presence of the FIFA President, the Secretary General, the Director of Finance & Administration and the external auditors. In addition, we have reviewed the consolidated income statement and balance sheet for the four-year period ending 31 December 2010 based on Article 69 of the FIFA Statutes. The statements agree with the IFRS financial statements for 2007-2010, which have been audited by KPMG and approved by the FIFA Congress. We have also assessed the accounting principles used, significant estimates made and the overall presentation of the financial statements. We believe that our assessment provides a reasonable basis for our opinion. Furthermore, we confirm that we have had unrestricted and complete access to all the relevant documents and information necessary for our assessment. On this basis, we recommend that the FIFA Congress approve the consolidated financial statements for 2010. For the Internal Audit Committee Dr Franco Carraro Chairman Zurich, 1 March 2011 116 ...
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This note was uploaded on 10/02/2011 for the course ECON 101 taught by Professor Mikson during the Spring '08 term at Aarhus Universitet.

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