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A look at FIFA and its money amidst scandal

May 27, 2015

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The global soccer world (or football world, depending on where you live) is agog at the scandal involving FIFA, the international federation that governs the sport.

Several top FIFA officials were arrested by Swiss authorities in Zurich on Wednesday morning, and await extradition to the United States on federal corruption charges. Fans of the game were certainly not surprised by the allegations, as the organization has carried a scandalous reputation for years. But the move by U.S. authorities certainly made waves in the sports world.

As the official body of the world’s most popular sport, FIFA determines the location of its biggest event, the World Cup, which is held every four years. With so much money involved with television rights and international sponsorships, the Cup carries enormous economic weight for host countries. There’s a lot of money involved with this story. Here are a few things you should know about the situation:

FIFA generates a ton of revenue.

Soccer is the world’s most popular game and its biggest international tournament, the World Cup, is one of the most watched sporting events on the planet. While the United States still has to catch up, the rest of the world loves soccer and FIFA’s revenues show that. Last year, FIFA generated over $2 billion in revenue, according to Forbes.

A lot of its revenues come from pricey endorsement deals as companies like Coke, Adidas and McDonalds pay to get their brand next to the FIFA name. Quartz reports that FIFA made $1.6 billion in sponsorships alone in 2014.

FIFA has a bad reputation.

FIFA has been accused of bad business practices and corruption in the past. From kickbacks to ticket scams, the last 17 years under current FIFA President Sepp Blatter have resulted in numerous scandals, as Graham Dunbar at the Associated Press reports. This lead to the organization’s corrupt image that carried over into Wednesday’s arrest. The New York Times reports that the Justice Department, F.B.I and I.R.S described the organization in terms “normally reserved for Mafia families and drug cartels.”

The charges reflect that reputation as well. Fourteen people, including FIFA officials, face charges of racketeering, wire fraud and money laundering conspiracy. One official allegedly took more than $10 million in bribes, according to Attorney General Loretta E. Lynch, the Times reports.

The U.S. has reason to be upset. 

It might seem strange that the United States is leading the investigation into FIFA’s alleged corruption, especially since soccer is not as popular here as it is in the rest of the world. But officials here certainly have reason to be suspicious. CNN did a nice job explaining why in a report this morning. It started when FIFA named Russia as the host nation for the 2018 World Cup and Qatar as the host for 2022. Choosing Qatar seemed like an odd choice and many people criticized it, raising concerns.

As CNN reports, FIFA had Michael Garcia, a former U.S. attorney for the Southern District of New York, look at the bids by the two countries. After 19 months Garcia had 350 pages worth of findings, but FIFA suppressed the report and cleared itself of any wrongdoing. From there, the FBI put together several leads and now believes different charges of corruption within FIFA originated on U.S. soil.

This makes things worse for FIFA.

FIFA has carried its bad reputation for some time, but Wednesday’s arrests is a major blemish on its already tarnished image. The organization faces investigations from U.S. and Swiss authorities. While Blatter has yet to be accused or charged of anything, among those arrested Wednesday were vice presidents Jeffrey Webb from the Cayman Islands and Eugenio Figueredo of Uruguay — both major figures.

As ESPN the Magazine points out, FIFA has reached a tipping point. After Wednesday, the organization is sure to face more than just investigations. Public scrutiny from human rights groups over its decisions to host the World Cup in Russia and Qatar will surely increase. ESPN reports that an estimated 4,000 workers will die between now and the start of the 2022 World Cup as the country pushes its preperations. Despite calls for change, FIFA insists it will stay with the two countries for 2018 and 2022.

For story ideas, connect with soccer fans in your area (Google the names of bars where people watched the World Cup, or look for soccer fan clubs in your area). See if any of your local companies are advertisers during soccer games. And, watch how advertisers react to the scandal.

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