Off Pitch: New Study Examines Financial Integrity of Global Football

February 25, 2016
by Doug Gavel

Global football is in trouble.  A rash of recent scandals involving Fédération Internationale de Football Association (FIFA) has tarnished the organization’s reputation, leading to the resignation of its president and many calls for reform. A new president will now be elected, but much more is needed to fill the many gaps that undermine the integrity of football and threaten its future success, given that FIFA’s troubles may be just the tip of the iceberg of problems plaguing the entire industry. 

This is the view of a new Center for International Development (CID) working paper. In the paper, Harvard Kennedy School Associate Professor Matt Andrews and CID research fellow Peter Harrington argue that the game’s finances are unevenly distributed and managed behind a veil, with organizing bodies plagued by weak financial regulatory structures that put many clubs at risk of collapse. 

“These weaknesses have emerged largely because the sector is dominated by a small elite of clubs, players and owners centered in Europe’s top leagues. The thousands of clubs beyond this elite have very little resources, constituting a vast base of ‘have-nots’ in football’s financial pyramid,” the authors write. “This pyramid developed in recent decades, fueled by concentrated growth in new revenue sources (like sponsorships, and broadcasting). The growth has also led to increasingly complex transactions—in player transfers, club ownership and financing (and more)—and an expansion in opportunities for illicit practices like match-fixing, money laundering and human trafficking.” 

Andrews and Harrington examine the issue through “five pillars of financial integrity” using data drawn from clubs, organizing bodies, primary research and personal interviews. Their key findings include:

  • a vast majority of the world’s clubs and governing bodies publish no financial data, leaving a vast dark space with no transparency;
  • a majority of global clubs and governing bodies are at ‘medium to high risk’ of financial failure;
  • European tax debts have grown despite Financial Fair Play, and confederations and FIFA contribute to a pattern of weak Fiscal Responsibility;
  • the global football sector is at ‘high risk’ of over-concentration, which poses existential questions for many clubs and even leagues; and
  • football’s governing bodies face a crisis of legitimacy stemming from a failure to tackle moral turpitude, set standards and regulate effectively.

Andrews and Harrington suggest a set of reforms designed to re-structure football and FIFA. These include separating out FIFA’s operational functions, bringing transparency to its fund flows, and strengthening its regulatory role. 

“This analysis pointed to major problems in all five financial integrity pillars – financial transparency and literacy, financial sustainability, fiscal responsibility, financial concentration, ad social responsibility and moral reputation,” they write. “None of these pillars stands tall, and as a result financial integrity in football is weak. Securing financial integrity in football will thus demand significant work and commitment, by many stakeholders.” 

Matt Andrews

Associate Professor Matt Andrews

"Securing financial integrity in football will thus demand significant work and commitment, by many stakeholders." --Matt Andrews and Peter Harrington

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