Notes

30. Financial risk management

a) Accounting classifications and fair value measurements
31 December 2023 in TUSD
Financial assets/ liabilities at fair value through profit and loss
Financial assets/ liabilities at amortised cost
Financial assets/ liabilities at FVOCI
Total
Financial assets measured at fair value
Derivative financial assets designated as hedging instruments6,9466,946
Other derivative financial instruments5,1515,151
Equity investment funds106,113106,113
Debt securities103,234569,433672,667
Total221,444569,433790,877
Financial assets measured at amortised cost
Cash and cash equivalents391,924391,924
Receivables220,946220,946
Deposits584,095584,095
Debt securities2,865,0092,865,009
Loans113,006113,006
Total4,174,9804,174,980
Financial liabilities measured at fair value
Derivative financial liabilities designated as hedging instruments278278
Other derivative financial instruments80,94980,949
Total81,22781,227
Financial liabilities measured at amortised cost
Payables81,80281,802
Lease liabilities200,445200,445
Total282,247282,247
Carrying amount
Fair value
31 December 2023 in TUSD
Total
Level 1
Level 2
Level 3
Financial assets measured at fair value
Derivative financial assets designated as hedging instruments6,9466,946
Other derivative financial instruments5,1515,151
Equity investment funds106,113106,113
Debt securities672,667672,667
Total790,877
Financial assets not measured at fair value
Cash and cash equivalents391,924
Receivables220,946
Deposits584,095
Debt securities2,865,009936,2231,906,394
Loans113,006
Total4,174,980
Financial liabilities measured at fair value
Derivative financial liabilities designated as hedging instruments278278
Other derivative financial instruments80,94980,949
Total81,227
Financial liabilities not measured at fair value
Payables81,802
Lease liabilities200,445
Total282,247
Fair value disclosure: equity investment funds and some debt securities are traded in active markets and the fair value is based on unadjusted quoted market prices on the balance sheet date (Level 1). Derivatives and some debt securities are not traded in active markets and the fair value on the balance sheet is determined by using valuation techniques (Level 2) with observable market data. No transfer was made between Level 1 and Level 2 during the year. FIFA has not disclosed the fair values for financial instruments such as short-term receivables and payables because their carrying amounts are a reasonable approximation of fair value.

Fair value measurements and disclosure of assets and liabilities

When measuring the fair value of an asset or a liability, the group uses observable market data as far as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

  1. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

  2. Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

  3. Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability are categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety at the lowest level input that is significant to the entire measurement.

31 December 2022 in TUSD
Financial assets/ liabilities at fair value through profit and loss
Financial assets/ liabilities at amortised cost
Financial assets/ liabilities at FVOCI
Total
Financial assets measured at fair value
Derivative financial assets designated as hedging instruments12,25512,255
Other derivative financial instruments6,5676,567
Equity investment funds86,97086,970
Debt securities98,322536,226634,548
Total204,114536,226740,340
Financial assets measured at amortised cost
Cash and cash equivalents1,708,1021,708,102
Receivables357,850357,850
Deposits314,395314,395
Debt securities2,144,9362,144,936
Loans855,575855,575
Total5,380,8585,380,858
Financial liabilities measured at fair value
Other derivative financial instruments102,970102,970
Total102,970102,970
Financial liabilities measured at amortised cost
Payables653,434653,434
Lease liabilities186,783186,783
Total840,217840,217
Carrying amount
Fair value
31 December 2022 in TUSD
Total
Level 1
Level 2
Level 3
Financial assets measured at fair value
Derivative financial assets designated as hedging instruments12,25512,255
Other derivative financial instruments6,5676,567
Equity investment funds86,97086,970
Debt securities634,548634,548
Total740,340
Financial assets not measured at fair value
Cash and cash equivalents1,708,102
Receivables357,850
Deposits314,395
Debt securities2,144,936864,6061,235,765
Loans855,575
Total5,380,858
Financial liabilities measured at fair value
Other derivative financial instruments102,970102,970
Total102,970
Financial liabilities not measured at fair value
Payables653,434
Lease liabilities186,783
Total840,217
Fair value disclosure: equity investment funds and some debt securities are traded in active markets and the fair value is based on unadjusted quoted market prices on the balance sheet date (Level 1). Derivatives and some debt securities are not traded in active markets and the fair value on the balance sheet is determined by using valuation techniques (Level 2) with observable market data. No transfer was made between Level 1 and Level 2 during the year. FIFA has not disclosed the fair values for financial instruments such as short-term receivables and payables because their carrying amounts are a reasonable approximation of fair value.

b) Financial risk management

FIFA is exposed to currency and interest risks as well as credit, liquidity and equity price risks in the course of its normal operations.

Credit risk

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 default, 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 arise if several parties were unable to meet their contractual obligations. FIFA’s management monitors the credit standing of the Commercial Affiliates very closely on an ongoing basis. Given their good credit ratings and the high diversification of the portfolio of Commercial Affiliates, the management believes that this scenario is unlikely to occur. The vast majority of cash and cash equivalents are held with bank and financial institution counterparties with a rating equivalent to “A-1” or higher in S&P ratings. Fixed-income investments with residual terms to maturity of 12 months or less are only executed with borrowers with a short-term rating of “A-2” or higher. Investments in bonds are only executed in listed, tradable bonds issued by borrowers with a “BBB-” rating or higher. Derivative financial instruments are executed only with counterparties with high credit ratings. The carrying amount of the financial assets represents the maximum exposure to credit risk.

Equity price risk

FIFA’s exposure to equity price risk arises from equity investment funds held by the group classified as at fair value through profit or loss. FIFA manages its price risk arising from equity securities through diversification. As at 31 December 2023, the exposure to equity investments was USD 106 million (2022: 87 million). If the fair values of the equity investments had increased/(decreased) by 10%, the impact on the net result would have been USD +10.6 million or USD -10.6 million, respectively (2022: USD +8.7 million or USD -8.7 million).

Interest rate risk

Interest rate risks arise from changes in market interest rates, which could affect the group’s profit or loss or equity. Since the interest rates of all term deposits and debt securities are fixed, there is only limited exposure to cash flow interest rate risk. FIFA’s interest rate risk exposure therefore mainly arises from changes in the fair value of such fixed-rate debt instruments measured at FVOCI and FVTPL. As at 31 December 2022 and 31 December 2023, there was no interest rate risk arising from financing transactions because FIFA is self-financed.

Foreign currency risk

FIFA’s functional currency is USD because the majority of its cash flows are denominated in USD. Exposure to foreign currency exchange rates arises from transactions denominated in currencies other than USD, especially in EUR, CHF, AUD and QAR. FIFA receives foreign currency cash inflows in the form of revenue from the sale of certain rights denominated in currencies other than USD, such as EUR, GBP and CHF. On the other hand, FIFA has substantial costs, especially employee costs and operating costs in connection with FIFA’s offices in Zurich, denominated in CHF and other currencies. The Controlling & Strategic Planning Subdivision regularly forecasts the liquidity and foreign exchange requirements. If any foreign currency risks are identified, FIFA uses derivative products to hedge this exposure (see also Note 31).

As at 31 December 2023, FIFA was exposed to the following foreign exchange fluctuation risks:

  • If the CHF had gained 10% against the USD as at 31 December 2023, the impact on the net result would have been USD +3.1 million (2022: USD +1.6 million).

  • If the EUR had gained 10% against the USD as at 31 December 2023, the impact on the net result would have been USD +0.8 million (2022: USD +2.4 million).

  • If the BRL had gained 10% against the USD as at 31 December 2023, the impact on the net result would have been USD +0.1 million (2022: USD -0.4 million).

  • If the AUD had gained 10% against the USD as at 31 December 2023, the impact on the net result would have been USD +0.9 million (2022: USD -0.2 million).

  • If the QAR had gained 10% against the USD as at 31 December 2023, the impact on the net result would have been USD +0.1 million (2022: USD +4.6 million).

This fluctuation analysis can be applied using the same method in reverse (a decrease of 10%). It only shows the effect from a risk management perspective and not realised gains or losses.

Positions exposed to foreign currency risk as at 31 December 2023
in thousands
CHF
EUR
BRL
AUD
QAR
Cash and cash equivalents*2,4833,122047508
Receivables41,9247,8813,88313,2984,763
Financial assets*6620000
Total assets in foreign currency45,06911,0033,88313,3455,271
Payables17,8953,442232400
Lease liabilities1,455265000
Total liabilities in foreign currency19,3503,707232400
Net exposure in foreign currency25,7197,2963,86013,1055,271
Net exposure in functional currency (USD)30,5068,0767958,9721,448
Positions exposed to foreign currency risk as at 31 December 2022
in thousands
CHF
EUR
GBP
AUD
QAR
Cash and cash equivalents*19,68818,22429393205,272
Receivables28,70822,7691416951,851
Financial assets*7240000
Total assets in foreign currency49,12040,993434162257,123
Payables32,28016,6553,7723,49391,390
Lease liabilities2,4601,680000
Total liabilities in foreign currency34,74018,3353,7723,49391,390
Net exposure in foreign currency14,38022,658-3,338-3,331165,733
Net exposure in functional currency (USD)15,56424,116-4,019-2,25745,522
* Positions exposed to foreign currency risk arise on financial instruments that are denominated in a foreign currency, i.e. in a currency other than the functional currency in which they are measured. The amounts displayed in the above tables represent the unhedged portion in foreign currency. As at 31 December 2023, FIFA held a total amount of USD 1,805 million (2022: USD 1,868 million) in financial assets, USD 0 million (2022: USD 92 million) in cash and cash equivalents, categories of which were denominated in CHF and are fully hedged against foreign currency risk.

Liquidity risk

As at 31 December 2022 and 31 December 2023, FIFA was self-financed. Moreover, FIFA holds mortgage notes in the amount of CHF 145.7 million (2022: CHF 145.7 million), guaranteed by its own properties, which could be used to cover any additional liquidity needs.

Maturity of financial liabilities
31 December 2023
31 December 2022
in TUSD
90 days
1 year or less
More than a year
90 days
1 year or less
More than a year
Payables – member associations and confederations023,37600377,9790
Payables – third parties and related parties58,42600275,45500
Derivative financial liabilities081,0561700102,9700
Total58,426104,432170275,455480,9490

Please refer to Note 28 for the maturity analysis of undiscounted lease liabilities.

More

29. Reserves

31. Hedging activities and derivative financial instruments