The windfall that's changed U.S. Soccer's financial landscape

U.S. Soccer’s filing of its Federal income taxstatement (Form 990) for its tax year ending March 31, 2018, gives us a glimpse into the financial condition.

It shows, as is required, the compensation — salary, benefits, bonuses andsettlements — to its highest-compensated employees. As a testament to the state of the men’s national team program, three of the five highest-compensated employees were former coaches in the men’snational team program — head coaches Jurgen Klinsmann and Bruce Arena and assistant Andreas Herzog. Klinsmann and Herzog were fired in November 2016 while Arena resigned inOctober 2017.

But the Form 990 also offers a glimpse into the financial state of the federation. As of March 31, 2018, U.S. Soccer had net assets of $162,738,719, an increase of almost$100 million in five years, from $64,096,906.

U.S. Soccer, Net assets
2018: $162,738,719
2017:$148,995,745
2016: $98,004,402
2015: $83,082,764
2014: $73,619,126
2013: $64,094,906

More than two-thirds of that increase comes fromone event: the 2016 Copa Centenario. When the event being planned by Conmebol and Concacaf to celebrate the 100th anniversary of the first Copa America turned out to be part of a criminal enterprisecreated for the primary purpose of lining the pockets of confederation and South American federation presidents to the tune of tens of millions of dollars and most of them were arrested or indicted,U.S. Soccer was faced with a decision. It could pull the plug on the tournament being played on U.S. soil or it could organize the tournament itself with DOJ approval.

Very reluctantly,U.S. Soccer decision-makers were convinced by then-U.S. Soccer president Sunil Gulati to go ahead with the tournament, but it has been a windfall to the tune of almost $72 million. U.S. Soccerreported receiving $18,719,385 from the CA2016 organizing committee it formed in FY2018 after receiving $53,034,469 in FY2017.

The profit of $46,037,506 in FY2017 is the largest thefederation has ever reported, topping the record of $16,673,714 set in FY2016 on the strength of the Victory Tour to celebrate the USA’s 2015 Women’s World Cup title in Canada.

U.S. Soccer, Net Profits (Revenues)
2018: $10,914,302 ($123,592,803)
2017: $46,037,506 ($152,122,659)
2016:$16,673,714 ($126,685,090)
2015: $8,595,932 ($102,127,196)
2014: $6,991,646 ($77,304,477)
2013: $4,279,831 ($65,138,738)

While revenues fromevents have been relatively flat over the last five years with the exception of FY2016 and to a lesser extend FY2015, the last year that the U.S. men went to the World Cup, revenues from sponsorshipsand royalties have doubled, driven by increases in federation deals with SUM and Nike.

Revenues, Sponsorship & Royalties (SUMPayments)
2018: $51,985,903 ($27,249,999)
2017: $48,887,978 ($26,500,000)
2016: $49,698,623 ($25,249,998)
2015: $39,788,018($18,305,172)
2014: $31,883,705 ($15,433,754)
2013: $25,439,368 ($11,101,067)

Revenues, Nat’l Team/Int’Games/Open Cup
2018: $31,483,992
2017: $33,122,459
2016: $61,133,320
2015: $43,133,566
2014: $31,111,513
2013: $27,850,210

The CA2016 windfall over FY2017 and FY2018 has allowed the federation to increase spending into the next  two years without a corresponding increase inrevenues elsewhere. (It should be noted U.S. Soccer doesn’t post CA2016 tax filings on its web site and Form 990 data centers only show a tax filing for FY2016, the year of the tournament, when it reported revenues of $189,681,375, almost all from ticket sales. CA2016 also operated a separatefor-profit subsidiary, CA2016 Marketing, that generated more than $36 million in 2016.)

U.S. Soccer projected operating losses of $13.9 million in FY2019, which ends at the end ofnext month, and budgeted a loss of $14.3 million in FY2020. The picture in FY2020 will look a lot different if the USA wins the 2019 Women’s World Cup in France — and embarks on anotherpost-championship tour — but that’s not a given.

The national team programs remain the biggest ticket item in the budget — up almost $20 million from last year to more than $61 millionfor FY2020 as the federation operates the women’s national team in a World Cup year, ramps back up the men’s national team and launches the extended national team program — but the federation is nowspending almost $30 million a year on player development — almost twice as much as it spent five years ago — and almost $10 million on coaching education — more than triple as much as it spent inFY2015.

As U.S. Soccer president Carlos Cordeiro noted when he spoke after Saturday’s AGM, the huge reserves are being used to fund thesedeficits. “Why are we having these deficits? Because our spending has been growing incrementally. We can’t starve these programs just to maintain a reserve.”

Photo: Ken Murray/Icon Sportswire