Last week, FINA, which oversees a majority of the largest international water sports competitions, released their 2020 financials that showed a roughly $22.4 million (21.5m CHF) loss for the organization, largely due to the COVID-19 pandemic. The postponement of the 2020 Olympics and cancellation of World Cup events across water sports eliminated most revenue-generating opportunities for the organization, while its reduction in expenses did not match the revenue drop.
Note: FINA is based in Lausanne, Switzerland, and their reported financials are all in Swiss Francs (CHF). It has always been valid that fluctuations in currency exchange rates (e.g., how much a US Dollar is worth, vs. the Euro) can impact some of the numbers in how historical financial data for multinational businesses are presented. This was especially true in 2020, due to the COVID-19 pandemic.
For the sake of this article, we will use the “average” yearly exchange rates outlined in the 2020 and 2016 audit reports for each figure from its corresponding year:
- 2020: 1 USD = 0.9615 Swiss Francs (CHF)
- 2019: 1 USD = 0.9936 Swiss Francs (CHF)
- 2016: 1 USD = 1.016354 Swiss Francs (CHF)
- 2015: 1 USD = 1.001012 Swiss Francs (CHF)
In its annual audit conducted by PricewaterhouseCoopers, FINA saw its operating revenue decline from $69.1 million (68.7m CHF) to $9.3 million (9.0m CHF), while its operating expenses declined from $76.2 million (75.7m CHF) to $29.2 million (28.1m CHF). A swing in “financial activities” results from a $6.5 million (6.5m CHF) profit in 2019 to a $2.5 million loss (2.4m CHF) in 2020 drove the remainder of the $22.4 million (21.5m CHF) loss for the organization.
The biggest shifts in the report came from a 90%+ decline between 2019 and 2020 in “FINA Events income”, from $68.0 million (67.6m CHF) to $6.8 million (6.5m CHF), with corresponding “FINA Events expenses” dropping from $56.6 million (56.2m CHF) to $9.6 million (9.2m CHF). In a typical year, TV rights, sponsorships, and value-in-kind make up a majority of FINA Events revenue, while third-party services to help run events are the largest expenditure. A full breakdown of the FINA events financials is available on pages 18 and 19 of the report.
However, the news is not all bad for FINA. For starters, if 2016 is any indication, Olympic years are significantly more profitable than non-Olympic years (even if revenues may be lower, due to fewer FINA-controlled championship-level events in the calendar year). FINA saw its income nearly double from $14.7 million (14.7m CHF) in 2015 to $27.3 million (27.7m CHF) in 2016, largely due to a nearly $28m (28.5m CHF) bump in cash from the International Olympic Committee, with very little corresponding expenditures. For the 2020 report, this is likely folded into the “deferred income” (installments invoiced on a contractual basis for future events) line items in the liabilities section of the balance sheet.
In addition, the organization has plenty of restricted funds earmarked for downturns or catastrophic situations. FINA tapped into its $43.7 million (42m CHF) cash reserve earmarked specifically “to secure the organisation of FINA events, in case of any catastrophic event or fallback”. FINA leveraged $17.2 million (16.6m CHF) of that to help cover its losses for the year. Notably, FINA also has a “functioning reserve”–an additional $13.5 million (13m CHF) earmarked “to preserve the on-going concern and sustainability over one year activity of FINA‘s fixed expenses and administration”–that it did not need to use.
Other highlights of the 2020 financial statements include:
- “Administration expenses” dropped from $9.1 million (9.0m CHF) in 2019 to $8.7 million (8.4m CHF), including a ~10% reduction in payroll expenses, likely due to COVID-driven pay cuts or layoffs
- “Federations support” dropped from $6.79 million (6.75m CHF) to $0.16 million (0.15m CHF)
- The International Olympic Committee granted a loan of $1 million (0.96m CHF) to FINA, due the COVID-19 pandemic. The terms of the loan were not disclosed in the report
- “Out of Competition doping control” dropped from $3.4 million (3.4m CHF) to $2.3 million (2.2m CHF)
- “Financial investments valued at true and fair view” dropped from $6.1 million (6.0m CHF) to -$0.6m (-0.6m CHF). Details and terms of the investments were not disclosed in the report
This is a good write-up. Given all the criticisms that FINA has faced over the years, I’m pretty impressed that they had over $43m of earmarked cash and liquid securities on had (or maybe through a line of credit?) to survive such a situation. Given that this amount is well above half a year’s worth of operating expenses, and given the fact that in an event like COVID, they would likely have to cancel many events (and thus substantially lower these operating expenses), it’s a reasonable amount to have prepared. I still wonder if they could have drawn more from a line of credit somehow if they needed to.
But if you look at the deferred income footnote (FN10 of… Read more »
In 2019 which was the year before COVID struck operating revenue was a mere $69 million. We all know swimming is a minor sport but surely if FINA had been better run it would have been able to generate more commercial income. And it’s laughable just how bloated and top-heavy FINA is given how little value it creates.
Money well spent. Unenforceable breaststroke rules don’t write themselves!
They’re about to be enforced….and it’s going to be carnage.
Well, to be honest I’d prefer a clean sport which generates a moderate amount of revenue for the federation (like right now), and not end up with a corrupt and money-driven federation like FIFA.
But I know what you mean, seeing how widly practiced swimming (even just at school or basic swimming teaching lessons) is around the world, it’s mind boggling that it isn’t able to make more money.
I think they should be aiming towards more efficiency rather than quantity like they’ve done so far in many aspects (meets, competitions…). Having a simpler and single focus would make them more visible as a whole, and more easily readable for the general public
Not that I am the biggest fan of FINA, but their payroll expense is +/- 10% of normal operating revenue. Not sure how much you have looked at financials in your life, but that is really, really, low. Not sure that makes it into the “bloated and top-heavy” category.
WestCoastRefugee – that’s true on face value. However, there’s a big ‘payroll’ expense in the form of a massive per diem for a whole lot of people. Last public number we saw was $400/day/person. And I believe, but am not certain, that this is above and beyond meals they’re given at events + hotels, so their actual expenses don’t come out of the per diem.
In other words, they’re all paid an additiona $400/day. While not a crazy lucrative figure for top-level figures in a company if we presume they’re working 8 hours those days, it is a number that’s hidden out of sight on the financials, and is essencially payroll.
My financial skills are pretty good. The generous per diems paid to the FINA ‘family of volunteers’ and the first class travel, accommodation and meals are not captured in payroll expense.