by Beau Dure @duresport
After the Copa America Centenario pushed U.S. Soccerâ€™s assets up to $162.7 million, the federation embarked on a spending plan that would take that stockpile down to $50 million, the financial equivalent of an old-school NASA capsule gently splashing down into the Pacific Ocean after orbiting the moon.
Now, in the midst of a pandemic, the ride back to Earth seems anything but smooth.
And U.S. Soccer was already dealing with legal complications. Legal fees, which wonâ€™t completely disappear just because much of the country is shut down, caused U.S. Soccer to knock down its soft-landing point from $50 million to $42 million. Verdicts and settlements, especially in the womenâ€™s national teamâ€™s lawsuit, could take a more substantial bite out of the federationâ€™s assets.
With all that in mind, U.S. Soccer has cut the Development Academy entirely -- a move that made sense on several levels but was a big card to play as the economy stumbled. The federation has also shut down youth national team programs for the time being and cut roughly 15% of its staff -- including well-regarded executives Brian Remedi and Tonya Wallach. The future of U.S. Soccerâ€™s much-cited but little-explained five-year spending plan is murky.
The federation has applied for a loan from a government coronavirus-relief program, ESPNâ€™s Jeff Carlisle reports.
Itâ€™s not that U.S. Soccer has immediately plunged into the red. Its assets are conservatively invested, shielding it from Wall Streetâ€™s volatility. The federation often budgets for losses on its national team games, especially this year. With fewer national team games, idled youth national teams and the DAâ€™s demise, the federationâ€™s bottom line may actually be better this year.
U.S. Soccerâ€™s budget for FY2021, which began covers April 1, 2020, to March 31, 2021, was approved at the 2020 National Council on Feb. 15 in Nashville. It called for an all-inclusive loss of $25.8 million with $118.6 million in total revenues and $144.4 million in total expenses.
(The federation budget and comparisons to two past years are available online. The spreadsheet is useful for seeing every line item in the federationâ€™s finances as they have been presented in Annual General Meeting books -- actual figures from FY 2019, projected figures from FY 2020, and the federationâ€™s budget for FY 2021. The FY 2020 projections are in the AGM book that was released in mid-January. The fiscal year ends March 31, so they don't include final numbers until the next year.)
But we should emphasize here: Those are the effects we know. The problem is what we donâ€™t know. Such as:
â€˘ The full impact of COVID-19 on national team costs, including whether the federation needs to play games without crowds, cutting a considerable amount of revenue while still incurring expenses.
â€˘ The full impact of COVID-19 on sponsorship money while national teams are idle.
â€˘ How much the federation might have to pay out in lawsuits. The womenâ€™s national team suit may require an eight-figure settlement, and in the unlikely event that the women were to win everything their economist calculates theyâ€™re due if FIFA bonuses are included, it could be nearly $70 million. The NASL case keeps dragging on like a TV series long past its prime, and the federation has not resolved legal tangles with Relevent Sports and the U.S. Soccer Foundation, among other legal matters.
â€˘ How the federation will respond to new leadership. Cindy Parlow Cone took over as president March 12. Will Wilson was hired as CEO March 23. Of the 10 senior executive positions assigned to report directly to the CEO in an April 2018 reorganization, two were vacant at the time of the reorganization, and five people in those positions have since departed, including Remedi and Wallach. Another, chief legal officer Lydia Wahlke, has been placed on administrative leave.
Here are a few aspects of U.S. Soccerâ€™s finances, both known and unknown.
National team games, both menâ€™s and womenâ€™s, are budgeted to lose money. Fewer games would reduce that loss, but the federation is still on the hook to pay the salaries of men's and women's national team coaches and 17 womenâ€™s national team players ($100,000 each plus benefits).
Budgeted revenue: $23.6 million. Budgeted expenses: $42 million.
Sponsorship and marketing is where the federation gets back the money it spends on the national team and a whole lot more. The contracts with Soccer United Marketing and Nike run through December 2022, so both agreements guarantee considerable sums of money -- indeed, SUM and U.S. Soccer officials often rebut critics by pointing out that SUM absorbs much of the risk that the federation could otherwise face on its own. Weâ€™ll find out this year how much or how little that buffer helps.
Budgeted revenue: $54 million. Budgeted expenses, including broadcasting: $8.3 million.
Youth national teams are a major expense with no budgeted revenue. These teams are currently idle, as the pandemic makes camps and games impossible. (The federation has already announced only five age group teams -- men's U-23, U-20 and U-17 teams and women's U-20 and U-17 teams -- will remain operational, contingent of working and traveling conditions, in 2020.) The federation still has to pay staff, depending on who has been laid off or furloughed. (Only four full-time youth national teams are on the staff.)
Budgeted expenses: $10.3 million, plus related player development programs for a total of $20.6 million.
Investments: U.S. Soccer has taken a conservative approach with its assets. As of March 2019, the federation had $62.3 million in equity mutual funds, $10.8 million in fixed income mutual funds, $39.3 million in corporate bonds, $23.8 million in U.S. Treasury notes, $9.4 million in U.S. government agency securities, and a little less than a million in cash. The stock market may have a few more wild ups and downs in the next year, but the federationâ€™s exposure isnâ€™t too much to bear.
Budgeted interest/investment income (not a change in investment value): $4.8 million.
Development Academy: The decision to dissolve the DA will save the federation a lot of money in FY 2021 and beyond.
Budgeted revenue: $1.1m. Budgeted expenses: $9.4 million. (Club development expenses are another $2.9 million.)
Other revenue sources that could come in lower than budgeted are registration fees ($6 million) and sanctioning fees for international games (net $2.5 million). Whether fundraising comes in above or below its budgeted $3 million is impossible to predict. Canceling the U.S. Open Cup would have minimal impact.
Some expenses may come in lower as well. Staff cuts will save a couple million. The federationâ€™s referee programs, which may be difficult to operate during the pandemic, are budgeted at a deficit of $1.3 million. Coaching programs, a point of emphasis in recent years, are budgeted at a deficit of more than $5 million.
The most painful cut, should the budget get to that point, would be the Innovate to Grow grant program for local development initiatives, budgeted at $3 million.
And the grant program is just one of several points of emphasis in U.S. Soccerâ€™s five-year plan. The federation has never clearly articulated that plan, but we can tell from vague statements and budget comparisons that theyâ€™re working on coaching education, an across-the-board technology upgrade, extended national teams (Paralympic, beach, futsal) and the Innovate to Grow program.
Those plans are surely getting an audit under the new reality and new management. But improving the menâ€™s national team, keeping the womenâ€™s national team in the worldâ€™s elite, and growing the game for youth and underserved communities all come with a price tag. Scouts, coaches and competitions -- from youth national team games to a revved-up Open Cup -- all cost money. No candidate in the 2018 USSF presidential election ran on a platform of â€śYou know what? Weâ€™re doing fine. Letâ€™s just sit on these assets.â€ť (After his first year as president, the 2018 winner Carlos Cordeiro, who has since resigned, emphasized, "We can't starve these programs just to maintain a reserve.")
And lest we forget, both senior national teams are looking for more of that money as well. The women want back pay and a deal on par with the menâ€™s deal. If the men get a new deal and a raise after playing 15 months on an expired collective bargaining agreement, the womenâ€™s deal will need to increase accordingly to keep everyone out of another round in court.
Finally, guidance for nonprofits is to maintain enough money to cover 3-6 months of basic expenses. Even with all national teams idle, that might be $15 million. Maybe $10 million if the lawsuits are all dropped.
So we wonâ€™t know whether U.S. Soccer can carry on with its bold investments in the future until we know the full impact of COVID-19, lawsuits and the management shakeup.
All we know now is that abstract numbers on a spreadsheet are being replaced by real people losing their livelihoods.