by Paul Kennedy

There are still six months left in 2020, which is shaping up to be one of the monumentally worst years in history, between the coronavirus pandemic and its economic fallout.

U.S. Soccer's fiscal year 2020 closed March 31, and preliminary financial results suggest they will be the worst in the federation's history with a deficit of $27.9 million.

That's an increase of $16.8 million from the federation's FY2020 budget and $7.6 million from what was projected seven months ago at the December 2019 board of directors meeting in Chicago.

In a presentation to the board of directors at its virtual meeting on Saturday, Pinky Raina, U.S. Soccer's chief financial officer, said the variance of $16.8 million between the actual and budgeted deficit was driven mainly by three areas: "The first one being our investment account and the volatility with the market, so we have lower investment income. The second area was our higher legal expenses and finally a lower fundraising due to timing delays."

U.S. Soccer's proposed budget for fiscal year 2021, approved by the National Council in February, less than a month before COVID-19 crisis shut everything down, called for an operating deficit of $27.5 million as part of a five-year plan to make what it said was "significant investments in the long-term growth of the sport."

That budget quickly went out the window. No updated projections for FY2021 were presented by Raina to the board on Saturday, but changes that have taken place or will likely take place include what she described as "programming changes and headcount changes," including the shuttering of the Development Academy, which was projected to cost $12 million, and the layoff of about 50 employees.

"We don't know return to play when, and we don't know how," she said. "Will these games be behind closed doors? Will there be open stadiums and caps? There's still questions that are uncertain and unanswered on pending litigation and CBA negotiations. We do not know what the outcome will be. We don't know what our registration levels will be. We don't know what the assumption of all other programming will be, whether that be referee, coaching, YNT [youth national teams], ENT [extended national teams], Open Cup or talent ID. And finally market performance with all the volatility that all of us have seen in the marketplace."

Just how much the financial outlook has changed since the beginning of the year is evident in the decline in the federation's net investments.

According to the budget report presented to the National Council in February, the federation began FY2020 with $139 million in investment assets and was projected to be at $123 million at the end of FY2020 (March 31). The federation's investment balance, Raina reported, is already down to $106 million, as of June 2020.

"I expect that we would have an increase in deficit for FY21 due to COVID-19 and market volatility," Raina said.

U.S. Soccer's five-year plan was to reduce its surplus of more than $160 million -- generated in part from a windfall from the hosting of the 2016 Copa Centenario -- to $50 million from 2018 to 2023. That projected surplus was reduced to $42 million by February 2020 -- before the pandemic -- because of an unanticipated increase in 2020 losses due to rising outside legal costs.

And now? "At the current time," Raina told the board, "we're expecting that $42 million balance will now end up being at $25 million."
The kicker: She said it was based on the assumption that business activity "normalizes" in the fiscal years 2022 and 2023.

FY2020 Preliminary Results (June 2020):
Operating Surplus (Deficit)
Revenue: $126,660,328
Expense: ($131,761,663)
Bottom Line: ($5,101,335)

Non-Operating Surplus (Deficit)
Revenue: $2,623,089
Expense: ($25,442,933)
Bottom Line: ($22,819,844)

All-In Surplus (Deficit):
Revenue: $129,283,417
Expense: ($157,204,596)
Bottom Line: ($27,921,179)

FY2020 Projections (Dec. 2019)
Operating Surplus (Deficit)
Revenue: $123,146,001
Expense: $143,406,820
Bottom Line: ($20,260,819)

Non-Operating Surplus (Deficit)
Revenue: $12,228,785
Expense: ($12,253,568)
Bottom Line: ($24,783)

All-In Surplus (Deficit):
Revenue: $135,374,786
Expense: ($155,660,388)
Bottom Line: ($20,285,602)

FY2020 Budget
Operating Surplus (Deficit)
Revenue: $122, 397,110
Expense: ($137,176,731)
Bottom Line: ($14,779,621)

Non-Operating Surplus (Deficit)
Revenue: $9,580,000
Expense: $5,917,851
Bottom Line: $3,642,049

All-In Surplus (Deficit):
Revenue: $131, 957,110
Expense: $143,094,682
Bottom Line: ($11,137,572)