By David Owen
March 26 – FIFA has yet to rule out buying shares in stock exchange-listed football clubs such as Italy’s Juventus and Manchester United of the Premier League as part of its updated approach to management of its financial assets.
As exclusively reported by Insideworldfootball last week, the world body recently gave itself permission to invest in equities as part of its asset management operations. FIFA may now put a maximum of 5% of its total investment portfolio into equities. Since the fair value of this portfolio was put at $3.62 billion at the end of last year, this implies that the organisation may be on the hunt for as much as $180 million worth of equities to put its money into.
Asked directly whether there were restrictions on these activities and, in particular, if FIFA could now theoretically buy shares in stock-exchange-listed clubs such as the English and Italian giants, the governing body acknowledged that asset managers might receive “specific exclusions”. But it also underlined that all investment decisions, “including those for equities”, would be based purely on “risk and economic criteria”.
In practice, it is hard to see how the global governing body could countenance investing in entities whose value might be directly influenced by its rulings and decisions, especially at a time when it is seeking to increase its exposure to the elite club game by expanding the Club World Cup.
FIFA’s response, in full, was as follows: “The overriding long-term investment objective is the real preservation of the value of FIFA’s financial assets.
“FIFA’s Asset Management Regulations ensure that the investment activity is conducted securely, transparently and efficiently in line with this objective and follow best practice. For example, we have segregated the investment duties, so that investment decisions, best-execution and investment controlling are clearly separated and ensure proper controls over our investments.
“As a result, all investment decisions (including those for equities) will be done purely based on risk and economic criteria.
“With regards to the investment strategy, FIFA is in the process to award the various investment classes to asset managers and no decision has been taken in this regard yet.
“In this process, it is foreseen to specifically define the investment universe and asset managers may receive specific exclusions accordingly.”
As already reported, and as restated in this response, FIFA’s overriding investment objective is said to remain the “preservation of the real value of FIFA’s financial assets”.
Equities are generally viewed as a higher risk, higher reward asset class than money market instruments and government and corporate bonds because, unlike debt, there is no obligation eventually to repay the capital invested.
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