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Nonprofit Does Not Mean No Profit

original Society & Ideas

The plan that vanished in four days

On July 28, FIFA announced a plan for a new company called “FIFA Forward Enterprise (FFE).” The idea was to move the men’s and women’s World Cups and the Club World Cup’s commercial rights and operations into it, value the company at $20 billion, and sell roughly 20% to private investors. The lead investor named was Thrive Eternal, launched by Joshua Kushner in April 2026. Member associations had until September 19 to respond.

According to a report in the UK’s The Times, if Chairman Infantino took the top post at the new company, his compensation would be more than ten times what it currently is.

In the early hours of August 1, FIFA withdrew the plan. “We will not proceed with this proposal.” Four days after the announcement.

What caught my attention wasn’t the size of the compensation. FIFA is a non-profit association under Swiss law. It’s supposed to be an organization that doesn’t aim to generate profit. So how could a story about a tenfold increase in one individual’s pay even arise there?

There’s a second question too. Why was the plan withdrawn?

Last time, I wrote about how far an individual’s traits can account for an extreme outcome. The conclusion was that traits are a necessary condition, not a sufficient one. This piece continues that thread. The question now is: once a person who has passed through the necessary condition sits down in the chair, what decides what they do next?

Setting questions of right and wrong aside, let’s look at the mechanism in order.

Here’s the conclusion up front.

What the non-profit form prohibits is not the generation of profit. It’s distribution to outsiders. So the profit doesn’t disappear. It turns into non-monetary perks for insiders — discretion, prestige, privileges — and that’s where things get mired.

There’s a second point. The absence of anyone outside who receives a share of the profit also means the absence of anyone outside who has a stake in the gains and losses. People with a motive to monitor structurally cease to exist.

These two points explain why the plan emerged. They don’t explain why it was withdrawn. So at the end, I’ll have to correct my own framework.

What “non-profit” prohibits is distribution, not generation

The starting point is Hansmann’s (1980) nondistribution constraint. It’s a foundational text in nonprofit organization theory, still cited more than forty years later.

The definition is simple. A non-profit organization is prohibited from distributing surplus to those who control it — not from generating surplus in the first place.

FIFA holds a monopoly position. There is no substitute for the World Cup. So a surplus does arise. It’s a surplus generated purely from a position insulated from competition, and economics calls this rent. FIFA’s own announcement projects revenue of $15 billion for the 2026 tournament.

So where does that surplus go? There are no shareholders, so it can’t become a dividend. It would be naive to think it simply vanishes at that point; in reality it changes shape.

Glaeser & Shleifer (2001) and Glaeser (2003) lay this out. In organizations lacking a residual claimant, surplus is easily captured by insiders. It takes the form not of cash but of discretion, prestige, organizational expansion, and perks. Niskanen’s budget-maximizing bureaucrat model has the same structure.

In other words, the non-profit form only restricted the way a share could be taken — to non-monetary form.

Seen this way, it becomes clear what FFE actually was. It was a device for lifting the nondistribution constraint and converting a non-monetary share into cash.

And it wasn’t only about money. Under FIFA’s statutes, Chairman Infantino has one term remaining. CBS wrote that the top seat at the new company looked like a way to create a “commissioner”-like position extending beyond 2031. Term limits are a deadline attached to a non-monetary share. Set up a company, and that deadline comes off too.

Monitoring can only be done from outside

Now for the second point from the opening — that with no outside beneficiary, there is no outside monitor either.

Pielke Jr. (2013), in Sport Management Review, knocks down one accountability mechanism after another for FIFA: the state (only Swiss association law reaches it), the market, sponsors, member associations, the media. His conclusion is that there is almost no means of holding FIFA accountable.

It’s easier to see if you substitute a corporation. A member association’s position is close to that of an employee or a director. Assigned work within the organization, allocated a budget, with their livelihood riding on that allocation. If something seems wrong, they can raise their voice. They can object in meetings. But the place where they raise their voice is a place the other side built.

An outside shareholder is different. They hold a bundle of claims: voting rights, access to the books, derivative suits, and the freedom to sell their shares. It’s this last one that has teeth. If shares are sold, the stock price falls, and management’s jobs face real danger. Only someone who stands outside and still holds a concrete claim can shake the power structure.

FIFA has no one occupying that outside-shareholder position. Structurally, it comes down to this: because a corporation’s residual claims are transferable, deteriorating management gets bought out. A non-profit association has no such mechanism. Discipline through a market for corporate control is zero.

In fact, the only bodies that have ever managed to reach FIFA are foreign criminal authorities operating through an entirely different hook. The 2015 US Department of Justice indictment used dollar clearing and RICO as a detour. Switzerland also acted, but both the 2014 PEP designation and the criminalization of private-sector bribery that took effect in July 2016 were legislation enacted after the fact, following incidents that had already occurred.

That covers the explanation for why the plan emerged. There is a share to be taken, and no monitor outside. So the proposal could come into being.

The arithmetic of buying 211 votes

So what kind of person ends up at the top of an organization like this?

FIFA operates on one association, one vote. 211 associations. Spain and San Marino carry the same single vote. Winning a majority in the chairman’s election requires 106 votes, and those 106 votes can be gathered without any relation to population or competitive strength.

Political science’s selectorate theory (Bueno de Mesquita et al.) predicts the optimal strategy under this kind of design. When a winning coalition can be bought cheaply, a leader sustains that coalition not with public goods (quality of competition, governance) but with private goods (development funds).

The figures put on the table this time are, as it happens, the answer key. According to reports, associations that voted in favor of FFE were offered £30.1 million, roughly $40 million, per association. Current FIFA Forward allocations are said to run around $8 million over four years.

The model’s prediction and the numbers actually placed on the table line up. Anyone can verify this from the same reporting.

There is research specific to FIFA as well. Geeraert (2018) frames corruption in international sports federations as a problem of “bad barrels” rather than “bad apples” — the claim being that it’s structure, not individuals, that produces it. Gibel, Überbacher & Scherer (2026) go further, tracking FIFA longitudinally from 2016 to 2024 and analyzing how anti-corruption reforms were rolled back. This isn’t research on “until self-correction kicks in,” but on “the process by which self-correction is dismantled.”

“Indifferent to being disliked” means the constraint has come off

Back to the question of compensation.

Alongside the optimal-contracting view of executive pay, there is Bebchuk & Fried’s (2004) managerial power approach. On this view, compensation is set not by the market or the board but by the executive’s bargaining power, and the ceiling on that power is what they call the “outrage constraint” — the cost of public indignation.

Under this framework, a person insensitive to backlash from those around them can extract more, precisely because the constraint is looser.

Still, I want to keep the logic precise. Shamelessness is not a sufficient condition. It’s a condition that loosens the constraint. It only takes effect once a share already exists (the nondistribution constraint) and monitoring is absent (the accountability gap). Only once all three are in place does a difference in character become a difference in dollar amount.

This takes the same shape as last time. Traits operate at the level of the necessary condition. Structure fills the gap left by the sufficient condition.

The part my own framework missed

Up to this point, I’ve explained why the plan emerged. But I can’t explain the withdrawal.

The straightforward prediction from this framework was: “Even if member associations object, it’s just talk, and it won’t hold together until the next general assembly.” In reality it was over in four days. That prediction missed.

I want to be clear about why it missed. I had assumed member associations had no exit card to play — that stepping away from the World Cup wasn’t a realistic option.

But UEFA’s 55 associations agreed on Thursday to boycott FIFA-run tournaments. The AFC, CONCACAF, and CONMEBOL also came out in opposition.

This isn’t voice. It’s exit.

And this exit is stronger than a shareholder’s “sell.” When a shareholder sells, the company can keep making its product. When member associations step away, the product itself — the World Cup — can’t be made at all. They were simultaneously recipients of the allocation and the very factor of production behind the product. The $20 billion valuation assumes strong national teams will keep showing up. When the factor of production withdraws, the valuation disappears.

In other words, member associations were not in a weaker position than outside shareholders — they held a kind of claim that outside shareholders don’t even have. That’s where I had it backwards.

And this isn’t the first time. In 2019, the European Club Association notified FIFA it would not participate in the new Club World Cup. The 2021 biennial World Cup proposal also collapsed after European associations signaled withdrawal. The same channel has now operated three times. That’s not coincidence — it’s a mechanism.

That said, the limits of this mechanism are just as clear.

First, it’s costly. A boycott hurts the boycotters too. It requires agreement among 55 associations, and it can’t be used routinely.

Second, it only works on transactions. What activated it this time was that the plan required member associations’ approval. The moment approval was sought, a window for refusal opened. Operations that don’t require approval fall outside this channel’s reach.

Third, it doesn’t reach the chair itself. The plan disappeared, but the chairman remains in office. UEFA’s statement that “the current FIFA leadership has lost UEFA’s trust” also means there’s no means of removing someone who has lost that trust.

In short, this isn’t an organizational monitoring device. It’s a veto over an individual transaction. The share to be taken, the gap in monitoring, and the design of selection all remain exactly as they were.

The grounds for acquiring the asset and the method of disposing of it don’t match

I think what was really at stake in this affair wasn’t the size of the compensation.

The World Cup as an asset was built up over a century on the promise that “FIFA is the trustee of a public good.” Broadcasters, sponsors, and national associations alike have all deposited money and rights on top of that promise.

Cancel that promise and cash out only the asset, and the grounds on which it was acquired no longer match the method by which it’s being disposed of.

UEFA’s statement that “the soul and governance of football are not a tradable asset” hits precisely this point, and I think it’s legally correct.

No sovereign state capable of stopping this appeared this time either. What stopped it were those who stood inside and held the factor of production. And there’s no guarantee that same hand can be played the same way next time.

——Up to here, this has been about a single organization, FIFA. But this mechanism isn’t unique to sports bodies. Next time, I’ll look at the same device operating in an entirely different place.

References

This piece was conceived and directed by Kuzuryu, with the writing done by AI.

Originally published in Japanese at https://clazytech.com/2026/08/1736/. Translated with LLM assistance and reviewed before publication.