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Nonprofit Does Not Mean No Profit

original Society & Ideas

A Plan That Vanished in Four Days

On July 28, FIFA announced plans for a new company called “FIFA Forward Enterprise (FFE).” Commercial rights and tournament operations for the men’s and women’s World Cups and the Club World Cup would move there, valued at $20 billion, with roughly 20% sold 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.

The Times of London reported that if President Infantino took the top job at the new company, his compensation would be more than ten times his current pay.

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

What caught my attention wasn’t the size of the compensation. FIFA is a nonprofit association under Swiss law. It’s supposed to be an organization that doesn’t exist to generate profit. So how could a story about someone’s pay increasing tenfold even arise there?

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 Why was the plan withdrawn?

Last time, I wrote about how far a person’s own character can drive an extreme outcome. My conclusion was that character is a necessary condition, not a sufficient one. This piece continues from there, looking at what determines what a person does once they’ve passed the necessary-condition test and taken the seat.

I’ll set aside judgments of right and wrong and walk through the mechanics in order.

Let me state the conclusion up front.

What the nonprofit form prohibits isn’t the generation of profit. It’s distribution to outsiders. So the profit doesn’t disappear. It transforms into non-monetary interests — insider discretion, prestige, perks — and that’s where things get mired.

There’s a second point. The absence of anyone outside who receives a share of the proceeds also means the absence of anyone outside with a stake in the gains and losses. Structurally, no one is left with a motive to monitor.

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 They don’t explain why it was withdrawn.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

What “Nonprofit” Prohibits Is Distribution, Not Generation

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

The definition is simple. A nonprofit 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 — a surplus generated by a position insulated from competition itself, what economists call 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 doesn’t become dividends. It would be a naive mistake to assume it simply vanishes; in practice it changes form.

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

In other words, the nonprofit form merely confined how the take could be received to non-monetary channels.

Seen this way, what FFE was becomes clear. It was a device to lift the nondistribution constraint and convert non-monetary takings into cash.

It’s not just about money, either. Under FIFA’s statutes, President Infantino has one term remaining. CBS wrote that the seat atop the new company looked like a means of creating a “commissioner”-style position extending beyond 2031. Term limits are a deadline attached to non-monetary takings. Create a company, and that deadline comes off too.

Monitoring Can Only Happen From Outside

Now let me verify the second point I set out at the start: with no outside beneficiaries, there is no one to monitor.

Pielke Jr. (2013), writing in Sport Management Review, dismantles one accountability mechanism against FIFA after another — the state (only Swiss association law applies), the market, sponsors, member associations, the media. He concludes that almost no means exist to hold FIFA accountable.

It’s easier to see if you map it onto a corporation. A member association’s position is closer to that of an employee or a board director. It’s assigned work within the organization, allocated a budget, and its livelihood rides on that allocation. It can raise its voice if something seems wrong. It can object at meetings. But the place where it raises its voice is a place the other side built.

An outside shareholder is different. Shareholders hold a bundle of claims: voting rights, the right to inspect the books, derivative suits, and the freedom to sell their shares. That last one is what bites. A sell-off drives the share price down and puts management’s jobs in real jeopardy. Only someone outside who still holds a concrete claim can shake the power structure.

FIFA has no equivalent to this outside shareholder. Structurally, it comes down to this: a joint-stock company’s residual claims are transferable, so if management deteriorates, the company can be bought out. A nonprofit association has none of that. Discipline through a market for corporate control is zero.

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

This much explains why the plan emerged. There’s a take, and there’s no outside monitor. So the proposal was viable.

The Arithmetic of Buying 211 Votes

So what kind of person ends up sitting atop an organization like this?

FIFA operates on a one-association-one-vote basis: 211 associations. Spain and San Marino have the same single vote. Winning a presidential election requires a majority of 106 votes, and those 106 votes can be assembled with no relation to population or competitive strength.

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

The figures put forward this time confirm it. According to reports, associations that supported FFE were offered £30.1 million each, roughly $40 million. The current FIFA Forward allocation is reportedly around $8 million over four years.

The model’s prediction matches the number actually placed on the table. Anyone can verify this from the same reporting.

There’s research specific to FIFA as well. Geeraert (2018) framed corruption in international sports federations not as a “bad apples” problem but as a “bad barrels” problem, arguing that it’s produced by structure, not people. Gibel, Überbacher & Scherer (2026) go further, tracking FIFA longitudinally from 2016 to 2024 and analyzing how anti-corruption reforms were rolled back. It’s a study not of “until self-correction takes hold” but of “the process by which self-correction gets dismantled.”

Being Unbothered by Being Disliked Means the Constraint Has Come Off

Now let me return to the question of compensation.

Separate from optimal-contracting theory, there’s Bebchuk & Fried’s (2004) managerial power approach to executive pay. On this view, compensation is set not by the market or the board but by the executive’s own bargaining power, with an upper bound set by “the cost of public outrage.” They called this the outrage constraint.

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

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

This takes the same shape as last time. Character does its work at the level of the necessary condition. It’s structure that fills the gap left open by the sufficient condition.

Where My Own Framework Fell Short

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 that even if member associations objected, it would remain mere voice and wouldn’t survive until the next general assembly. In fact it ended in four days. That prediction missed.

I want to be clear about why it missed. I had assumed member associations held no exit card — that there was, in effect, no option to step away from the World Cup.

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 more powerful than a shareholder’s “sell.” When shareholders sell, the company can keep making its product. When member associations step away, the World Cup as a product simply cannot be made. They were simultaneously recipients of the allocation and a factor of production for the product itself. The $20 billion valuation presumes that good national teams will show up. When the factor of production withdraws, the valuation disappears.

In other words, member associations were, far from being weaker than outside shareholders, holding a kind of claim that outside shareholders don’t even have. That’s where I had it wrong.

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 they would withdraw. The same pathway has now fired 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 can’t be used routinely.

Second, it only works on transactions. What activated this time was the fact 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 the reach of this pathway.

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

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

The Grounds for Acquisition and the Method of Disposal Don’t Match

What was really at stake in this affair, I think, 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 staked money and rights on that promise.

To cancel that promise and cash out the asset alone leaves the grounds for acquisition and the method of disposal mismatched.

The point UEFA’s statement drives at — “the soul and governance of football are not assets to be traded” — is, I think, legally correct.

No sovereign state capable of stopping this appeared this time either. The ones who stopped it were insiders who held the factor of production. And that hand may not be one they can play the same way next time.

—So far, this has been the story of 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 setting.

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.