CHICAGO — The United States Soccer Federation, a non-profit tasked with promoting the sport in America, expects to spend around $9 million fighting lawsuits in the 2020 financial year alone.
The $9 million projection, which covers the 12 months beginning April 1, 2019, was revealed by USSF CFO Pinky Raina at a board of directors meeting in Chicago on Friday. And it is heavily based on the previous fiscal year’s legal fees, meaning U.S. Soccer will spend well into eight figures to fight the multiple suits it is currently facing.
It is unclear how much, specifically, has been spent battling a gender discrimination lawsuit filed by women’s national team players against the federation in March. That suit, one of several that have hit U.S. Soccer recently, was mentioned during Friday’s opening remarks by U.S. Soccer president Carlos Cordeiro, who termed it a “challenge.”
But it is not the only one. The USSF has also been sued by, among others:
The North American Soccer League (NASL), a now-defunct second-tier men’s professional league
The U.S. Soccer Foundation, a charitable organization dedicated to growing the game in underserved communities
Cordeiro met with a small group of reporters after the board meeting. When asked which lawsuits have been the most costly, he explained that the federation has insurance “in most every case,” but that “there’s one case where our insurance is running out. Which is why we’ve had to anticipate [greater] expenses.”
Cordeiro wouldn’t say which suit that is, but according to a federation source, it’s the NASL case.
The projections do not account for any potential settlement in the women’s national team’s equal pay case, which is set for trial in May 2020. The whopping $9 million is almost solely based on attorney fees.
U.S. Soccer’s bigger financial picture
Prior to the barrage of lawsuits, the USSF would budget around $3 million in legal fees. The recent spike has affected the federation’s finances, and forced it to adjust long-term projections.
Following the 2016 Copa America Centenario, which generated a one-off profit of roughly $80 million, U.S. Soccer’s reserves swelled to $162 million, Cordeiro said Friday. A year later, the fed hatched a five-year plan that involved spending a significant chunk of that surplus and investing at all levels of the sport.
Raina’s presentation to the board on Friday revealed specifics: The federation’s initial financial year 2020 (FY20) budget called for the surplus to dip to $150.5 million in FY19; $139.9 million in FY20; $111 million in FY21; $82.1 million in FY22; and $50.2 million in FY23.
The annual deficits were strategic and planned. That the surplus is projected to fall by over $100 million has little to do with the legal fees incurred. Those fees, however, have slashed that projection even further. U.S. Soccer’s FY21 budget will feature a revised schedule for the annual deficits, taking the FY23 projection below $50 million.
In Raina’s words: “The operating deficits from FY20 through the end of FY23 are now higher. And the major driver for these increases in operating deficits are the increased legal expenses.”
For the 2020 financial year, those legal expenses had a $5.5 million impact on U.S. Soccer’s operating deficit, with the projection rising from $14.8 million to $20.3 million. The following year, a similar impact will likely be felt again.
In other words, money that could be going toward promoting soccer in America – toward furthering U.S. Soccer’s mission – is instead being spent on courtroom battles. It’s what Raina calls an “unplanned deficit that is driving our financial reserves down.” As long as the federation’s stakeholders continue to suit it, and as long as it continues to fight, more and more money will essentially go to waste.
More on the U.S. Soccer board meeting
For more from the board meeting – including info on the CEO search, the new men’s national team GM’s role, and much more – here’s our full report.
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