World Athletics’ total equity and reserves dipped below $30 million (£23 million/€25 million) last year, after the governing body for one of the leading Summer Olympic sports posted a 2019 loss of $17.3 million (£13.3 million/€14.4 million).
This was an improvement from the $27.6 million (£21.3 million/€22.9 million) loss recorded for 2018.
However, it indicates that the organisation was still living beyond its means within weeks of the sports world being plunged into chaos by the emergence of COVID-19.
The consequent postponement of Tokyo 2020 means, moreover, that around $40 million (£31 million/€33 million) of revenue that it would have been expecting to receive from the International Olympic Committee (IOC) about now will instead be shunted into 2021 – and very possibly reduced.
Against this, World Athletics – now headed by former middle-distance running champion Sebastian Coe – is one of 15 International Federations (IFs) to have been granted an IOC loan.
It has previously been indicated that this year should also see it receive a payment for profit share from Dentsu, the Japanese marketing giant that acts as its commercial rights agency.
This would cover the period of 2018-2019.
In 2018 the governing body received an $8.4 million (£6.5 million/€7 million) payment covering the period of 2010-2017.
Marketing income for 2020 and the years ahead should also be higher – 10-year renewals with three leading sponsors – TDK, Asics and Seiko – are said to have been concluded in 2019 “at an uplift of 10 per cent to their previous deals.”
In addition, China’s Wanda signed a decade-long deal to be the first title partner of the Diamond League, in an agreement billed as “the largest sponsorship deal in the history of World Athletics.”
World Athletics owns 35.2 per cent of Diamond League AG.
In its newly-published 2019 annual report, the body said that in terms of “real reserves to safeguard the organisation”, its Executive Board had “agreed that the organisation should hold reserves of $25 million (£19.25 million/€20.75 million) at all times.”
It would aim to deliver this “from 2020 onwards.”
The new consolidated balance-sheet – the first that the body has published in its history stretching back to 1912 – shows a Reserve Fund amounting to $10 million (£7.7 million/€8.3 million) at the end of both 2018 and 2019.
The Monaco-based organisation also emphasised that “our reserves will always reduce year on year over a four-year period as a substantial amount of our revenues are delivered at the start of these four years.”
“Our aim”, it said, “is to reinvest our revenue in the sport to reach a breakeven state at the end of each four-year cycle.”
The decision to follow in the footsteps of most other Summer Olympic IFs by publishing audited accounts has coincided with World Athletics’ adoption of International Financial Reporting Standards (IFRS).
Prior to 2019, the annual report states, “annual consolidated financial statements were prepared under accounting policies determined by the IAAF”, as World Athletics was previously known.
Figures leaked in June indicated that the body had run a deficit of just over $19 million (£14.6 million/€15.8 million) in both 2017 and 2018.
Adoption of the new standards has resulted in the 2018 figure being revised up to $27.6 million (£21.3 million/€22.9 million).
Revenue for 2019 amounted to $51.1 million (£39.3 million/€42.4 million)
Broadcast rights and commercial rights reached respectively $14.7 million (£11.3 million/€12.2 million) and $18 million (£13.9 million/€14.9 million), very similar to the previous year.
Total expenses dipped from $72.5 million (£55.8 million/€60.2 million) in 2018 to $67.8 million (£52.2 million/€56.3 million).
One area of cost moving in the opposite direction was legal spending, which jumped more than 40 per cent from $1.65 million (£1.27 million/€1.37 million) to $2.4 million (£1.85 million/€2 million).
Among other details, the accounts appear to indicate that World Athletics pays a monthly rental of $19,000 (£14,630/€15,770) for its Monaco headquarters under a lease running until March 2030, with an option to extend for an additional 15 years thereafter.
It is also stated that, in 2019, “World Athletics has recorded an amount of $157,000 (£120,890/€130,310) payable to the Complete Leisure Association, for services and workspace of an executive assistant to the President during time spent in London in connection with World Athletics business, provided at cost pursuant to a secondment agreement.”