Is FIDE Going Bankrupt?

Is FIDE Going Bankrupt?

| 83 | Chess Event Coverage

The financial accounts for 2015 show an alarming decrease of the World Chess Federation's assets. An extensive reform of FIDE's internal structure seems inevitable to guarantee a healthy continuity.

As part of the agenda for the upcoming General Assembly in September in Baku, FIDE has published its financial statement of income & expenses for 2015 (balance sheet in PDF here; supplementary notes in PDF here). The figures show that its reserve fund has decreased from €1,287,551 to €332,343, a staggering decrease of 74 percent. The federation spent €955,208 more than it earned last year. Something similar happened in 2014, when FIDE's funds decreased from €2,011,156 to €1,287,551. 

In 2015 FIDE suffered a big blow with its securities. The value of its UBS investments fell from €623,271 to €152,099 in one year, suggesting that the federation decided to sell securities but did not meet the desired result. 

Although the total income of €2,030,703 is higher than the budgeted €1,870,000, some posts have generated less income than expected. For example, entry fees, money that comes in from participants who play tournaments (e.g. the World Juniors), have generated €102,790 less than budgeted.

Furthermore, although budgeted €55,000, no money was generated from the World Rapid & Blitz Championship in Berlin. The regulations (in PDF here) stated that Agon, the company that organized the event, should have transferred 20 percent of prize money (U.S. $80,000) to the FIDE bank account.

"Agon had informed the FIDE Presidential Board that the Berlin tournament did not generate enough revenue, and so they asked not to pay the $80,000," FIDE Treasurer Adrian Siegel told "Of course I did not agree. We need the money." But the Presidential Board went their own way and agreed with Agon.

Agon's Ilya Merenzon told "This is not accurate. The condition we took Berlin was that we would not pay the FIDE fee; a condition that was accepted. The reason was short lead time. But [Mr Siegel]] does not agree to this, that's true. But that was post-factum." 

Georgios Makropoulos, the FIDE Deputy President, told in an email: "The Presidential Board members were advised by Agon that they had lost €200,000 on the World Rapid and Blitz in Berlin and agreed with Agon that when they next organized the World Rapid and Blitz, they would also pay the $80,000."

Magnus Carlsen facing Teimour Radjabov at the World Rapid
& Blitz in Berlin last year — a tournament FIDE earned nothing from.


The total expenses for 2015 were €2,985,910, but they were budgeted at €2,260,500. Below are the largest examples of overspending on budgets: 

  • FIDE's legal costs were an astounding €183,883 compared to the budget of €30,000. This was partly related to the CAS case against Silvio Danailov
  • The travel costs of FIDE President Kirsan Ilyumzhinov were €183,284, but they were budgeted at €120,000.
  • The World Championship and Olympiad Commission (WCOC) spent €63,763 (mostly travel costs) which wasn't budgeted.
  • Journalists awards went as high as €46,910 and were not budgeted. This involved two prizes given to Russian journalist Sergey Makarychev and Norwegian TV channel NRK.
  • FIDE covered the unbudgeted travel costs for delegates from South Korea traveling to the 2015 FIDE Congress in Abu Dhabi for €24,871.

About the latter, Siegel said: "Kirsan [Ilyumzhinov, the FIDE President - PD] wanted to invite them hoping that they would be interested in organizing a big event. I said more than once that we didn't have the money to pay their travel costs." But Siegel got overruled. "The South Koreans did show up in Abu Dhabi."

Makropoulos: "The reason that Kirsan invited the Koreans was that he was encouraging them to make chess a sport in the 2018 PyeongChang Winter Olympics."

Strangely, many expenses over 2015 were not budgeted at all, even though there were similar expenses in 2014. Siegel, who took over from Nigel Freeman as treasurer in September 2014 after the 2015 budget was approved, told "This is true. More expenses should have been budgeted. We are trying to improve on this."

Many expenses over 2015 were not budgeted at all.

Mr Makropoulos: "The World Championship and Olympiad Commission costs were indeed not budgeted, but note that the commission's income of €85,905 wasn't budgeted either, so the commission made a profit. We previously did not budget either because at the time of making the budget, we were unsure of the figures.

"The majority of this was spent by visits to Azerbaijan, Georgia and Russia regarding Olympiads and World Championship matches and the meetings held by the WCOC as an active Commission. Also expenses for Grand Prixs, the World Rapid and Blitz and other events and meetings regarding the World Championship cycle are allocated here."

Verification Commission

A rule of thumb is that an organization should have about 20 percent of its balance total as assets, which is only just the case for FIDE. The federation needs to stop over-spending or else it will get into serious trouble.

This was also noted by Graham Boxall, the Chairman of FIDE's Verification Committee. In his June 2016 report he writes: "We should also mention here that the majority of the debts to FIDE are those related to commitments due by our President. If the differences between the figures in 2013, 2014 and 2015 were to represent a continuing trend, FIDE's financial position would quickly become very difficult indeed."

Boxall also noted that much of the cash flow problems are caused by organizers of important events who fail to comply with their payment obligations to FIDE. Besides the aforementioned World Rapid & Blitz in Berlin, examples are the Mariya Muzychuk vs Hou Yifan World Championship in Ukraine, and the forthcoming Olympiad in Baku. “In both cases FIDE was left without receipt of contractual payments,” writes Boxall.

The Mariya Muzychuk vs Hou Yifan match was one of the events that failed
to comply with their payment obligations to FIDE. | Photo Vitalyi Hrabar.

Even when organizations do comply, sometimes it is with big delays. "Tournaments can pay three to four months late, sometimes even more," said Siegel, "and that can lead to cash flow problems." Siegel suggested penalties should be enforced, but said that the Presidential Board members didn't want this, fearing that no organizer would be interested anymore. Siegel: "I am afraid that this is true. But at the same time, it's not how it works in the real world."

Structure of FIDE

Financial figures cannot be interpreted without taking into account the structure of an organization. In FIDE's case, the finances might be alarming, but they're strongly related to its structure. 

FIDE's general structure is as follows: General Assembly (delegates of all member federations), a President, a Presidential Board, an Executive Board, and lots of Commissions. FIDE operates under its Statutes and by using its Handbook.

One potentially problematic part of the Handbook is paragraph 1.3 in the Financial Regulations.

"The financial management must be conducted on the basis of an annual budget set up by the Treasurer and approved by the General Assembly. If the budget is not approved, FIDE shall function on the basis of the last budget adopted by the General Assembly. In exceptional circumstances the Presidential Board can modify the budget between annual meetings of the General Assembly."

FIDE's financial reports to the General Assembly are done once a year and until recently there were not written interim reports. As a result, the member federations were informed at a rather late stage about the financial situation. The last General Assembly was in September 2015, three months before the end of the financial year.

The FIDE Treasurer does provide interim reports though. At board meetings, he reports in written form (this used to be done verbally) and gives recommendations. "Last year in Abu Dhabi, I recommended to rule out business class flights and choose only economy even for flights that are longer than four hour. This was accepted," said Siegel.

Missing reports

The external audits, always performed by Ernst & Young, only include a short approval letter with the figures attached. However, normally speaking, this should also include a more extensive report. For many companies, the extensive report is not publicly available, but since it is written for the General Assembly, it should be available here. 

The General Assembly, as its client, should receive this — especially when the financial situation raises questions. However, several delegates have confirmed to that they have never seen such a report.

The FIDE General Assembly in Tromsø 2014.

Boxall wrote to in an email: "In my few years with the Verification Commission it has not been the habit of the statutory auditor to submit such a report.  But at our own meetings for the purposes of the Verification Commission we were made aware that various issues which affected our findings had been the subject of discussion with Ernst & Young Limited during its time in the FIDE office and in the context of its own particular duties."

FIDE Treasurer Adrian Siegel noted that if the FIDE delegates would like to see this, they simply have to ask for it at the General Assembly. "This is handled differently by different companies, but I would not be against this. I don't have to hide anything," Siegel told

It's also remarkable that the financial statements do not include a cash flow report (something else the FIDE delegates might want to ask for). What's also missing are the commitments FIDE has made to other organizations, such as contracts and financial consequences.

External auditor

It is also normal for organizations to switch between financial auditors, for instance every eight years, to enforce integrity. The Handbook does not mention anything here; FIDE has been working with the same auditor (Ernst & Young) for a very long time. The Handbook also doesn't mention any other integrity guidelines, such as a possibility for the Treasurer to address the General Assembly.

It is common for an external auditor to be present at a General Assembly, to provide further explanation, if needed. However, in FIDE's case there was never a representative from Ernst & Young present. "I am not sure if we can arrange this for Baku," said Siegel, "but if the delegates want this then we can certainly try to arrange."

FIDE's Verification Commission, which consists of only two people (a chairman and a secretary, together with an observer) seems to lack sufficient authority. The overspending in 2014 was discussed and criticized by the commission, but in 2015, more overspending followed.

What to do?

To what extent can FIDE officials be held accountable? For instance, the Handbook makes it possible for the Presidential Board to exceed budgets, but the General Assembly only finds out about such excesses (e.g. huge legal costs) a year later. FIDE officials are overspending (e.g. travel costs), but FIDE lacks regulations to prevent this. Agon doesn't deliver the money they were supposed to, but the Treasurer lacks the power to do something about this.

Even the Treasurer himself overspent on travel costs in 2015. "It's a snake biting its tail," said Siegel. "I had to go to the Athens office more often to see what is going on. I paid myself for the last five trips."

Based on the sheer numbers, it is surprising that FIDE's auditor Ernst & Young haven't made a single remark about the potential threat to FIDE's continuity. This might be related to the fact that 2016 is expected to be a better year for FIDE. Significant revenue is expected from the Candidates' Tournament, the Olympiad and the World Championship. However, without bank guarantees or contracts that include penalties, is this money guaranteed?

As we speak, FIDE is already cutting the budgets of several commissions (Siegel: "I wont be making many friends in Baku!"), but it seems clear that structural reforms are necessary as well. To make FIDE a healthier organization, the General Assembly needs to push for structural reforms (e.g. by means of the Constitutional Commission), to avoid not only overspending, but also to make sure enough money is coming in — like the U.S. $20 million promised (but not delivered) by the FIDE President at the 2014 General Assembly in Tromsø.

Peter Doggers

Peter Doggers joined a chess club a month before turning 15 and still plays for it. He used to be an active tournament player and holds two IM norms.

Peter has a Master of Arts degree in Dutch Language & Literature. He briefly worked at New in Chess, then as a Dutch teacher and then in a project for improving safety and security in Amsterdam schools.

Between 2007 and 2013 Peter was running ChessVibes, a major source for chess news and videos acquired by in October 2013.

As our Director News & Events, Peter writes many of our news reports. In the summer of 2022, The Guardian’s Leonard Barden described him as “widely regarded as the world’s best chess journalist.”

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