Equalizing FIFA Prize Money

Tl;dr: I think that by using a square root equation, the US Soccer Federation can create an equal standard for World Cup payouts to the women’s and men’s national teams that also narrows the gender gap in FIFA prize money.

Disclaimer: I left US Soccer in 2020, and I don’t know any more about CBA negotiations than what has already been publicly reported. Nothing in this piece represents insider knowledge nor should it be construed as the position of the Federation.

A Thought Experiment

The US Women’s National Team (USWNT) and the US Soccer Federation (US Soccer) recently announced that they reached a settlement in the women’s equal pay lawsuit.  But the settlement has a big caveat: it only applies if the two sides reach a new collective bargaining agreement (CBA), and that hasn’t happened. From the outside (see disclaimer above), it seems like US Soccer wants to unify the USWNT and the US Men’s National Team (USMNT) into a joint CBA, and that the key sticking point for a new deal is what to do about FIFA’s gender gap for World Cup prize money. 

As a math nerd who loves soccer and wants to see sports do more to promote gender equity, I decided to try my hand at answering this question. In this thought experiment, I lay out a possible solution to the FIFA prize money problem by proposing a framework that maintains an equal standard while narrowing the pay gap: a square root equation. I genuinely believe this approach would have tangible benefits for the USWNT, the USMNT, and US Soccer compared to the current state of affairs. 

This is by no means a perfect solution, and I hope US Soccer and the USWNT are already close to a deal that everyone is happy with. The world of professional soccer has a long way to go in pursuit of true gender equity, as demonstrated by the extreme differences in FIFA prize money. My approach provides one way to mitigate those differences, but in order to actually fix them we need to see systemic changes at all levels of soccer, such as FIFA increasing its women’s prize pot to match the men’s. In the meantime, this idea may still be useful to federations around the world that are trying to make progress toward their own equal pay deals.

The FIFA Prize Money Problem

How to fairly distribute FIFA World Cup prize money is a surprisingly complicated question because FIFA gives out far more prize money in the Men’s World Cup (MWC) than the Women’s World Cup (WWC), something US Soccer has no control over. Historically, the USWNT and USMNT have also negotiated their own terms in separate CBAs, adding another level of complexity for creating an equal standard.

Here’s a quick primer on the uneven landscape of FIFA prize money.

Prize money discrepancies 

FIFA awards World Cup prize money directly to national federations on a participation and performance basis. For example, every federation at the 2018 Men’s World Cup in Russia was awarded $8 million just for participating, and the French Football Federation received $38 million total for winning the tournament.

In comparison, US Soccer received $4 million total when the USWNT won the 2019 Women’s World Cup in France. 

That’s a massive $34M discrepancy that stems from FIFA’s long history of undervaluing the women’s game.

To put it in perspective, if the USMNT had qualified for the 2018 Men’s World Cup and lost every single match, US Soccer would have been awarded twice as much prize money as they actually received when the USWNT won every single game in the 2019 tournament. 

Prize money distribution

The other thing to keep in mind is that FIFA gives its prize money to the national federations, not to the teams, and it’s up to each federation to determine how much to pass on to their players. This can vary widely by country. For example, when France won the 2018 Men’s World Cup, the French federation passed around $11M of the $38M in prize money to the players. Under the current USMNT CBA, their payout for winning the 2018 Men’s World Cup would have been significantly higher, at over $28M of the $38M in prize money.

So while US Soccer unfortunately does not control the FIFA World Cup prize pots, US Soccer does control how to distribute that prize money once they receive it. When the USWNT won the 2019 World Cup, US Soccer passed on the entirety of the $4M prize money to them plus some additional funds from the federation.

If US Soccer receives wildly different amounts of prize money from FIFA for the USWNT and USMNT World Cup performances, how can the three parties reach a new agreement that establishes a fair standard, acknowledges and addresses the gender inequity in FIFA’s prize money, and has upside for everyone? That’s the big question. 

Defining “Equal Pay”

Some of the difficulty in reaching a deal is that different people mean different things when they say “equal pay.” On top of that, the USWNT and USMNT currently have different compensation structures in their collective bargaining agreements that make one-to-one comparisons hard.

But when talking solely about FIFA prize money, here are three possible things “equal pay” could mean:

1. Equal percentages: US Soccer could give the national teams the same percentages of their prize money. Some federations already do this and call it equal pay.

• Example: The Australian federation awards 40% of prize money to both teams.

• Drawback: Although this is an equal pay scale, it simply passes on the inequality of the prize money pots to the teams. Under the Australian model, the ratio between men’s and women’s payouts is still the same as the ratio between men’s and women’s prize money.

2. Equal dollars for equal performance: US Soccer could offer identical World Cup performance-based bonuses to the men and the women, regardless of differences in prize money. In theory, this option would be ideal.

• Example: US Soccer pays each team $1M for qualifying for the World Cup, an additional $1M for making it to the Round of 16, an additional $1M for making it to the Quarterfinals, and so on.

• Drawback: In practice, this option is constrained by the size of the bonuses US Soccer can afford and by the size of the pay cut that the USMNT is willing to accept, making it unlikely under the current circumstances.

3. Equal dollars, period: US Soccer could take an unconventional approach and give the exact same payout to both teams regardless of their separate performances. However, an approach where payouts aren’t tied strictly to each team’s separate FIFA prize money introduces future risk for the USWNT if FIFA’s prize money structure changes.

• Example: US Soccer pools the total prize money it receives from both the Men’s and Women’s World Cups and splits it three ways between itself and the two teams.

• Drawback: Right now, the USWNT may be better off splitting prize money with the USMNT. But since the USWNT traditionally outperform the USMNT, if FIFA equalized World Cup prize pots (either by increasing the women’s or decreasing the men’s), then the women would see their prize money go to the men.

My Criteria for an Equal Pay Solution

To unravel the FIFA prize money problem, I think it’s important to describe what we’re trying to accomplish when we talk about equal pay. USWNT players want fairness, both in terms of being treated equally to their USMNT counterparts and in terms of closing the gender pay gap. US Soccer wants a sustainable, financially viable solution that the USWNT and USMNT will be happy with in the long run.

Although the massive FIFA prize money discrepancy makes “equal dollars for equal performance” very difficult, I believe a solution should still strive to meet the following criteria:

1. Equal Standard: To achieve a sense of fairness, the USWNT and USMNT share the same standard for determining prize money. This means US Soccer determines payouts with the same formula for both the USWNT and USMNT even though they compete in different tournaments with different prize money. (This aligns with US Soccer’s desire to reach a single, identical contract with the USWNT and USMNT to avoid any future disputes.)

2. Narrowing the Gap: US Soccer structures payouts in a way that reduces the discrepancy in prize money between the Men’s and Women's World Cups.

3. Prize Money Dependency: To create a financially stable system that adapts to future changes in FIFA prize money, US Soccer determines payouts solely as a function of each team’s separate prize money earnings. This doesn’t preclude US Soccer from contributing additional funds out of pocket, but it keeps payouts tied directly to FIFA prize money.

So how can we create a framework that offers an equal standard to both teams and narrows the gap in prize money, while using only prize money as an input?

Bending the Money Curve

A mathematical solution

My proposed framework is based on the simple math concept of a concave curve, such as the square root function. Basically, what this approach means is that as prize money increases, teams get a smaller percentage of it (while still getting more money in absolute terms). This is the same concept behind progressive taxation, and it helps “narrow the gap” between prize money pots.

The charts below show how a bending curve narrows the gap between smaller and larger values: for every unit increase in the value of X, the marginal increase in the value of Y gets smaller and smaller.

On the other hand, a straight line does not narrow the gap between smaller and larger values: the marginal increases in the value of Y are always the same. This is the main drawback of the “equal percentages” solution.

Plugging in real numbers from the last Men’s and Women’s World Cups illustrates how a square root equal standard can narrow the gap in prize money. All we need to do is compare the ratios of the maximum possible prizes under three different scenarios in the table below.

A Fitted Curve

Now let’s take the square root concept and turn it into a concrete example. Given the current realities of each team’s CBA, just taking the square root of the prize money wouldn’t be a very attractive deal, so we need to do some math to find an adjusted curve that can align with their expectations.

That’s how we end up with the equation, graph, and table below of Player Payouts as a function of FIFA Prize Money.

In this particular scenario, any amount below $8M is rewarded with a Player Payout greater than 100% of Prize Money. The Max Payout, roughly corresponding to the Prize Money for winning the 2018 MWC, is $20M.

(There are actually an infinite number of curves we can build to establish a lower breakeven point, a higher max payout, etc. If you think you can build a better curve for the purposes of a CBA negotiation, you can do just that with the interactive widget at the bottom of this post.)

Remember, the point of this formula is that it applies equally to both teams, and the only input it requires is an amount of FIFA Prize Money, already meeting two of our three criteria.

1. Equal Standard ✅
3. Prize Money Dependency ✅

We can also see how the gap narrows between larger payouts and smaller payouts with this specific square root equation.

The first table below shows how for each additional increase in Prize Money, the marginal increases in Payouts get smaller and smaller. The second table shows how the ratio of Max Payouts for the MNT and WNT is also reduced under this model compared to the current CBA numbers.

2. Narrowing the Gap ✅

Now we have a solution that meets all three criteria we set out: it establishes an equal standard, it narrows the gap between MWC and WWC prize money, and it only uses prize money as an input.

But is it a good deal? Here’s why each interested party would benefit from moving to this particular framework.

What’s in it for the USWNT?

• A pay raise: This model would significantly improve the WNT’s payouts over their current CBA.

• Narrowing the gap: Crucially, this model lowers the ratio of MNT to WNT payouts, and it basically guarantees that US Soccer will pay the WNT more than what FIFA awards in prize money at the next Women’s World Cup (green area on the left side of the graph).

• Cashing in on future increases: As FIFA continues to increase the WWC prize pot, the WNT’s earnings will increase automatically while the gender gap will narrow more quickly.

What’s in it for the USMNT?

• Risk mitigation: The square root model shifts money away from exorbitant payouts for podium finishes (green line below blue dots on the right side of the graph) in favor of heftier payouts for more modest performances (green line above blue dot on the left side of the graph).

• Big bucks: Even while sacrificing some upside for great performances, the USMNT would still receive a payout roughly twice as large ($20M) for winning the Men’s World Cup than the French MNT did in 2018 ($11M).

• Good PR: The USMNT has been publicly supportive of the USWNT in their equal pay lawsuit against US Soccer. By agreeing to a joint deal, they can actually be part of the solution.

What’s in it for US Soccer?

• Equal standard: Using the same standard to calculate World Cup payouts for both teams is the last piece in the puzzle to end the equal pay dispute with the USWNT.

• Manageable costs: This model comes with potential out-of-pocket costs to US Soccer (red line on the left side of the graph), but those peak at $1.33M per four-year cycle, still allowing US Soccer to uphold its fiduciary responsibilities to all its members.

• Flexible framework: Once the teams adopt a framework that only depends on prize money, the CBA does not need to be revisited whenever FIFA changes their prize money distribution.

Conclusions

Given how hard it has been for US Soccer and the USWNT to reach a deal on FIFA Prize Money, it could be time to think outside the box in order to achieve what each party means by “equal pay.”

The simple math concept of a square root gives us a powerful tool to establish an equal standard for payouts that nonetheless narrows the gender gap in prize money.

And while there is no guarantee that the USWNT (or the USMNT) would agree to such a model, a novel proposal might at least help inform other federations and national teams around the world in their own pursuits of equal pay.

Interactive Curve Builder

Of course, if you were in charge of negotiating the new collective bargaining agreement, you would want to explore how different versions of the curve affect Player Payouts before choosing the best one for your client. Thanks to Enrique Unruh, a graduating senior at UVA, you can do just that with our interactive curve builder below. (Make sure to use your desktop or laptop to get the most out of the widget.)

Bonus Panel

How big of a deal is solving the equal pay issue for US Soccer? Well, global Google searches for the phrase “equal pay” over the past 5 years peaked the week the USWNT won the 2019 Women’s World Cup.