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The World Cup – A Windfall for FIFA
The 2014 World Cup cycle from 2011 to 2014 generated $4.8 billion in revenue for FIFA or €3.9 billion, broken down as thus: $2.4 billion (€1.95 billion) from TV rights fees, $1.6 billion (€1.3 billion) from sponsorships, and $527 million (€429 million) from ticket sales. Taking into account FIFA’s $2.2 billion (€1.79 billion) in expenses, the governing body made a profit of $2.6 billion (€2.12 billion) during those four years. This figure is more than triple the profit FIFA made for the previous World Cup cycle (2007–2010), which was reported to be somewhere around $631 million (€514 million).
The Zurich-based, organization is clearly the biggest beneficiary of the World Cup, and as this quadrennial tournament has become more and more lucrative so, too, has FIFA. Over the past 10 years, which happens to coincide with the 2010 and 2014 World Cups, FIFA’s cash reserves have grown exponentially, from $350 million (€285 million) in 2015 to $1.5 billion (£1.1 billion) in 2014. Expect that $1.5 billion to rise even more, especially with this year’s World Cup, which is expected to rake in revenue upwards of $5 billion (€4 billion).
A Grim Fallout
The picture is often not as rosy for the hosts, notably South Africa in 2010 and Brazil in 2014. South Africa spent €2.4 billion to host the World Cup eight years ago, and struggled to make a tenth of that money back. The hosts were only able to recoup €366 million, mainly because tourist turnout was considerably lower than the projected 450,000 visitors expected for the event (tourism was expected to give the South African economy an initial boost of €645 million). Economic growth for the second and third quarters, which spanned parts of the tournament, slowed down as well, from 4.6% in the first quarter to 3.2% in the second quarter, and 2.6% in the third quarter.
It should be noted that the South African government had predicted a $6 billion (€4.9 billion) boost from hosting the World Cup. Whether or not this figure was met remains unknown, largely because the aforementioned prediction was mid and long term. What is known, is that the many of the stadiums—some built from scratch, others upgraded, all to the tune of $1.1 billion (€0.9 billion)—were white-elephants-in-waiting, as most of them have been underused since 2010.
The case of Brazil is even more convoluted, with Embratur tourism board head Vicente Neto announcing in 2014 that the World Cup had not only injected some $15 billion (€12.2 billion) into the Brazilian economy but had also created many jobs. However, Fluminense Federal University and mega-event analyst Chris Gaffney believed that such figures were exaggerated, while George Washington University's Lisa Delpy Neirotti pointed out that “the real economic benefits of such events are less tangible and more long-term.” This means that a full reckoning as to how exactly the 2014 World Cup impacted Brazil’s economy may take a few more years.
But these figures may provide some context: Brazil invested $11 billion (€9 billion) in building new stadiums, upgrading existing ones, and creating other pertinent infrastructure. It also spent another $2 billion (€1.6 billion) for security measures, which means that, the Brazilian government paid, at the very least, $13 billion (€10.6 billion) to host the 2014 World Cup, which turned out to be rather forgettable for this football-crazy nation. Aside from paying an exorbitant sum, this particular World Cup will be remembered by most Brazilians as the tournament where the national team were embarrassed in the semis by the Germans. The 7-1 victory over the hosts was described by Ladbrokes in its World Cup rewind article as one of the “finest international performances in history.”
More Than Just a Game
Indeed, the World Cup is more than just a game, as staging it has wide-ranging ramifications, particularly on the economy of the host nation which needs to invest a hefty sum to stage for this quadrennial showcase.
Now, it is on to Russia, where the 2018 World Cup will be held. the Russian government has already spent $10.8 billion (€8.8 billion), and we are still a few months away from the tournament’s first game.
This article was written by J's World Cup exclusively for the Sports Business Institute Barcelona.
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