2014 World Cup most lucrative and expensive in FIFA history

Brazil

Brazil

The 2014 World Cup is the most valuable, lucrative and expensive in FIFA history.

Record numbers include a $35 million prize to the winning team’s federation, $4 billion commercial revenue for FIFA and a $14 billion bill for Brazil.

With 3 million tickets available to buy, the 64-match tournament is almost sold out.

“The financial success — we have it, it is done,” FIFA secretary general Jerome Valcke has said. “The ticket sales success is there, we have never sold so many tickets.”

FIFA’s satisfaction is not shared across Brazil.

Taxpayers are picking up the biggest bill, with the country of 200 million people running up costs several times more than FIFA to stage the world’s most-watched sports event.

The $14 billion total is the predicted spending on building and renovating 12 stadiums, upgrading federal, state and city infrastructure, plus security plans to welcome the 32 teams and around 600,000 expected visitors.

The spending fueled unrest in Brazil, especially during the Confederations Cup last June, among those wanting better schools, hospitals and less government corruption.

“When Brazil bid for the World Cup they had the budget to do so,” Valcke said.

FIFA forecasts it will spend $2 billion on the 2014 tournament, including the local organizing committee costs.

Still, much of that bypasses Brazil. Even if the host nation does earn the winner’s check on July 13, the remaining $323 million in FIFA’s prize fund goes to the other 31 nations.

The federations also share $48 million from FIFA to prepare for the tournament, and $70 million goes to (mostly European) clubs whose players are selected.

The $35 million first prize is less than 1 per cent of the governing body’s revenue banked directly from its marquee event over a four-year commercial cycle.

Broadcasters and sponsors pay most of FIFA’s $4 billion income.

European television networks have paid the majority of the nearly $1.7 billion, so far, in rights fees to FIFA, according to the past three years of financial reports.

Six top-tier partners — Adidas, Coca-Cola, Emirates, Hyundai, Sony, Visa — pay a combined $177.125 million annually. That totals $708.5 million over four years.

Eight second-tier sponsors — Budweiser, Castrol, Continental, Johnson & Johnson, McDonalds, Moy Park, Oi, Yingli — collectively pay $524 million. About $120 million has been earned from Brazilian ‘national sponsors,’ according to the 2011-13 financial reports.

FIFA also gets hundreds of millions from fans buying match tickets, plus agencies securing the rights to sell corporate hospitality seats, and licensed merchandise.

As street protesters in Brazil know, FIFA’s revenue is untaxed there. World Cup sponsors and media also receive exemptions for their operations as a condition of Brazil’s hosting bid in 2007.

FIFA, however, has spent significantly in Brazil.

FIFA already gave $221.6 million to the embattled organizing committee, and more should follow in last-minute wrangling over paying for essential services.

In February, FIFA settled a nearly $20 million bill for power generators needed for broadcast operations.

“We stepped in because it’s not a question just of money,” Valcke said then. “We were afraid that we would not be on time to deliver this energy. And without it, we cannot broadcast the World Cup.”

FIFA’s investments include tens of millions for TV production to deliver the biggest ratings this year.

In 2010, the Spain-Netherlands final was watched by 530.9 million people according to the reliable “average global in-home audience” measure. More than 900 million people watched at least one minute of the match at home, and the overall total likely topped 1 billion when public viewing places are added.

Spending by FIFA on ticketing, accommodation and IT services has also helped Brazil’s economy. Draw ceremonies for the qualifying groups in Rio de Janeiro in July 2011 and the finals tournament in Costa do Sauipe last December added several millions more.

The full World Cup financial picture will be clear only next March, when FIFA publishes its 2014 accounts.

Typically, its numbers peak in a World Cup year.

Its reserves are $1.4 billion, which are intended to keep the Zurich-based body operating and organizing its other tournaments — including the Women’s World Cup, under-17 and under-20 events, Summer Olympics, Club World Cup — if its main attraction is cancelled.

FIFA reinvests about 75 per cent of its income in soccer, including $250,000 annual grants to each of the 209 member federations. The six continental bodies get $2.5 million each, and $27 million was spent in 2013 on development projects, such as pitches and training centres.

That $27 million was exceeded by paying $36.3 million in executive bonuses, and the total personnel bill was $102 million for about 450 staff members.

FIFA can certainly afford the current and future expenses.

Booming sales for the next two World Cups to broadcasters Fox and Al-Jazeera, among others, and renewed deals with long-term commercial partners Adidas and Coca-Cola should ensure that $5 billion flows into FIFA for the 2018 tournament in Russia.

By Graham Dunbar

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