The global sports industry has, for the most part, faced an impenetrable barrier to entry when it comes to truly expanding the popularity and viability of most, if not all, sports to an all-encompassing flat world level. Not only is football the one big exception to this rule, there seem to be no further impediments to its exponential growth, in terms of
popularity as well as revenues. One need look no further than the property, which has become more popular than even the Olympics, when it comes to global multi-nation events: the FIFA World Cup (FWC). With the 19th edition of the FWC 2010 being hosted in South Africa, ?global? has a new meaning when it comes to describing the cross-over appeal, popularity and success that the FWC 2010 is likely to have, as it kicks off tonight. Many claim it is likely to break every conceivable record when it comes to viewership, revenues and every other parameter that measures success at sporting events. Above all, however, let?s not forget that beyond the business side of the FWC, there is a humanistic appeal, where patriotism trumps capitalism, and money isn?t always everything, regardless of the prima donnas who set the stage and benchmarks for success.
And this is what makes the FWC 2010 an enduring and endearing property, whose rampant and runaway success and growth have been witnessed indulgently and expectantly, with nary an ounce of scepticism or bitterness. It is the melting pot where profitability meets passion, and success is there for all to see, savour and relish for the month-long battle between the 32 nations that have made it to the highest echelon of this sport. The sharp contrast is seen, of course, when one compares the similarity in terms of the corpus, with the now maligned BCCI and its offshoot?the IPL. Like the BCCI, FIFA is a not-for-profit organisation, with 208 member nations. Every cent, peseta, pence, yuan, rouble or rand that it earns, is churned back into football development and infrastructure. Therefore, despite the criticism surrounding the commercialisation of the event, one should take care to take into account that the majority of the soccer-playing nations hail from Africa; South, Central and Latin America; and Asia. These are nations that cannot support or afford the infrastructure that is required for their players to develop into world champions or contenders at the global level. Therefore, it is imperative for teams and players to receive the support of the parent body and organisation, without which the sport would have languished or stagnated.
The FWC is somewhat unique in its structure when it comes to costs and revenue streams. The FWC and all other FIFA competitions are privately funded?without state subsidies for either FIFA or the host nations? organising committees. FIFA carries the costs of staging the events and, in exchange, retains all commercial rights. Like the CWG, Olympics and other multi-nation events, there is a long and rigorous screening process, due diligence, road-show and eventually posing and posturing by the dignitaries and celebrities on behalf of their respective countries. The stadiums where the matches or games are held, are either constructed or renovated to meet the ?legacy? requirements that are a prerequisite for hosting an FWC match. Therefore, the host nation bears the cost of building infrastructure, which includes the stadiums and, of course, the hospitality, similar in scope to the CWG 2010. Not to mention the intangibles, such as popularity, publicity and other such branding and marketing collateral benefits. In terms of manpower and costs vis-?-vis human resources, such is the allure of being a part of the event, that there are no less than 70,000 volunteers who form the core of the management and organisation committees. Passion and altruism aside, the reason for this is the dearth of tickets available for purchase for many of the coveted seats at matches. Therefore, the host nation often bears a majority of the costs related to the organisation of the event, but its sources of revenue include revenue share from the central and local revenue pools, gate receipts and, of course, tourism.
FIFA?s costs include the cost of organising the event, the prize money, facilitation and participation fees, and sanctioning loan fees to the football clubs and leagues to allow their players to be ?loaned? to the national teams to represent their countries. To prevent ambush marketing or surrogate advertising, FIFA must also ensure that many of the stadiums that have already granted branding, signage and naming rights to sponsors must be ?sanitised? i.e., brand-free and the sponsors whose branding is removed must be recompensed.
The revenue streams are aplenty, with the main sources of revenue in the form of broadcasting rights? fees, official associations with a suite of global as well as local sponsors and partners in addition to merchandising and licensing, among others. The numbers say it all. FWC 2006?s television coverage extended to 376 channels, in comparison to 232 for FWC 2002. FWC 2006 generated a total coverage of 73,072 hours, with a total cumulative television audience of 26.29 billion (24.2 billion in-home and 2.1 billion out-of-home viewers), just falling short of the 26.4 billion who watched FWC 2002 in Korea and Japan. The FWC 2006 final between Italy and France had a global cumulative audience of 715.1 million viewers.
The broadcasting rights are expected to generate close to $2.15 billion for the central revenue pool. Global Brands Group is the FIFA worldwide master licensee for 2007-2014, and in turn it sells the rights for broadcasting FWC 2010 on a territorial licence to each country. For example, ESPN Star Sports (ESS) has secured the South Asia broadcast rights for approximately $44 million. It is expected that close to 80 million Indians will watch FWC 2010, which will be a significant jump up from the 48 million-odd Indians who followed FWC 2006. A positive sign for ESS is that it has sold all the available advertisement slots for over Rs 150 crore. There will be close to 2.6 billion viewers spanning virtually each country in the world. FWC 2010 revenues are expected to be in the $3.3-3.4 billion range, a significant rise over FWC 2006 revenues ($2.3 billion). From a sponsorship perspective, at last count, FIFA had six official global partners, eight FWC 2010 sponsors (including Mahindra Satyam) and six national FWC 2010 sponsors.
The FWC is a gargantuan success story and its unparalleled growth is Malthusian in its pace, yet it is still likely to evolve and metamorphose with each successive edition. Until 2007, continents were granted the right to host the event and then individual nations within the continent would bid to host the event: that is how South Africa was given the right to host the FWC 2010 over Morocco. This has changed now and, likely, for the better. The fact remains that some nations and continents are simply better equipped at this point to organise and host the world?s most popular sporting event. The fact that it only takes place once every four years makes it all the more crucial that the event is a successful one. Until then sit back and enjoy the spectacle but don?t forget the passion, blood, patriotism and tears that go into each dribble or hard tackle. For once, the success of the event is gauged on the green of the playing field and not by the green that enables it to take place. When the dust settles, it?s likely that the direct and intangible official revenues emanating from FWC 2010 will exceed $30 billion and collateral revenues will be close to five times that amount. More importantly however, most of the world?s population, irrespective of their demographic or socio-economic status, would have witnessed a true spectacle. And just for that small mercy, one could stake a claim that the ?hand of God? has indeed blessed this event.
The author is a sports attorney with J Sagar Associates. Views are personal
