Financial analysis of the biennial FIFA World Cup proposal: Data Viz – Sportico.com
The exact infrastructure cost for the 2022 FIFA World Cup in Qatar is not publicly known; outlets reported numbers ranging from $10 billion at 300 billion dollarsdepending on whether some domestic construction projects such as roads and airports are included.
What we do know is that FIFA will not pay for any of this. This responsibility (in the case of Qatar, the construction of at least seven new stadiums) always rests with the host country. Brazil and Russia spent over $10 billion each on preparations for the 2014 and 2018 events, respectively.
Football’s international governing body incurs other tournament-related costs. It pays a local organizing committee to run the event and covers the prize money awarded to participating countries, as well as their travel and accommodation costs.
However, these expenses pale in comparison to the money that FIFA receives. The 2014 World Cup generated $4.8 billion in revenue for the organization against $2.2 billion in expenses, for a profit of $2.6 billion. The 2018 World Cup was an even bigger financial success: $5.36 billion in revenue versus $1.82 billion in expenses. The 2022 event is expected to generate a similar profit of around $3 billion.
These figures make it easy to understand why FIFA is pushing for a Biennial World Cup. He invited his members to an online summit on September 30 to discuss the proposal, that the The Union of European Football Associations (UEFA) and the European Club Association (ECA) have been officially criticized, along with Europe’s top women’s football leagues. Fans in countries with the most talented local leagues have also raised concerns about a disruption to the football schedule.
UEFA earns revenue from the Champions League, Euros and other club competitions, all of which could be affected by more frequent World Cups. On the other hand, FIFA depends on an event for its revenue. According to the financial statements, 83% of its revenue over the four-year cycle from 2015 to 2018 was attributed directly to the 2018 FIFA World Cup.
Nearly half of this full-cycle revenue came from TV broadcast rights deals, 95% of which was for the 2018 World Cup, although this may be an overestimate given that several deals include both the men’s tournaments and feminine. In 2011, for example, FOX bid $400 million and beat ESPN for the rights to broadcast the 2018 and 2022 World Cups, as well as the 2015 and 2019 women’s events.
However, FOX only accounted for a fraction of global TV revenue from the 2018 World Cup. The combination of Asia and North Africa generated $974 million in media rights revenue, surpassing Europe ( $920 million) for the first time, according to FIFA. The organisation’s television contracts are fixed until the 2026 World Cup.
Marketing was the second largest revenue category during the 2015-2018 cycle, totaling $1.66 billion. His “difficult to know” how much this category would increase in the scenario of a biennial World Cup, according to Sainte-Croix professor of economics Victor Matheson.
Ticketing and hospitality packages from the 2018 tournament combined to bring in $689 million, in line with 2014’s $711 million. One would expect this revenue stream to double by doubling the frequency of the World Cup. “Having one of these events every ten or 15 years on a continent, it’s hard to believe that’s a huge drop in ticket sales as opposed to one every 30 years,” Matheson said. “It’s still a long time to get demand pent up.”
However, twice as many matches does not mean twice the value of TV rights. World Cup fatigue or competition with other events, such as the Olympics, could weigh on the cost of broadcast deals. “It’s harder to get people to invest in something every two years than every four years,” Matheson said. “I guess we would see a drop in ratings.”
Still, reliable ticketing revenue puts FIFA in a good position. A boosted rights package, including an additional World Cup every four years, would only need to sell for around 50% more than the current price to secure a profitable tournament for FIFA, and that’s before factoring in any additional income from sponsors.
But as Michael Scott learned in an episode of Office, when you have a surplus, you have to spend it. FIFA’s spending shed light on what the non-profit organization would do with the hypothetical extra money it would earn from a biennial World Cup.
Since 2016, FIFA has significantly increased its investments in the area of ”development and education”. This category only accounted for 20% of spending in the 2011-2014 cycle, but jumped to 31% in the next cycle with the introduction of the FIFA Forward program. In its own words, FIFA “shares the success of the FIFA World Cup with its 211 member associations, as well as the six confederations and the zonal/regional associations” and claims that it “helps all girls and all the boys, all the women who love football and the man of the world play football in the best possible conditions” through the initiative.
Based on 2020 figures, each country is eligible to receive up to $1 million per year to fund general operating costs, as well as up to $2 million throughout the 2019-2022 cycle for special projects, which FIFA approves through an application process. Member Associations with lower incomes may also receive up to an additional $400,000 per year for travel and equipment. Finally, each of the six confederations receives 12 million dollars per year.
Even after a pandemic year in which FIFA posted a deficit of $778 million, the nonprofit is still in good financial health, with $1.88 billion in reserves, down from $2.58 billion. dollars at the end of the previous fiscal year. One World Cup every four years is more than enough to offset the organization’s loss-making operation the other three.
FIFA itself does not need more money, but it argues that more frequent World Cups will raise funds which can then be distributed to the 211 member nations, more than half of which have never participated in a World Cup. As well as having a better chance at the big show, these countries would derive revenue from more frequent qualifying tournaments and any extra money that FIFA might send them.
However, some income may be diverted elsewhere. To make a biennial World Cup feasible, clubs that sign the paychecks of the world’s best players may demand greater compensation for letting their athletes risk injury while playing for national teams. USMNT star Christian Pulisic missed games for Chelsea last month due to an injury sustained in a United States World Cup qualifier against Honduras.
“[FIFA is] good enough to promote grassroots football making sure some of the money from those World Cups trickles down,” Matheson said. “But I guess if you generate more money from more World Cups, the vast majority of that extra revenue won’t go to St. Kitts and Nevis… It will go to the big club owners who are asked to release players more often.
Besides European clubs, potential host nations could also find themselves disadvantaged by the proposed change. “If you have a more frequent World Cup, you’re likely to have a lot less international tourism,” Matheson said. “If I’m an American fan, maybe I could save enough money to go to Brazil or Paris if it’s every four years, but I can’t go every two years.” These fans would be replaced by domestic tourists, who generate much less economic impact.
In addition, prominent figures in women’s football have opposed more frequent World Cups, citing potential disruption to the schedule and reduced visibility for women’s international competitions. Indeed, women’s soccer already has a major tournament every two years because the Olympic Games bring together the best players in the world, which is not the case for men.
That said, women’s teams could gain financially if FIFA tackles the disparity in prize money between men’s and women’s World Cups, for which it has been repeatedly criticized.