Sports & Money | The Money behind the Giant Sporting Event FIFA World Cup

Sports & Money | The Money behind the Giant Sporting Event FIFA World Cup

globe’s biggest sporting event, sport’s highest-paid stars, FIFA's main source of income, Television rights, Marketing rights, Licensing rights, FIFA’s Hospitality rights, and ticket sales, future of FIFA

FIFA (Fédération Internationale de Football Association) was built in 1904 for the organization and promotion of a growing number of international football (soccer) competitions.

The FIFA World Cup is played in more than 200 countries and has an extensive fan following.

The FIFAWorldcup is the world’s largest sporting event, over 3.4 billion people expected to watch the monthlong tournament.

The 2018 World cup is honoured with sport’s biggest and highest-paid stars in Lionel Messi, Cristiano Ronaldo and Neymar.The trio earned a combined $309 million over the past 12 months from salaries, bonuses and endorsements.

FIFA contains the cash reserves of more than $2.7 billion, and has the ability to borrow against future income and guarantee loans, and exploring the ways to survive the economic disasters.

There is also a certain uncertainty at the idea of FIFA taking out money to the rest of the world given the history of patronage and corruption that resulted in scandal and a 2016 indictment that brought down the previous administration.

Some of the projects are already committed to different projects such as $500 million is earmarked for women's football over the next four years.

FIFA's main source of income, which contributes more than 90% of revenue, comes from organizing the men's World Cup and selling commercial and broadcasting rights to the tournament.

However, FIFA is a nonprofit organization that invests mostly of its earnings retrograde into the development of the Sports, FIFA also has tremendous earning power. Most of these revenues come from organizing and marketing major international competitions, with the most popular being the Men's and Women's World Cup, each of which happens every four years.

According to 2018 financial report, in World Cup events, FIFA generated more than $4.6 billion in revenue, per the organization's annual financial report.

FIFA's Business Model:

FIFA acquire a lot of income from other events by selling television rights, marketing rights, licensing rights, as well as revenue from ticket sales.

FIFA's costs are negligible, helping to ensure that the organization has as much money as possible to put back into the development of the sport itself.

This is where their money comes from:

The FIFA World Cup is more than just selling tickets, but there are more things from which they make money.

Television rights:

In 2018, FIFA generated total revenue of 4.6 billion dollars. Half of the money came from the television rights, which was approx 2.54 billion dollars.

So when the people turn ON the TV to watch tournaments, it is the result of the negotiating process between the television stations or broadcasting institutions with FIFA.

Sometimes, both parties could not reach an agreement towards the television rights, thus they are not permitted to broadcast the football games and related events.

The competition for broadcasting is often serious due to the increasing popularity of this sport.

ESPN and Twenty-first Century Fox Inc. (FOXA) entered a bidding war to get the television rights. Finally, FOX outbid Disney’s ESPN with the money of 400 million dollars paid to gain television rights through the 2022 World Cup.

Marketing rights:

Selling marketing rights is another way FIFA utilizes to generate its revenues.

The total money laundered was 1.66 million out of 4.6 million from the sale of marketing rights generated in the 2018 World Cup. This 1.66 billions of dollars are propagated in the 4 years leading up to the current World Cup. This amount is striking high in the circumstance that the corruption scandal involving many high-level leaders of FIFA broke.

Licensing rights:

Licensing rights has a huge market of 600 millions of dollars for the 4-year-period from 2015 to 2018. This is 114% higher than the revenues generated in the same sector in the previous tournament.

This 600 millions of dollars perpetuate the sales of brand licensing contracts, royalty payments and other similar sources.

FIFA’s Hospitality rights and ticket sales:

Hospitality and accommodation rights and ticket sales are a foremost source of FIFA’s revenues.

In the period of 2015 – 2018, the total money from hospitality rights and ticket sales is reported to be up to 712 millions of dollars. In the 2018 World Cup held in Russia, more than 10 million tickets were sold.

What is the future of FIFA?

As long as people are die-heart fans of sports, FIFA is going to be at heights for sure.  With the massive fan base in all countries in the world who are willing to spend a part of their income to buy tickets, massive revenues are no doubt real. In the future, to keep the sources of their revenues, FIFA’s future plan is to continue to support the development of this sport by investing in many projects.

The bidding process of FIFA still provoked by many complaints, therefore, in the future, it is a must to improve it to make it a transparent and objective process. Gender equality in football will also be promoted.

The sponsorship model of FIFA will be enhanced considerably with sponsorship levels of FIFA Partners, FIFA World Cup Sponsors, Regional Supporters and National Supporters.

Every tournament does not necessarily mean a bright future for FIFA for earning a huge amount of money, especially after the corruptive scandal in 2015, leaving the president and other executives to be arrested. The questions about the transparency and good governance of FIFA raise, demanding positive changes in management to prevent corruption and deceit.