Category Archives: Stadiums and events

Branding and marketing, Business strategy, Football Business, Stadiums and events, World Cup

The Business of World Cup Branding and Sponsorship

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After the 32 participating nations announced their World Cup squads and most domestic football leagues around the world wrapped up their seasons, the attention has turned firmly to the action that has now begun in stadia across Brazil this summer.

Cue the spectacular advertising campaigns put on by brands and companies the world over, in a bid to cash in on the World Cup. Traditional sportswear powerhouses like Nike and Adidas have gone head to head in the production of high-budget commercials and promotional projects featuring footballing superstars, while companies that by nature don’t have anything to do with football—take Pepsi and Samsung, for example—have built a roster of star players to feature in their campaigns.

From official “FIFA Partners” to “National Supporters,” from “FIFA World Cup Sponsors” to unrelated companies targeting the football-fan demographic, the World Cup this summer features a multitude of brands competing for their ideal target market—FIFA has even designed and implemented a three-tier sponsorship structure to amplify and increase the profitability of the marketing frenzy in their flagship tournament.

Even the footballing action is and will be dominated by sponsors: the flashing billboards adorning each stadium, the official live broadcast coverage partners, the athletic gear worn by the players—given the frenetic advertising environment, perhaps international football should receive some credit for not yet caving into the lucrative practice of featuring official sponsors of national team kits.

The nature of the World Cup, and the reverence with which its fans and participants treat its ultimate prize, mean that football will be the main star in Brazil this summer. But that hasn’t stopped—and won’t stop—the considerable momentum that the branding and sponsorship activities have built over the years in their evolution into a prominent sideshow to the tournament.

How It All Began

It wasn’t always this way. There was a time when the World Cup—even professional football altogether—was just about the sport. But the phenomenon of television changed things forever.

The impact of television on the World Cup’s worldwide commercial boom cannot be understated: According to TIME, the number of TV sets worldwide “increased more than twentyfold” from 1954 to 1986, “from a little more than 30 million to more than 650 million,” laying the foundations for a truly groundbreaking moment in football history.

While the first live World Cup games, broadcast in Europe for the 1954 tournament held in Switzerland, reached only a handful of audiences due to the low number of matches shown, the potential of television and TV advertising was already apparent. In 1974, new FIFA president Joao Havelange turned his organization into a modern international NGO upon taking office, as he put in place the infrastructure, people and income-drive of a corporation to conquer the world of football and reap the ensuing economic benefits.

After the rapid expansion of the World Cup tournaments under Havelange’s watch—he added eight participant slots to the tournament, while also introducing other versions of the World Cup, including the U-17 and U-20 iterations, as well as the Confederations Cup—came the idea of corporate sponsorship to help bear the costs of hosting a global tournament in one country.

Thus came money-spinning deals with Adidas and other big-name corporations like Coca-Cola to finance the tournament, while television advertising, which had grown to become a huge cash cow with the boom of TV, led to increased premiums for marketers to get their spots and campaigns onto World Cup TV screens.

The Golden Era of World Cup Sponsorship

The sponsorship boom that began under Havelange has been taken to unprecedented new levels during the tenure of current FIFA president Sepp Blatter. According to a UPenn study, the stellar lineup of corporate FIFA sponsors (otherwise known as their “partners”) for the 2010 World Cup in South Africa included Adidas, Coca-Cola, Emirates Airlines, Hyundai-Kia Motors, Sony and Visa—who were “guaranteed exposure in the tournament stadium” and would receive “direct advertising and promotional opportunities and preferential access to TV advertising.”

The cost involved in partner-level sponsorship of the 2010 tournament was a commitment of a minimum of between 100 and 200 million euros through 2014, while “FIFA World Cup Sponsors” would collectively invest around 50 million euros through 2014.

As a result, FIFA’s revenues from the South Africa tournament reached a staggering $1.022 billion, and FIFA was to provide $420 million to all participating national teams and the football league teams providing players to those national teams. $30 million would go to the World Cup-winning team (Spain), while first-round teams automatically qualified for $8 million each. $1 million in preparation costs were provided to each participating football association.

So, yes, it’s a sporting achievement and an indication of a country’s footballing proficiency to qualify for a World Cup—but it’s also a great way for national football associations to make money. Football—and the World Cup—can no longer be considered as its own entity, separate from the clutches of money. After a period of explosive growth and the influence of a few key players, the World Cup and money have become intimately intertwined.

FIFA has ridden on this wave to further corporatise and globalise itself. Since introducing the World Cup in the United States in 1994, a move that proved to be a stunning success (USA 1994 still holds the total attendance record and average all-time attendance record), the World Cup has since traveled to Asia (2002), Africa (2010), and will go to Russia in 2018 and the Middle East in 2022. According to the Telegraph, Blatter has even entertained the idea of hosting the 2022 tournament across several countries in the Gulf region, which would multiply the brand and advertising exposure for FIFA’s partners across geographies.

To Sponsor or Not to Sponsor?

It’s not only the football that wins, however—after all, there has to be an inherent attraction to becoming a World Cup sponsor in the first place. Otherwise, brands wouldn’t be tripping over themselves to secure eye-watering contracts with national teams, players and the tournament itself.

So grand is the World Cup stage, that even smaller brands and smaller teams involve big sums of sponsorship money. Spain’s Joma sponsored Honduras in 2010 for $2 million a year, while China’s Hongxing Erke Group paid $7 million a year for the North Korean team.

But the battle is always at its most intense at the top of the footballing hierarchy, simply because a brand’s association with a team’s success will do wonders for its own brand performance, not least in terms of direct revenues. The UPenn study cites forecasts that the Adidas’ sales in the domestic Spanish market would grow by 8% if Spain won the World Cup in 2010 (they did), which would mean an overall 50% increase in Adidas’ sales from previous forecasts for 2010.

A continued association with success is also the driving force behind Nike’s contract with high-profile teams like Brazil, Portgual and the Netherlands, which guarantees a high level of visibility for the million-strong World Cup audiences around the globe. As the apparel hits stores worldwide ahead of, during and after the tournament, money will flow into the coffers of these high-profile brands, and even more so if their sponsored national teams perform well.

This explains the recent trend of new national team kit designs almost once a year: Brazil, England, Germany, Spain, Argentina and France are all examples of world-famous teams who have launched high-profile events and flashy marketing campaigns in conjunction with big-name sportswear companies and top international stars. And there are still those companies outside the sports arena that have allocated major funds and expensive campaigns to up their branding and advertising ante with the World Cup on the horizon.

Without doubt, the growth in sponsorship opportunities have provided many an ambitious brand to take advantage of World Cup to reach out to bigger audiences and rake in the ensuing benefits. But this path must be treaded properly.

The danger is that new kit launch events and over-the-top advertising campaigns have become hype machines that serve no purpose, and the risk is that the ever-expensive replica kits—one of the many inevitable products of the evolution of branding and sponsorship into World Cup sideshows—have become out of reach financially for that most important demographic when it comes to the most famous football tournament on earth.

For what is the World Cup without the common football fan?

 

This article first appeared on Outlook India, as “The Branding Business: How branding and sponsorship have evolved into a prominent sideshow to the World Cup.”

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Finance and economics, Football Business, Stadiums and events, World Cup

Power Ranking the 2014 FIFA World Cup Stadiums

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With the World Cup just around the corner, excitement is well and truly brewing. Construction workers in Brazil are frantically putting the finishing touches to a stellar lineup of stadiums ready to host fans the world over for a month.

There have been many obstacles along the way, notably the well-publicized construction delays that have led to criticism directly from FIFA, but it looks as if the construction will be carried over the line in time for the tournament—just.

Here we rank the 12 World Cup stadiums this summer, based on a number of criteria: geographical location, game significance, structural features and importance to the community.

Let us know your thoughts in the comments below.

 

All stadium information provided by the World Cup Portal, the official Brazilian Federal Government website on the 2014 FIFA World Cup.

12. Arena Pantanal (Cuiaba)

12. Arena Pantanal (Cuiaba)

Jose Medeiros/Associated Press

Geographical Location

Cuiaba’s Arena Pantanal is last on our list, and its geographical location is a major reason behind its low ranking: There is no team in the state that plays in Brazil’s top football division, making this 41,390-seater a likely candidate to become a white elephant after the World Cup.

After the tournament, the arena will “turn into a new leisure venue for locals,” according to the World Cup Portal, which goes to show just how unimportant this stadium location was in the first place.

 

Game Significance

That the ground will only host four group stage matches doesn’t help its ranking on our list either.

While Chile-Australia, Russia-South Korea, Nigeria-Bosnia-Herzegovina and Japan-Colombia are all interesting matchups in their own right, the fact that none of the big boys will be on show in the Arena Pantanal says it all about its significance.

 

Structural Features

Since it is a brand-new stadium for the World Cup, modern architectural features and fan-friendly accessibility factors do redeem the Arena Pantanal somewhat.

It has 90,000 square meters of promenade surrounding it, while 20 entrances, 79 turnstiles, 20 staircases and 12 elevators will provide fans a spacious environment to enter and exit the stadium.

There are also 32 food kiosks, three restaurants, 97 boxes and 66 lavatories, making it a fan-centric modern structure.

 

Importance to the Community

Legacy inside and outside of football is very much part of FIFA’s lexicon when it comes to hosting World Cups across the world.

In the Arena Pantanal’s case, since there is no local first-tier team that will be able to make use of such a grandiose new construction project, there is no choice but for the stadium to turn into a multi-purpose venue after the tournament.

Whether that is “important” to the local community or simply a convenient reason for Cuiaba to be a host city is entirely up to you.

 

11. Arena Da Amazonia (Manaus)

11. Arena Da Amazonia (Manaus)

Jose Zamith/Associated Press

Geographical Location

The Arena da Amazonia is another stadium whose geographical location just doesn’t help itself.

Sure, you can argue that hosting a World Cup match so close to the Amazon makes for an exotic experience, but the traffic and the climate there—not to the mention the sheer distance from everywhere else—makes Manaus a royal pain of a venue.

There’s a local adage that goes: “There are two seasons in Manaus—summer and hell.” And there’s a whole article on CBS News (and other various news outlets) on just how challenging the Manaus location is.

 

Game Significance

The most high-profile match here is Group D’s clash between England and Italy—not that Roy Hodgson and his team will enjoy traveling such a long distance for an already tough match on paper.

Manaus was never going to host more than the standard four group-stage games: It would have presented too much of a logistical challenge otherwise.

 

Structural Features

What you can’t deny is the spectacle that the Arena da Amazonia is as an architectural feat. The 45,500-seater takes inspiration from an “indigenous straw basket, full of Brazilian fruit,” according to the World Cup Portal, which is its most distinct feature.

Seven colors in various tones of yellow, orange and red are represented in the stadium seats, while the stadium facade itself looks like a basket from the X-shaped metal modules. (We considered moving it up our rankings because of these unique features.)

 

Importance to the Community

Yet for all of its vibrant colors, the Manaus area really doesn’t have a pressing need for a state-of-the-art new football stadium, not least because of the transportation problems the city will likely encounter for its matches.

Here‘s a revealing statement from the Telegraph that shows just how “important” the stadium will be:

There has been some speculation that it might be used as a prison after the World Cup to relieve overcrowding elsewhere.

Legacy indeed.

 

10. Arena Da Baixada (Curitiba)

10. Arena Da Baixada (Curitiba)

Alexandre Carnieri/Associated Press

Geographical Location

Outside of sports, Curitiba has long been recognized for its central role in Brazilian economics; indeed, it was awarded the Global Sustainable City Award in 2010, which recognized the city’s sustainable urban development.

The Arena da Baixada finds itself in one of the most desirable cities in Brazil.

 

Game Significance

Despite its ideal location, the Arena da Baixada plays host to a disappointing four matches this summer, and none of the fixtures on show in Curitiba is a mouthwatering clash.

 

Structural Features

With a capacity of 43,000, the Arena da Baixada is a respectable arena that is also the home stadium of Atletico Paranaense, who also own and operate it.

Rising like a concrete box in the middle of the city, the Arena is a structurally impressive stadium: Its ground facade is almost see-through, meaning that people outside of the stadium are able to look inside towards the ground.

The 48 kiosks and four restaurants for food, as well as the 884 underground indoor parking spaces, make it a strong contender in the accessibility category.

 

Importance to the Community

Construction delays and failure to meet the agreed FIFA timeline is one of the reasons the Arena da Baixada ranks so low here. As of May 15, it was one of three World Cup stadiums yet to be completed, according to Yahoo!, while a test match in mid-May saw bulldozers parked outside with construction material piled up.

Curitiba was nearly excluded from the tournament outright because of “chronic delays that were caused mostly by financial shortcomings.” Certainly not encouraging.

 

9. Estadio Beira-Rio (Porto Alegre)

9. Estadio Beira-Rio (Porto Alegre)

Gabriel Heusi/Associated Press

Geographical Location

In terms of location, the Estadio Beira-Rio in Porto Alegre is arguably one of the most fitting venues in Brazil to hold World Cup matches. The city features one of the most intense cross-town rivalries in Brazilian football—Internacional and Gremio.

It is also the southernmost stadium out of all 12, which means that colder temperatures are likely.

 

Game Significance

With five matches to host, the Estadio Beira-Rio slightly outperforms its predecessors on this list. France, the Netherlands and Argentina are among the high-profile teams to play their group stages matches in Porto Alegre, while it is also set to host a round-of-16 match.

 

Structural Features

Unlike the stadiums at Cuiaba and Manaus, the Estadio Beira-Rio is not a completely new structure; rather, the redeveloped design accentuates the already striking facade to present one of the most memorable out of the 12.

It also hosts a respectable 50,000 seats, and after redevelopment, the stands have been moved closer to the pitch for a better fan experience. The 22 bars and snack bars and the 44 shops will add to a few good days out in Porto Alegre.

 

Importance to the Community

With football such a prominent part of the Porto Alegre community, the Estadio Beira-Rio commands an even more premium location, on the banks of the Guaiba River and extremely accessible from the main hotels and the airport.

The only major piece of negative news is that as recently as this March, its mayor claimed that it might drop out of the World Cup because of insufficient funding (via the BBC). For such a football-mad city, that is quite unbelievable.

 

8. Arena Fonte Nova (Salvador)

8. Arena Fonte Nova (Salvador)

David Campbell/Associated Press

Geographical Location

Known as the capital of happiness in Brazil, Salvador is host to the annual Central do Carnaval, and it seems natural to bring the World Cup to a city with a party atmosphere.

Situated close to the seaside, the Arena Fonte Nova enjoys a spectacular view and stands out as a space-age construction amid buildings of modest height in a bustling city.

 

Game Significance

The Arena Fonte Nova will host six matches this summer, with four group matches (featuring such heavyweights as Spain, the Netherlands, Germany, Portugal and France), a round-of-16 match and a quarterfinal.

 

Structural Features

With a capacity of 55,000, Salvador’s stadium is one of the most impressive constructions to feature this summer. Having been constructed for the Confederations Cup, the Arena Fonte Nova has a distinctive “horseshoe” area that will support 5,000 removable seats for the tournament only.

Perhaps worth noting is the fact that it was the first to secure a naming rights agreement among the 12 World Cup stadiums, with the Brazilian brewery Itaipava signing a sponsorship deal worth $100 million lasting until 2023.

Construction faults led to blind spots from several areas inside the stadium during its inaugural match, however, while heavy rain caused a section of the roof to collapse in May 2013, affecting this otherwise remarkable stadium’s ranking on our list due to safety issues.

 

Importance to the Community

Salvador’s central role in Brazilian entertainment will likely have been a big factor behind the decision to host World Cup matches in the city, while there are already longer-term plans for the stadium after this summer: It will be one of the venues used for the football competition in the 2016 Summer Olympics.

 

7. Arena Castelao (Fortaleza)

7. Arena Castelao (Fortaleza)

Fabio Lima/Associated Press

Geographical Location

Fortazela is one of three major cities in Brazil’s north-east alongside Recife and Salvador, both of which are also World Cup host cities this summer.

 

Game Significance

The Arena Castelao will play host to six matches this summer, including four group-stage matches, a round-of-16 match and a quarterfinal.

Besides featuring crowd favorites such as Uruguay, Germany and Ivory Coast, Fortaleza will also see the Brazilian national team play on home soil in a Group A game against Mexico, which is sure to be a spectacle.

 

Structural Features

The Arena Castelao seats an impressive 63,903 people and has been refurbished to make the World Cup this summer.

An interesting architectural feature is its glass skin, which reduces heat inside the stadium. Its huge roof is also coated with a material that “allows for the circulation of air in the stadium,” and “provides soundproofing and ideal shade for television broadcasting.”

 

Importance to the Community

Surprisingly, the Arena Castelao has hosted two large-scale and high-profile religious events. In 1980, Pope John Paul II brought 120,000 followers to the celebrations of the 10th National Eucharistic Congress at the stadium.

In 1995, 50,000 followers gathered for the farewell of Dom Aloisio Lorscheider, the archbishop of Fortaleza, confirming the stadium (then yet to be redeveloped) as an important center-piece in its citizens’ lives.

 

6. Itaipava Arena Pernambuco (Recife)

6. Itaipava Arena Pernambuco (Recife)

Ana Araujo/Associated Press

Geographical Location

The Itaipava Arena Pernambuco is situated in the western suburbs of the Recife metropolitan area, one of the most important geographic locations in all of Brazil.

Recife itself is known as the Brazilian Venice, what with the rivers, small islands and more than 50 bridges found in its city center. Its famous 8km Boa Viagem Beach adds to its overall allure as an important cultural and leisure destination.

 

Game Significance

The Arena Pernambuco’s fixture list isn’t terribly impressive: Apart from four group-stage games that may throw up a few interesting twists in the World Cup, it will only host an additional round-of-16 match.

 

Structural Features

The seating capacity of the Arena is 46,000 and it’s a standard modern stadium designed to be accessible and convertible. There are plans for it to be used as a venue for concerts, conventions and other events after the World Cup.

The strong emphasis on sustainability impressed us. A solar power plant implemented in the stadium will generate 1MW of installed capacity and will be able to meet the average consumption of 6,000 people when the venue is not filled. Impressive.

 

Importance to the Community

One of the things that attracted us to Recife was its potential for a strong and positive legacy after the World Cup. According to the World Cup Portal, the Pernambuco represents the beginning of a new urban center named the “World Cup City,” a 242-hectare area that “aims to bring together housing, offices, educational institutions and leisure areas.”

The completed area will include a university campus, a hotel and convention center with other commercial, residential and entertainment complexes, and is predicted to generated 10,000 direct jobs until 2024. A noble effort if it ends up going through.

 

5. Arena Das Dunas (Natal)

5. Arena Das Dunas (Natal)

Jobson Galdino/Associated Press

Geographical Location

Natal is well-known for its tourist attractions, with its natural scenic landscapes, beaches, historical monuments and the famous Carnatal, giving the city a unique aura.

The Arena das Dunas finished construction in January 2014, replacing the old Machadao football stadium that was demolished in 2011 to make way for the new project.

 

Game Significance

For a stadium of such breathtaking beauty, it is a travesty that it will only host one truly high-profile match (Italy vs. Uruguay in Group D) among its slated lineup of four group-stage matches.

 

Structural Features

Probably one of the most striking and visually stunning stadiums in World Cup history, the 42,000-seat Arena das Dunas features a facade and roof made up of 20 petal-shaped modules, “designed to be higher on one of the stadium’s side, giving the impression that sand dunes—common in the region—are moving,” according to the World Cup Portal.

Sustainability, now a key element in all stadium construction, also plays an important role in Natal’s World Cup stadium: Its roof captures rainwater, up to 3,000 cubic meters of which may be reused in its lavatories and for pitch irrigation.

 

Importance to the Community

Just like Recife project, the Arena das Dunas is planned to be the center of an exciting new district, featuring a shopping center, commercial buildings, world-class hotels and even an artificial lake.

 

4. Estadio Nacional Mane Garrincha (Brasilia)

4. Estadio Nacional Mane Garrincha (Brasilia)

Tomas Faquini/Associated Press

Geographical Location

There aren’t many locations more high profile than a capital city, and that’s exactly what Brasilia is. A relatively recently planned and developed city, Brasilia provided a more central location for a capital city than Rio de Janeiro.

Given its political importance, Brasilia naturally pays less attention to football. Yet the Estadio Nacional Mane Garrincha is still a force to be reckoned with.

 

Game Significance

The Estadio Nacional Mane Garrincha will live up to its capital-city billing and play host to seven matches this summer: four group-stage games, in addition to a round-of-16 match, a quarterfinal and the third-place match.

Out of the four group-stage matches, Colombia vs. Ivory Coast and Portugal vs. Ghana will provide two interesting spectacles.

 

Structural Features

Named after legendary Brazilian footballer Garrincha, the stadium is one of the most easily recognizable in Brazil and hosts a remarkable 71,000 people, making it the perfect venue for high-profile matches in the World Cup this summer.

Its distinctive UFO-like design, which looks like a narrow bowl supported by a multitude of columns around the side, adds to the myth that surrounds one of the most iconic venues in world football.

 

Importance to the Community

Unfortunately, this is where the Estadio Nacional Mane Garrincha loses out. Not only will football continue to play second fiddle to politics, but the stadium itself will court controversy due to the sheer amount of money invested in it.

According to this AP story, fraudulent billing has led to a huge increase in building cost: At $900 million, it is now the second-most expensive stadium in the world, despite there being no major professional team in Brasilia. Authorities will need to navigate the political minefield or risk having the first major demonstrations start right under their noses.

 

3. Estadio Mineirao (Belo Horizonte)

3. Estadio Mineirao (Belo Horizonte)

Marcus Desimoni/Associated Press

Geographical Location

The Estadio Mineirao is the largest football stadium in the state of Minas Gerais, where Belo Horizonte is its most populous city.

Its bustling activity makes it one of the most important cities in the south-eastern region of Brazil, while its urban planning—inspired by that of Washington, D.C.—has won international accolades for urban revitalization and food security.

 

Game Significance

Now we’re getting right into the thick of the action. Besides hosting four group games, Belo Horizonte will also feature a round-of-16 match and a semifinal, making it one of the most high-profile venues in the World Cup.

 

Structural Features

The Estadio Mineirao first opened back in 1965, making it one of Brazil’s most iconic football stadiums in its long and illustrious history. Its post-refurbishment 62,160 seats make it one of the continent’s largest, while its distinctive circular, Coliseum-like structure make it one of the most recognizable venues in South America.

Once again, sustainability is the hip word of the moment: 90 percent of the rubble produced by the building site was reused, according to the World Cup Portal, while a rooftop solar power plant converts enough energy to cater to the demand of 1,200 medium-sized households. Not a bad feat at all.

 

Importance to the Community

By way of sheer longevity, the Estadio Mineirao has become an institution in the minds of the Brazilian football public.

The promenade area outside the stadium itself will be used as a social space to host events alongside leisure, cultural and sporting events staged inside the arena.

 

2. Arena De Sao Paulo (Sao Paulo)

2. Arena De Sao Paulo (Sao Paulo)

Mauricio Simonetti/Associated Press

Geographical Location

The home stadium of Brazilian powerhouse Corinthians will be called Arena de Sao Paulo during the World Cup.

The city of Sao Paulo itself is well-known: It is the largest city in Brazil and plays a huge role in the country’s commercial, financial and entertainment activity.

 

Game Significance

Probably the second-most important stadium in terms of game significance this summer, the Arena de Sao Paulo will host four group games, including the opening match between Brazil and Croatia, as well as other heavy-hitters such as Uruguay vs. England, the Netherlands vs. Chile and South Korea vs. Belgium.

It will also host a round-of-16 match, as well as a semifinal.

 

Structural Features

For a stadium of such high profile and importance, the Arena de Sao Paulo actually has a surprisingly low standard capacity. It was only to meet the FIFA requirements for an opening-match stadium that 21,200 removable seats were added to form the current 68,000-seat capacity.

Structurally, it is one of the most impressive World Cup stadiums on show this summer. The stadium complex will feature a pedestrian mall as well as other spectacles such as a performance fountain and large gardens.

Stadium acoustics were also a key consideration during the planning and building of the stadium—it will duplicate the current noise level supporters create during games—while, as in several other host stadiums, rainwater reusability is a key sustainability feature.

The Sao Paulo project was awarded the Best Commercial Project and the Best Overall Project awards in the 2011 Grande Premio de Arquitetura Corporativa.

 

Importance to the Community

Public accessibility and capacity management are two of the most impressive features of the Arena de Sao Paulo.

Express trains will connect to the stadium during the World Cup, linking it to the city center in just 20 minutes, according to FIFA.com, while the metro and train stations have the capacity to handle 100,000 passengers an hour.

 

1. Estadio Do Maracana (Rio de Janeiro)

1. Estadio Do Maracana (Rio De Janeiro)

Daniel Basil/Associated Press

Geographical Location

Is it any surprise that the most high-profile stadium in Brazil will host the most-profile match in the World Cup this summer in its most high-profile city?

Rio de Janeiro is arguably Brazil’s most famous city—and deservedly so, given its iconic status in both tourism and popular culture. It’s known for its natural settings and historical monuments, while its beaches and carnival atmosphere only add to the cultural significance of the city.

 

Game Significance

You can’t get any bigger than this. Forget that the titular Group B clash between Spain and Chile will take place at the Estadio do Maracana; forget that six other matches will take place; the Maracana will host the final, which might very well feature the home nation.

 

Structural Features

Having first opened in 1950, the Maracana is probably the arena most steeped in Brazilian football tradition out of all the 12 World Cup stadiums, making it the perfect choice to host the showpiece event of the whole tournament.

A major reconstruction project was undertaken to prepare for the 2014 World Cup: A new one-tier seating bowl, featuring yellow, blue and white seats alongside the green pitch make up the Brazilian national colors, while a new fiberglass roof was installed.

 

Importance to the Community

To see the cultural importance of the Maracana to the Brazilian public, see the number of non-World Cup events that take place at the stadium.

Besides the record-breaking concerts put on by the likes of Paul McCartney and Madonna, the Maracana will also host both the opening and closing ceremonies of the 2016 Summer Olympics and the 2016 Summer Paralympics.

 

This article first appeared on Bleacher Report.

Finance and economics, Football Business, Politics, Stadiums and events, World Cup

How Brazil Hopes to Get Rich off the 2014 World Cup

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With less than two weeks left before the World Cup kicks off this summer in Brazil, all the attention has understandably been on the football side of things, with all participants playing warm-up friendlies to ready their squad for the tournament.

For the Brazilian government and footballing authorities, who have attracted criticism for repeatedly missing construction deadlines for the World Cup stadiums, perhaps the recent attention to the friendlies makes for a welcome respite.

After all, most of the coverage in the past year or so (this is an example from The Washington Post) has focused on the state of the host nation. (I wrote an article on that only a few months ago.)

But the public protests in Brazil have not gone unnoticed. In fact, the demonstrations that started during last year’s Confederations Cup have provided a controversial backdrop to the upcoming World Cup: How will officials be held accountable for the massive overspending they have committed in their preparations for the tournament?

It is imperative that there is an answer to how Brazil and its citizens stand to benefit from hosting a glamour tournament like a World Cup—not just from glory and hype alone.

Let’s take a look at how the 2014 host nation hopes to make money off the latest installment of the World Cup—but as we see, not all the hopes and proclamations may ring true.

 

Jobs and the Local Economy

 

Eraldo Peres/Associated Press

 

Brazil’s tourism minister, Vinicius Lages, told AFP, via Yahoo: “The Cup is not an economic panacea but a catalyst for Brazilian development. It was a key factor behind Brazil finally overhauling its infrastructure.”

The World Cup, he predicted, would add about $13.6 billion to the Brazilian economy—already the world’s seventh largest—in 2014 alone.

It doesn’t stop there.

A report by Ernst & Young Terco on the social and economic impacts of the 2014 World Cup concluded that the tournament “should generate 3.63 million jobs/year and R$63.48 billion income for the population in the period 2010-2014, besides an additional R$18.13 billion in tax collections.”

EY’s projected impact on the national production of goods and services stood at R$112.79 billion, while the sectors most benefiting from the event—defined as economic activities with major increased output—were civil construction, food and beverage, business services, utilities, information services, and tourism and hospitality.

All of which sounds glamorous and sexy, but there have been contrasting reports on the actual long-term gains as a result of hosting the World Cup—and they aren’t quite as pretty.

A Moody’s report on the impact of the tournament on different industry sectors concluded that “the 32-day event will provide short-lived sales increases that are unlikely to materially affect earnings and disruptions associated with traffic, crowding and lost work days will take a toll on business.”

Then there is the very real possibility that the “World Cup effect”—defined by IBTimes.com as the phenomenon of countries being more harmed economically from hosting the event, as seen from South Africa 2010—may take hold in Brazil.

Four years on, the same uncertain material benefits from a World Cup are still yet to be transparent. As cited in the IBTimes.com article,University of Maryland professor Dennis Coates noted that even the 1994 World Cup in the U.S.—claimed as one of the most successful and transformational ever—ended in an income reduction of $712 million for the average host city relative to predictions.

 

The Tourism Industry

 

Eraldo Peres/Associated Press

 

Vinicius Lummertz, Brazil’s national secretary of public policies, toldThe Rio Times last November of his optimism that Brazil’s tourism industry would stand to gain enormously from the World Cup:

We hope tourism in Brazil rises to a new level after the World Cup. With infrastructure improvements that increase the competitiveness of Brazil as a tourist destination, and the high exposure of the country abroad, I expect to see a significant increase in foreign tourists—but mainly more Brazilians traveling through Brazil.

The Tourism Ministry predicted that tourists home and abroad would spend R$25 billion during the tournament, when 600,000 foreign and three million Brazilian travelers are estimated to visit the country.

The massive spending on infrastructure by the Brazilian government in recent years in preparation for the World Cup has likely been to maximize the revenue the country can make during the tournament—and with an eye on the future as well.

The EY study quoted above addressed such needs for investment in order for tourism income to be realized:

Once the actions that are required to enable the country to capitalize on the opportunities generated by the World Cup are completed, the event may result in an increase of up to 79% in the international tourist inflow to Brazil in 2014, with even possibly higher impacts in subsequent years. In the period 2010-2014, that figure should be as high as 2.98 million additional visitors.

The tourist inflow directly and indirectly induced by the World Cup is expected to account for additional income up to R$5.94 billion for Brazilian companies.

Yet before Brazil can throw a metaphorical carnival to celebrate their upcoming economic benefits, a few sobering updates on the tourism front may dampen the mood.

According to Claire Rive of The Rio Times, “The tourism sector in Brazil has had to adjust their inflated estimates concerning the expected influx of tourists…leading to big discounts on local and international flights and accommodation during the tournament.”

The reduction in projected tourist numbers has led to discounts on airfare prices and package tours, while demand for accommodation has “substantially decreased and prices have decreased.”

 

And, of Course, Corruption

 

Eraldo Peres/Associated Press

 

That a World Cup involves staggering amounts of money and an opportunity for businessmen and government officials to make a quick buck is no surprise—and Christopher Gaffney, professor at Rio de Janeiro’s Federal University, agrees strongly.

“There’s collusion of the Brazilian governmental elite with the business elite, and the game is rigged in their favor,” Gaffney said(via Yahoo). “This was an opportunity to make a lot of money and that’s what’s happened.”

But adding to the depressing reality that corruption will form a huge proportion of Brazil’s money made from the World Cup is the astonishingly public manner in which the embezzlement has been carried out.

See the case of the lead builder of Brasilia’s Mane Garrincha Stadium, already the world’s second-most expensive football stadium.

The Associated Press ran a story this May alleging that Andrade Gutierrez, a construction conglomerate, and Via Engenharia, an engineering firm, made up a construction consortium that billed the government $1.5 million for the transportation of prefabricated grandstands for the Brasilia stadium—a fee that was initially thought to cost just $4,700.

Auditors pointed out that “wasteful cutting practices or poor planning added $28 million in costs,” while “$16 million was lost when Brasilia’s government inexplicably failed to enforce a fine against Andrade Gutierrez for a five-month delay in completion of the main portion of the stadium.”

According to Al Jazeera, the same firm made political contributions totaling $37.1 million after confirmation of which cities would be hosting tournament matches, and after it was awarded stakes in contracts totaling “nearly one-fourth of the World Cup’s total price tag,” four years after it contributed a measly $73,180 in municipal elections, a 500-fold increase.

Moreover, auditors found $275 million in alleged price gouging with just three-fourths of the $900 million Mane Garrincha Stadium project.

The most damning part?

“Funding for Brasilia’s stadium relies solely on financing from the federal district’s coffers, meaning every cent comes from taxpayers.”

What comes around, goes around.

 

This article first appeared on Bleacher Report.

Branding and marketing, Business strategy, Finance and economics, Football Business, Liverpool, Stadiums and events

Anfield Redevelopment Underlines Liverpool’s Financial Rejuvenation Under FSG

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Ahead of a crucial Premier League title decider against Chelsea this Sunday, Liverpool this week announced their expansion plans for Anfield, while managing director Ian Ayre today credited, via the Telegraph, the role of current owners John W. Henry and Fenway Sports Group in their financial rejuvenation.

Both the Anfield redevelopment announcement and the revelations behind the dire financial situation at Liverpool have not only boosted the feel-good factor around the club, who are five points clear in the Premier League and poised to win their first league title in 24 years, but also highlighted just how important FSG have been in their resurrection.

The Reds now seem a stark contrast to what they were just a few years ago, when Tom Hicks and George Gillett were in constant internal battles with then-manager Rafael Benitez and released plans for a new stadium in Stanley Park that got nowhere, a symbol of their failed reign that disillusioned supporters.

John W. Henry led FSG’s takeover in 2010, which saved the club from administration and that has subsequently transformed Liverpool’s fortunes on and off the pitch.

As Ayre claims that “the club is in a fantastically sustainable position now,” let’s look at just how Liverpool have been rejuvenated financially under the reign of Henry and FSG—and whether this can be sustained going forward.

 

 

Chris Brunskill/Getty ImagesCorporatization of Liverpool as a Global Business

It’s easy to say we were 10 years into a stadium move and it’s about time we are back in the Champions League, but if you think about where we were financially, just because you’re Liverpool it does not mean you have a right to get back up there. There are plenty of teams who could have slipped and slipped, despite new owners, so it’s an unbelievable achievement to get back where we are today. That is testament to the people who invested in it and worked on getting us back there.

Ian Ayre’s proud proclamations of the FSG-led transformation, dipped in bitter memories of the Hicks and Gillett reign, will reverberate around Anfield as a resounding endorsement of the way John W. Henry has run his sports empire.

Joshua Green of Bloomberg.com has encapsulated Henry’s reign at Major League Baseball club Boston Red Sox in a wonderfully revealing article on their baseball dynasty, and similar principles from Henry’s financial and business background have been applied to Liverpool.

The inevitable truth in the sports world these days is that it is becoming more and more of a global business, and Liverpool have, in many aspects, finally caught on.

When looking at models for sustainable growth in world football, perhaps Arsenal is always the go-to club given the building of their new Emirates Stadium and the well-known financial management of Arsene Wenger, but it’s no surprise that Ian Herbert’s column for the Independent draws comparisons with “the kind of machine that the Glazer family have developed at Old Trafford.”

That Manchester United have set up offices around the globe to push their marketing and sponsorship efforts is indicative of their aggressive expansion as a corporation; Herbert writes that their “far-sighted establishment of regional and global corporate sponsorship deals began well over a decade ago.”

This has only recently surfaced at Anfield—though, of course, it is a case of better late than never—with all kinds of backroom appointments boasting titles we would otherwise associate with financial organizations and the business world in general.

Liverpool, who have for years been in the top 10 of Deloitte’s Money League rankings despite missing out on the Champions League, have finally gotten in the sponsorship act and have begun raking in the millions as a result of the commercial push. Their announcement this week of a partnership with US restaurant chain Subway, per the Liverpool Echo, is only the latest chapter in their fast-growing business empire.

 

 

Liverpool FC/Getty ImagesAnfield Redevelopment: Finally Done Right?

When looking to expand the financial income of football clubs, the issue of stadiums will always come into the equation.

After all, gate receipts was the reason behind Arsenal’s decision to move from Highbury to a new stadium, and Manchester United, having expanded Old Trafford over the years, have been raking in a minimum of £3 million every home match since its capacity has come close to 76,000, per ESPNFC.

So it’s no surprise that much has been made over Liverpool’s next step in terms of their stadium: The question was always whether to develop the iconic Anfield, which would have a capacity ceiling due to construction constraints, or to move into their neighboring Stanley Park, which would require massive payments that might hamper their other financial activity, much as Arsene Wenger has experienced.

This Mirror Football article, in light of the new stadium redevelopment announcements, revisited the failed and widely mocked plans for a 60,000-capacity stadium in Stanley Park, which were first suggested in 2002 and then revisited in the Hicks and Gillett reign. They promised a “spade in the ground” within 60 days of their 2007 acquisition of Liverpool, but proved unable to finance the construction project.

By contrast, the £150 million redevelopment currently mooted will cost less than a third of the Stanley Park plans, and will likely eventually take the total seating capacity to 58,000 after expanding two main stands, according to Chris Bascombe of the Telegraph.

Surrounding all the recent fanfare has been the club’s shady policy of “buying up houses around the stadium and leaving them empty, driving the local area into dreadful decline” since the 1990s, which David Conn has uncovered in his revealing Guardian column.

The club apparently “used an agency to approach some residents, while some houses were bought by third parties then sold on quickly to the club. That left residents with the belief…that Liverpool were buying up houses by stealth, to keep prices low,” a tactic that has not gone down well with local residents.

But as Ayre and the club have published their plans publicly and also apparently been in dialogue with the local councils and residents with their Anfield redevelopment plans, the chance is there for FSG and the current hierarchy to redeem errors made in years past and commit to a bright future for the local area and the local community.

The public consultation of fans’ opinions on the Anfield redevelopment, through a public online survey on their official website, is a good start. The right opportunity has finally arrived for FSG to leave a positive legacy in the city of Liverpool, far beyond just bringing the football club back in the green.

 

 

Christopher Furlong/Getty ImagesLooking Ahead to a Promising Future

This week’s announcement of the Subway partnership is the latest sponsorship arrangement Liverpool Football Club have landed in 2014 alone: The likes of Vauxhall and Dunkin’ Donuts all joined the Liverpool corporate partner list this calendar year.

Following the money-spinning and multi-year deals with Standard Chartered Bank and Garuda Indonesia, an airline, Liverpool may even solicit financing for the expansion of the Main Stand via a “lucrative naming rights deal with a major sponsor,” according to James Pearce of the Liverpool Echo. Following Macron’s naming-rights announcement with Championship club Bolton Wanderers, announced this week as well via BBC Sport, naming rights may well and truly have entered the English football mainstream—Arsenal’s Emirates Stadium and Manchester City’s Etihad Stadium are but two famous examples.

For Liverpool, it’s been a story of financial rejuvenation, underlined by Ayre’s comments regarding the long and difficult journey of infrastructure-building at the club since FSG’s takeover:

When I came here seven or eight years ago, there were all these stories of the club shop being closed the day after the [2005] Champions League final [win over AC Milan in Istanbul], and only having a couple of sponsors. Over a long period of time, we have been trying to lay the foundations and build the infrastructure that services a great club like Liverpool.

As the club look to cash in on their successes in the Premier League this season—they confirmed, with their win over Norwich City last Sunday, a lucrative return to the Champions League next season—and continue to bear the fruits of their commercial exploits, their highest-ever annual turnover of £206.1 million this past year will surely be eclipsed considerably in a year’s time.

Add to that the image of the club as a young and energetic force, spearheaded by a visionary young manager in Brendan Rodgers and featuring a host of young stars in the team, as well as the rejuvenated Anfield stadium and surrounding area—confirmed to go through this time—and you have, for the first time in many a season, a healthy outlook for Liverpool Football Club for years to come.

To think that the Reds were “seconds from disaster” before John W. Henry and Fenway Sports Group swooped in for their rescue act.

What a roller coaster it’s been—and long may it continue.

 

This article first appeared on Bleacher Report.

Finance and economics, Football Business, Premier League, Stadiums and events, TV and broadcasting

Is a European Super League an Inevitable Next Step in World Football?

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The past couple of weeks in European football have thrown up some interesting scenarios, perhaps unthinkable just a few years ago, which have thrown into question the competitiveness and balance even in the leading domestic leagues around Europe.

When Chelsea loaned Thibaut Courtois, then one of the hottest goalkeeping talents in the world, almost three years ago to Atletico Madrid, surely they didn’t expect to have to waive a contract clause at the prospect of facing their loanee in the Champions League semifinal.

When Borussia Dortmund won the Bundesliga and upset the status quo just a few years ago, surely they didn’t expect that a comprehensive 3-0 win over Bayern Munich in the league would mean as little as it just did, given that Pep Guardiola’s side had just become the quickest team ever to win the German championship.

These are but two incidents that have reflected the reality of European football these days (and there are many more—think Bayern’s ruthless snapping up of Mario Gotze and Robert Lewandowski from Dortmund, supposedly their closest rivals).

And the reality is that, while the top-tier leagues, especially in England with the Premier League, have started to break away from their lesser domestic competitions, those cream-of-the-crop clubs at the top of the European game have begun to form a mini exclusive club of their own.

Perhaps it’s time to consider not whether a European Super League would be a fun and interesting side project for club owners to think about, but whether it is actually an inevitable next step in world football.

 

Kerstin Joensson

 

Booming broadcast and television revenues

It’s hard to point a finger at a definitive starting point for this spiraling breakaway of the European elite, but BT Sport’s staggering £897 million three-year exclusive deal to broadcast live Champions League and Europa League games starting from 2015, announced last November via BBC Sport, is a good start.

Given the amount of money involved in the European game, it’s no surprise that the likes of Arsenal and Liverpool have made qualifying for the Champions League essentially a barometer of their season-to-season success in the Premier League.

Of course, it’s a cyclical game—perhaps even a snowball effect—in which money drives commercialization and encourages clubs and league administrators to package the sport as a “consumer product,” which focuses on entertainment value in the form of stadiums, overall team play and individual superstars, which boosts widespread interest and thus potential income, and so on.

But it’s not as if those involved in the beautiful game at the top level are trying their level best to keep the game devoid of any adverse effects from the money involved. Far from it.

Just this January, the Telegraph reported that the Premier League wanted to bring forth the next “auction” of football broadcasting rights by six months, which sources allegedly claimed was a show of “opportunism” from the league in “attempting to exploit the fierce competition between BSkyB and BT, and the resulting increase in the value of sports rights.”

As the game of football evolves at the top level and clubs become ever more like global corporations, even the ordinary football fan has evolved into being a consumer from their clubs’ point of view.

And how do businesses engage with their consumers? By providing high-quality goods (in this case, high-quality performances with a dose of superstardom, delivered at every broadcast opportunity across every possible channel).

A further case illustrating the financial explosion of the modern game once again focuses on the aggressive increase of Premier League prize money: A Telegraph report in May 2013 mentioned that Manchester United’s £60.8 million in TV money, a record sum for a Premier League champion, would be eclipsed the following season by the club that finishes bottom of the league because of new broadcasting deals.

 

Gonzalo Arroyo Moreno/Getty Images

 

Exponential inflation of player valuations

The sheer amount of money involved in top-level football highlights the indispensability of the sport to TV networks and channels, which in turn drives up their bids to carry these matches.

But from both the clubs’ and the fans’ points of view, this is merely a reflection of an ever-increasing and ever-vociferous demand for the sport—especially as clubs and leagues are becoming more business-savvy and expanding into markets never previously thought lucrative or even possible.

Which means that top-level footballers and top-level coaches, who turn top-level footballers into top-level teams on the pitch, gradually become a premium commodity to be traded to those willing to shell out a fortune in anticipation of the potential upsides.

And so we have eye-watering deals like Gareth Bale’s world record transfer from Tottenham Hotspur to Real Madrid, who themselves set the previous record by signing Cristiano Ronaldo from Manchester United. And vastly inflated contracts like Wayne Rooney’s new extension at Old Trafford, which reportedly will land him a mammoth £300,000 a week, per BBC Sport.

Suddenly, the prevalence of money in the modern game has made it an essential part of both player decisions and transfer strategies. Players appoint ruthless agents to extract the best deal for themselves and their clients, while clubs head towards the murky waters of outbidding each other for star names.

The supply line has just shot up in value.

And those organizations who can afford to shell out the big bucks to procure such mercurial and overpriced talent—some through the generosity of a well-off benefactor—become the most important players in the financial game of football.

It’s no surprise, then, that Simon Kuper and Stefan Szymanski put forth in Soccernomics that football clubs in capital cities are best positioned to dominate the European game in the future: Take the financial “capital” in the cities and you instantly have the most powerful hybrids of money, geography and power across football clubs in Europe.

 

Marc Mueller

 

A whole new, exclusive playing field

Where does this bring us?

On the one hand, the growing demand of top-level football means that there will only ever be greater sums of money spent by fans and reflected in megadeals between leagues, clubs and broadcasters.

On the other hand, the explosion of player valuations means that agents will continue to grow in prominence and importance, while player power will entrench itself as an institutional concept in modern football—and only a handful of football clubs are even equipped to handle such major deals.

Which essentially means that the footballing world is their oyster.

As players vie to get into those clubs as a sign of their ability and ambition and as clubs strive to either maintain their place in that elite group or try their utmost to break into the oligarchy, a whole new, exclusive playing field has taken form for the big boys up top.

La Liga has traditionally been the easiest and most glaring example of a “top two” league, with Barcelona and Real Madrid maintaining a hegemony on proceedings in Spain until Atletico burst onto the scene this season, while recently Bayern Munich has become a textbook example of just how far a first-placed team can pull away from its closest challenger.

Sooner or later, as egos, ambitions and competitiveness are wont to trump all in sport, these big players will yearn for a platform where they can pit their wits against each other on a regular basis, to claim a title that will truly prove their dynasties.

The concept of a European Super League suddenly doesn’t sound so far-fetched after all. In fact, it almost sounds as if it’s going to be the next big evolution in world football.

And just as TV networks have continued to scramble for big broadcasting deals just to get a slice of the ever-growing pie, football clubs not yet in the “Super League” category will fight tooth and nail, and spend an arm and a leg to try to get there.

There will be plenty of new entertainment for football fans—and plenty of inadvertent and unfortunate financial casualties as well.

 

This article first appeared on Bleacher Report.

Business strategy, Finance and economics, Football Business, Stadiums and events, World Cup

Why the 2014 FIFA World Cup in Brazil Can Still Be the Best Ever

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As we enter the final few months of the buildup to the 2014 World Cup, we’ve heard much about the current state of host nation Brazil and how behind it still is in terms of building the necessary infrastructure to successfully host and support a worldwide tournament and festival.

Just last week, FIFA secretary Jerome Valcke told BBC Sport that Brazil may not be “totally ready” for the start of the tournament due to building delays, with two stadiums in Porto Alegre and Sao Paulo still not finished.

And with the current political climate in Europe, amid criticism of Russia’s recent actions following the Winter Olympics in Sochi and Qatar’s human rights record ahead of its own World Cup in 2022, Valcke has even gone as far as to emphasize FIFA’s political neutrality, per Al Jazeera:

FIFA is not the United Nations…We are not there to discuss with political authorities what they should do…We can discuss with them, and again be the platform for them to meet, to exchange and to make sure they are using football as a tool for change…But we cannot tell a country what should be [sic] their foreign policy. That’s not our role.

All of which has thrown a considerable spanner into the Brazilian works, as the country makes frantic last-minute preparations for the global event amid an unsteady domestic political climate.

For Brazil to put on a successful World Cup, 64 years after it was last hosted on home soil, no doubt there are still major hurdles to overcome—not to mention many people to convince.

Yet lost amid all the negative news is the undeniable prospect of a fervent and vibrant tournament, of a famed Brazilian party, of a mouthwatering tournament featuring footballing talent in abundance on the pitch—and the underlying possibility that the 2014 World Cup can still be the best ever.

 

Leo Correa

 

A National Legacy

Let’s begin by looking at the positive impact that FIFA can bring with its local programs in conjunction with the tournament itself.

Its recent announcement of a $1 million television production internship program for Brazilian students, allowing them the chance to gain “invaluable work experience at the world’s biggest single-sport event,” is a glimpse at the “legacy” impacts that FIFA has now made a big part of its tournament-hosting packages.

By involving local students and providing technical and professional training in a sure-to-be exciting opportunity for local youth, FIFA has laid the groundwork for a potential boom in interest in the international sports business and the financial workings of a global tournament—quite in contrast to the uneasy local sentiment on show during the Confederations Cup last summer.

Looking at the legacy factor from a macro, country-level perspective, the Brazilian government forecasts, via Fox News Latino, that the World Cup itself will generate around 62.1 billion reais ($27.7 billion) in revenue, three times its income from the Confederations Cup.

The significant economic impact from the boom in tourism has been projected to include a total number of 3.6 million visitors to the country and an increase of 47,900 jobs in the tourist and recreation sectors, which would be a considerable injection of activity and revenue into Brazil’s GDP.

Alongside the inevitable focus on consumption on Brazilian soil, the Brazilian government has also launched advertising drives to highlight its other attractions, including “the Iguassu Falls, eco-holidays in the Amazon, the historic city of Salvador and Brasilia,” according to the BBC, as well as to draw attention to its capacity and capability to host global events and conferences.

Said Marcelo Pedros, the director of international markets for Embratur, the Brazilian Tourist Board:

Everyone knows that Brazil can play football and throw a party, but we want to show just how well we can organize international events. When Germany held the World Cup in 2006 it was the other way round. Everyone knew they would be well organized, but could they hold a party? They did, and it was very successful. We are going to prove the same success with Brazil’s organization skills.

And, of course, there is the small matter of the tournament kicking off on Brazil’s own Lovers’ Day, which, according to the Metro, is already capturing the imagination of many an innovative and entrepreneur.

 

Dean Mouhtaropoulos/Getty Images

 

An Unpredictable Contest

We’ve managed to come this far without even mentioning the football due to be on show in Brazil, which is a strong testament to the off-pitch factors that could see Brazil become the biggest and most successful global party yet.

But while the World Cup has arguably evolved from a pure celebration of football into a money-making exercise, at its heart football is still the beautiful game, and we could well be looking at one of the most exciting iterations of the tournament of all time, given the unpredictability of the contest this summer.

As football fans look ahead to the 2014 World Cup, many questions will no doubt pop into their minds. Who will rise to the top this year? Will Neymar confirm his status as the next big thing in football by bringing his country the World Cup at home? Or will Lionel Messi finally deliver a World Cup to secure his place in the pantheon of all-time greats?

Will Spain continue their recent dominance with a fourth successive win in a World Cup or a European Championship tournament? Or will Germany’s youth revolution end its own wait for a world title?

What about the dark horses—will Belgium’s new golden generation fulfill their potential as they look to take the World Cup by storm? Or will Uruguay better their last-four performance in 2010? Is it time for an African team to go all the way? Or will England finally get over their quarterfinal hoodoo and fire their way into the final?

The presence of so many international stars on Brazilian soil—the mythical Zlatan Ibrahimovic excepted, due to Sweden’s playoff loss to Cristiano Ronaldo’s Portgual—will bring unprecedented levels of global coverage (and, of course, incessant marketing and advertising efforts), which will in turn drive up interest in the tournament around the world.

Even the statistic, tactic and formation buffs will be treated to an event of gigantic proportions, as the proliferation of data analysis in football will no doubt boost intelligent debate and substantiated discussion around the contest unfolding on the pitch. The different ideologies and philosophies adopted by different national teams may finally see distinct national “identities” form around the ball.

And we haven’t even gotten to the prospect of a nerve-wracking penalty shootout or a new Zinedine Zidane-esque flashpoint.

 

Handout/Getty Images

 

A Glimpse into the Future

All the talk so far has been of the present, but while the World Cup doesn’t involve the next host nation putting on a “teaser trailer” show to close out the current tournament—unlike the Olympics—one eye, as ever, should be kept on the future.

And this World Cup finds itself in a fascinating intersection between the old and the new.

On the pitch, what could be better for Brazil than to have traditional rivals Uruguay resurface as a strong contender? Or a new-look Argentina side to prove its dominance and legacy with Messi at the helm?

The prospect of a new Brazil team headed by Neymar winning on home soil is one that can’t be ignored—and no doubt one that would kick off an unprecedented party—while the recent dominance of Spain may start to make way for teams of the future.

We will get to witness the platform that Belgium may well set for itself in international football, while England is set to usher in a new generation of young talent following what will be a transitional tournament. And as ever, there are plenty of new names we might not have even heard of yet who will catapult themselves into the spotlight over just a few weeks in Brazil.

In the stadiums and on the streets, the local mood may well be poignant, as Brazil recalls hosting its last World Cup 64 years ago and considers the development and turmoil it’s gone through in that time.

From a traditional footballing heyday in 1950 to a global commercial extravaganza, those who have followed the tournament in years gone by may yet witness another chapter in the ongoing evolution of the World Cup as an event.

The fascination of welcoming visitors from around the world and partaking in a joint experience of an international tournament at home may inspire a new generation of Brazilian youngsters to not only embrace the power and potential of the simple game of football but also to serve the greater good of their nation through business and global collaboration.

And finally, Germany 2006 was a return to familiar European territory between two groundbreaking tournaments in Asia (Korea/Japan 2002) and Africa (South Africa 2010), while Brazil 2014 will be the last tournament to be hosted in a region with World Cup experience: The next two World Cups, if all goes according to plan, will be held in new frontiers—Russia (2018) and the Middle East (Qatar 2022).

For FIFA as much as for Brazil—depending on how this year’s event goes—the World Cup will be a key milestone and provide a glimpse into an exciting or murky future.

For if Brazil successfully overcomes its last-minute hurdles and political differences and ends up hosting an excellent tournament, we can all look forward to successfully charting new territory in the years to come.

South Africa did it. Why not Brazil?

 

This article first appeared on Bleacher Report.

Finance and economics, Football Business, Politics, Stadiums and events, World Cup

State of Brazil 2014: Where Do Things Stand in World Cup Host Nation Right Now?

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During Brazil’s 5-0 hammering of South Africa in Johannesburg in an international friendly on Wednesday, more than just a footballing spectacle was on show.

Sure, Neymar’s hat-trick—the Barcelona star has hit 30 goals in just 47 caps—inspired the Selecao to a resounding victory over the hosts. And the Samba stars even hit the headlines after the match for all the right PR reasons when they elected to pose and celebrate a young pitch invader, as reported by the Daily Mail.

But this prestige friendly was also the meeting between the most recent World Cup host and the current incumbent, played at Soccer City, the venue of the 2010 final, where Spain beat the Netherlands to win their first-ever World Cup.

It was a passing of the baton—well, of sorts.

In an ideal world, from both FIFA’s perspective and surely the Brazilian Football Association’s, Brazil’s resounding victory would also have represented an analogous reflection of the upcoming World Cup in relation to 2010’s, with Brazilian excellence, preparation and execution not just limited to a five-star performance on the pitch.

In an ideal world, the joy and happiness we saw on the faces of the Brazilian team when they celebrated their victory (and the young pitch invader) would not only be repeated as they take to the stage to win their sixth World Cup on home soil in July, but for generations to come as they soak in the legacy of the “best World Cup ever.”

And in an ideal world, the sense of satisfaction in the Brazilian fans at Soccer City and watching on television at home would precede a sense of immense pride to be realized this summer while they watched a spectacle unfold at home, before they bid farewell to the hordes of tourists who will have created an economic boon for them to enjoy.

But where do things stand right now in the host nation? As we discuss below, things are not quite as rosy as they should be. Let’s look at how Brazil is faring, from different angles.

 

 

Gallo Images/Getty ImagesThe team: Ready to pounce

When it comes to matters on the pitch, the Brazil national team seem more than ready to take their chance on home soil this summer.

While a 5-0 drubbing of South Africa, their biggest ever loss at home, was an impressive achievement, and once again highlighted Neymar’s growing stature in world football and importance to his country’s footballing hopes, an arguably more symbolic result than took place last summer.

Brazil’s 3-0 defeat of World Cup champions Spain in the 2013 Confederations Cup final, itself a dress rehearsal for this summer’s World Cup, was courtesy of a match-winning performance by Neymar(and two goals from Fred), in an all-round spectacular performance. They inflicted upon Spain their first defeat in 29 competitive matches.

Luiz Felipe Scolari’s starting XI on Wednesday featured just two changes from his Confederations Cup final win last summer. WithNeymar having prospered since his move to Barcelona, the resurgence of Fernandinho at Manchester City and the impressive rise of Oscar at Chelsea, this is a Brazil side as workmanlike as it is flamboyant.

As Brazil prepare to welcome the visit of 31 other teams this summer, they will also revel in the fact that their opponents face a grueling match schedule, made all the more difficult because of the weather and traveling and exacerbated by the hot afternoon kickoff times.

This ESPNFC article lists all the obstacles that Brazil’s rivals will be up against: With the weather conditions of six cities classed as “stifling”—four of them “oppressive”—and high temperatures of over 31 degrees Celsius, the cross-country coverage will ensure startling differences between stadiums and locations.

The sheer largeness of the country means that some participating teams will face extremely tiring travel schedules. The USA team, for example, will travel a total of 8,800 miles for three of their group stage games, spending at least 35 hours commuting in total, while all matches will be played in “oppressive” conditions.

Of course, not all teams face such a demanding schedule, but it’s worth remembering that South American teams generally have a better record in World Cups hosted in the same region: All seven World Cups played in the Americas have crowned South American winners.

The only silver lining for other pretenders is that Brazil only finished as runners-up the last time they hosted a World Cup at home.

 

 

Friedemann Vogel/Getty ImagesThe logistics: Another last-minute dash

It seems as if World Cups, despite the spectacle they may be, always involve last-minute madness.

If we thought South Africa’s preparations in the final months leading up to their tournament weren’t a big enough alarm—as FIFA secretary general Jerome Valcke claimed in February 2010 (via Sky)—the situation this year is apparently even worse.

Just this January, FIFA President Sepp Blatter told the Telegraph:

Brazil just found out what [the scale of work] means and has started work much too late. No country has been so far behind in preparations since I had been at FIFA, even though it is the only nation which has had so much time—seven years—in which to prepare.

Not that his public criticism had had the desired effects. Valcke’s latest update in early March reflected the current state of chaos in Brazil’s preparations, as they “are working in conditions where the cement is not even dry,” and all IT and telecommunications systems hadn’t been installed, according to SportBusiness.com.

This was a long time coming.

A grand total of six stadiums, in Sao Paulo, Curitiba, Cuiaba, PortoAlegre, Natal and Manaus, had missed a deadline of Dec. 31, 2013 set by FIFA to allow a suitable preparation window ahead of the summer’s matches.

Since then, Curitiba has flirted with danger, coming close in February to being dropped for the tournament altogether, according to BBC Sport, only for local organizers to bring in hundreds of extra workers to meet building requirements and ultimately earn a FIFA reprieve.

Now Sao Paulo, which is set to host the opening game, might not be ready to hand its stadium over until May, a month before the tournament kicks off on June 12, according to BBC Sport.

Valcke, understandably, is unimpressed: According to theSportBusiness.com article above, he has had more harsh words regarding Brazil’s lax preparations:

I am not a World Cup specialist, but I will say this has not been easy for sure. We are almost at 100 days before the first game starts in a stadium in Sao Paulo which is still not ready and won’t be ready until May 15.

A glaring example of Brazil’s last-minute tendencies was the embarrassing fiasco over the preparation of the Maracana stadium for a high-profile friendly match between Brazil and England, supposedly to mark its grand reopening. Due to concerns over its structural readiness, and thus supporter safety, judicial order suspended the match a few days before it was schedule to take place, according to the Guardian.

The match ultimately resumed and ended in a 2-2 draw, but the warning signs were already there.

 

 

Ronald Martinez/Getty ImagesThe politics: The biggest headache of them all

If FIFA have already suffered enough headaches because of the disorganization in Brazil’s preparations, they’re about to experience even more—and this time the Brazilian FA could feel the heat as well.

It would’ve been all well and good if the issues that were raised before the Brazil-England friendly preceded an ultimately grand spectacle in the Confederations Cup.

But while Brazil’s victory over Spain said plenty about their ambitions to lift their sixth World Cup this year, what happened off the pitch among the local supporters were almost inevitable—yet surprising in equal measure.

The BBC reported that protesters clashed with police during the final, as demonstrations sparked by transport fare rises snowballed into more and larger grievances about the imminent World Cup and the costs associated with the tournament.

Massive public investment in preparation for the World Cup has irked the Brazilian public, who has witnessed a slowdown in the Brazilian economy and prefers the public money to be channeled into other priorities like health care and education, according to the Telegraph.

The “FIFA Go Home” and “There Won’t Be a World Cup” banners on show last summer weren’t as damning as the massive drop in public support for the tournament. In November 2008, almost 80 percent of the public were reportedly in favor of the World Cup. In March 2013, it had fallen to just 50 percent.

And the public worries are legitimate.

There have long been debates on the actual merits and sustainable benefits to hosting international sporting events like the Olympics and the World Cup due to the financial burden they put on the host countries, and we only have to look at South Africa to see the repercussions and strain that football’s premier tournament can put on a country.

According to the Guardian, the government spent £687 million in new and refurbished stadiums (10 in total) for the World Cup. Since the tournament ended, several struggled for continuous use—much like Beijing’s Bird’s Nest Stadium after the 2008 Olympics—and required continuing subsidies from hard-pressed local authorities.

A South African government report has said that the month-long tournament cost the country more than £2 billion, while FIFA earned £2.2 billion and came away with a handsome £394 million profit. Several of their stadiums have since been branded white elephants, an accusation that has since been leveled at Brazil’s own construction efforts, according to another Guardian report.

So all this talk of a legacy off the pitch, as FIFA and organizing bodies often claim World Cups can leave, could very well be seen by the public as pure rhetoric and a lofty dream as they end up bearing the economic brunt.

Which will put an even bigger burden on the shoulders of the Selecaostars.

A record sixth World Cup success on home soil would bring joy to their legions of loyal fans, but in the end, might just serve to placate the growing unrest across the nation.

Now imagine if they didn’t win.

Luiz Felipe Scolari still has plenty of work to do yet.

 

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League, and occasionally on football business.

Business strategy, Finance and economics, Football Business, Manchester City, Stadiums and events

Why Stadiums Are Increasingly Crucial to Football Clubs’ Commercial Strategies

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The Santiago Bernabeu revamp, the Etihad Stadium and the Anfield regeneration—it’s been a busy few weeks for high-profile stadium projects for high-profile football clubs.

From rebranding, modernization to capacity increases, stadium refurbishments and new stadium projects are becoming headline hitters for the amount of money they involve and the scale of commercial ambition they suggest.

The three examples above are some of the biggest news involving football stadia in recent weeks, but are by no means isolated cases: A big part of the discussions involving New York City FC and David Beckham’s fellow new Major League Soccer venture in Miami also revolve around the kind of venue and arena they select and subsequently develop.

It’s not just about Real Madrid, Manchester City and Liverpool: A look across the top clubs in Europe shows that besides stadium capacity and modern architecture, stadium experience also matters to fans and, increasingly, football clubs.

We’ve always known that the live experience of a football match inside a stadium is a defining part of being a football fan, and one of the key factors that continue to pull in match-day revenue despite rising ticket prices, especially in the Premier League.

But now we’re seeing that football stadia are increasingly crucial to the commercial strategies of football clubs for a variety of different reasons. Let’s explore some of them with a few brief case studies.

Matt Dunham/Associated PressCorporate Sponsorships: Arsenal’s Emirates Stadium

The first example that comes to mind is Arsenal’s move from Highbury to the Emirates Stadium in 2006.

Known as the “Home of Football” previously, Highbury was famous for its small pitch and the proximity of the pitch to the stands, and thus for its atmosphere.

While its peak capacity was in excess of 70,000, Highbury had to be reworked due to the Taylor report on the Hillsborough disaster in 1989, which recommended that football stadia in England become all-seaters. For the majority of the Premier League era, Highbury was known for being one of the most compact stadia for a top football club: They only seated around 38,000 fans every week.

Naturally, this posed problems for the Gunners, especially as they were building their fanbase and were looking to challenge Manchester United on the domestic front. While Arsenal were scraping by with gate receipts from 38,000 fans a week, Old Trafford had expanded to 55,000 seats by 1996, which meant a corresponding increase of matchday revenue for United.

With Arsenal’s decision to move into a new stadium at Ashburton Grove, so they leapt forward into the 21st century and fully embraced any corporate sponsorship and strategic partnerships as they came forward.

Not only did they start fully adopting a transfer policy of buying young and cheap and selling high to maximize financial return—helped by the astute Arsene Wenger, who holds a degree in economics—but they also explored commercial initiatives to alleviate a significant potential burden in financing their new stadium.

Granada Media took a 5 percent stake in the club by investing £47 million, as reported by the Guardian, while Nike signed a new shirt sponsorship deal with Arsenal for a reported £130 million, according to the BBC. (Puma have since replaced Nike as kit makers in a lucrative deal announced this January by the BBC.)

In 2004, Arsenal added to their coffers with a £100 million naming rights deal with Emirates Airlines, which at the time was reportedly “by far the biggest deal ever undertaken in English football,” according to the BBC.

Out of the total £390 million that the Emirates Stadium cost, three major sponsorships footed at least £277 million, and in January last year, Arsene Wenger publicly stated that Arsenal had finally finished paying off their loans for their new stadium and would be ready to finance big-name signings, as reported by the Daily Mail. He stayed true to his word by smashing the Gunners’ transfer record with the deadline-day signing of Mesut Ozil.

As seen from their stadium move, Arsenal transitioned into the corporate age of football and became a commercial giant in the process. With their existing deals set to end and new, lucrative partnerships about to kick in, the Gunners may finally realize their full potential on the pitch with their advances off the pitch. The Emirates Stadium provided a platform and opportunity for Arsenal to become a modern, commercial organization.

Jan Pitman/Getty ImagesTournaments and International Prestige: Bayern Munich’s Allianz Arena

This January, Bayern Munich revealed plans to increase its Allianz Arena home stadium from its current capacity of 71,137 to 75,000, as reported by ESPNFC.

The expansion plans will only boost Bayern up the stadium capacity ranks in Germany by one position, above Hertha Berlin’s Olympiastadium and behind Borussia Dortmund’s Signal Iduna Park, but Bayern’s ambitions, as we saw from their summer appointment of Pep Guardiola to take over from treble-winning Jupp Heynckes, aren’t limited to domestic triumph.

Consider the stadium’s use planned from the get-go: Since opening in 2005 with one of the most widely recognized exterior stadium designs in world football, it has been the home stadium of both of Munich’s professional football clubs, Bayern Munich and TSV 1860 Munchen, as well as a frequent host of the German national team.

Then there are the finances. In this 2013 article by the Economist, Bayern’s total revenue in 2012 was the fourth highest in the world, after Real Madrid, Barcelona and Manchester United. The nearest challenger from within Germany was Borussia Dortmund with €189.1 million, about half of Bayern’s €368.4 million.

Yes: The same Borussia Dortmund who finished second to Bayern in both the Champions League and the Bundesliga in 2013 had just half the total revenue of Bayern.

Having conquered home soil, Bayern are going after world domination, and with a new stadium, they can place themselves at the forefront of German football—if they weren’t there already.

They have 2020 in their sights. Named as Germany’s candidate city for the 2020 European Championships, which will be taking place across European cities, Munich will be bidding for “Package A,” which includes three group-stage matches and one last-16 or quarterfinal fixture, and “Package B,” which includes both semifinals and the final.

The problem at the moment is that UEFA’s requirements are that stadia must meet 70,000 seats to qualify to host matches in the tournament: As Allianz Arena’s capacity is reduced to 67,812 for international games and UEFA competitions, it currently falls just shy.

Of course, there’s no stadium expansion or corporate super-club that doesn’t have its fair share of commercial deals and strategic alliances: The Economist article quoted above has plenty of coverage of Bayern’s considerable financial might as a result of their sponsorship deals, all the while operating in the Bundesliga context that mandates not more than 49 percent of football clubs can be owned by corporations.

Denis Doyle/Getty ImagesThe Next Level: Real Madrid’s Santiago Bernabeu

For around just £60 million (lower than what Cristiano Ronaldo cost) less than what Arsenal’s Emirates Stadium cost to build, Real Madrid are redeveloping their iconic Santiago Bernabeu stadium for a whopping £328 million (€400 million).

According to the Guardian, Real Madrid president Florentino Perez didn’t mince any words in his proclamations for his club’s goals: “It’s time to face another challenge; we want to make the Santiago Bernabeu the best stadium in the world.”

Currently seating 81,044, the Bernabeu is already one of the biggest in world football, but with the planned redevelopments, according to Marca, it will become the third-largest five-star stadium in the world with 93,000 seats, behind Barcelona’s Camp Nou and the Azteca Stadium.

But it’s not purely about capacity expansion: A quick look at the mockups shown by the Mirror shows the sheer scale of Los Blancos’ ambitions. They will be building an entirely new exterior and adding a retractable roof, in addition to expanding the lucrative VIP areas and corporate box offerings like those at the new Wembley, which Marcasay generate at least €10 million a year alone.

As ever with football stadia these days, the Mirror claim that Real Madrid are looking to negotiate a lucrative naming rights partnership, with Microsoft and Coca-Cola as strong contenders to land a potentially record-breaking deal.

In a league where Real Madrid and Barcelona dominate television revenues due to a lopsided arrangement that earn them about 6.5 times the smallest team in La Liga, according to Bloomberg, despite an impending law that is expected to reduce this inequity, the dominance of Madrid will continue to hold when their redeveloped stadium opens for use.

The politics and implications of reducing the financial duopoly of theel Clasico teams are best left for another article to dissect, but while Madrid may not be able to recoup their eye-watering TV revenues in the short to medium term, their new stadium may provide a very comfortable cushion.

Not that Barcelona will be left behind, though. They’ve already put their own stadium expansion proposal to a vote this April: The upgraded Camp Nou would seat 105,000 fans, surpassing the Azteca Stadium’s capacity and becoming the biggest football stadium in the world. It would cost a whopping €600 million, according to ESPNFC.

The duopoly goes on.

Sharon Latham/Associated PressA Footballing Empire: Manchester City’s Etihad Stadium

Football clubs don’t seem to be content on just winning on the pitch anymore. Our last case study will be on Manchester City, who have caught the eye not just with their achievements in the Premier League and their star-studded squad, but also with their remarkable expansions across the globe.

Their entry into Major League Soccer with New York City FC has already been well-publicized and much anticipated, and just this January they extended their already considerable footballing might into Australia with their acquisition of the A-League’s Melbourne Heart, as reported by the Guardian.

With their tentacles spreading across the globe, City are well and truly building a footballing empire, and right at the middle of this are a few architectural projects back in Manchester.

If Arsenal, Bayern Munich and Real Madrid have all capitalized on their existing fanbases and historical success and catapulted into the 21st-century super-club, Manchester City have broken emphatically into that category in just a few years.

According to the Manchester Evening News, City’s commercial deals in 2012 helped them to increase revenue by 51 percent to become the seventh highest-earning club in the world, behind Arsenal, Chelsea and the aforementioned big three.

Besides City’s well-regarded social media campaigns and money-spinning world tours, they are also going ahead with plans to increase the capacity of their Etihad Stadium from 48,000 to 62,000, which would make it the second-largest stadium in the English top flight and take them into the realm of the European footballing elite.

And just like Florentino Perez of Real Madrid, City’s power brokers have been vocal in their ambitions for their team: Chief operating officer Tom Glick claimed that Manchester would have two of the top-five clubs in terms of worldwide revenues by the end of 2014.

If, as reported by the BBC, the Etihad expansion will be completed by the 2015-2016 season, then City will have with them a mighty financial arsenal in just a couple of seasons’ time. A far cry from its initial capacity of 38,000, and a development fit for an empire.

By that time, however, they might have a new competitor to deal with: Liverpool, who have continued to be a fixture in the top 10 of Deloitte’s Money League for the past few years, despite being the only club there without Champions League football, look ready to return to the European big time.

And, according to the Telegraph, they are planning to submit their own redevelopment proposals for Anfield by the end of the 2013/14 season.

 

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League.

Business strategy, Elsewhere, Finance and economics, Football Business, Politics, Stadiums and events, TV and broadcasting, World Cup

The World Cup: Evolution from Celebration of Football to Money-Making Exercise

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“No decision will be taken before the upcoming 2014 FIFA World Cup Brazil, as agreed by the FIFA executive committee.”

Source? An official FIFA statement, via the Guardian. Topic? Whether the 2022 World Cup in Qatar will be held in the summer or winter, of course; it’s only been the topic that’s consumed most international football fans and FIFA observers in the past few months.

The timing though? Immediately after Jerome Valcke, the FIFA secretary general, suggested to a French radio station that the World Cup might be moved to November 2022 after all.

Confused? You’re not the only one. But what’s been made apparent from the Qatar World Cup 2022 debacle, is that besides all the confusion and suspicions, the focus has firmly been taken away from what the World Cup is supposed to celebrate: football, the game itself.

Sure, the talk has revolved around Qatar’s temperatures in the summer, which would make for harsh conditions for players and fans alike, but surely that would’ve been a factor in the decision-making process leading up to awarding Qatar the host rights, instead of a topic to be discussed afterwards.

That Sepp Blatter and FIFA want to bring the World Cup to the Middle East is not a secret: Back in November, he even entertained the idea of hosting the tournament across several countries in the Gulf region, according to the Telegraph. So the globalization of football and the expansion of FIFA are two key items on the agenda, and both politics and money are equally prominent at the heart of all this, as we studied in an earlier article on the World Cup controversies.

But how exactly did the World Cup get to this current state? To answer that question, let’s go back and trace the evolution of the world’s most prestigious tournament from celebration of football to money-making exercise.

Laurence Griffiths/Getty Images

The Olympics: Eternal Rival and…Founding Father?

To understand the World Cup’s evolution and growth, we must first consider the history of the Olympic Games, eternally seen as the World Cup’s rival tournament in terms of global reach and prestige.

The distinction is always made that the Olympics celebrate not just one sport, but sport as man’s pastime, while the World Cup is only the gathering of footballing nations in the world—and before the United States’ entry and strong showing, not even encompassing the entire world. The World Cup’s proponents point to the final as the premier spectacle in world sport, with no single sporting match able to match its global appeal.

In reality, while they might be rivals now and trying to outdo each other every two years, it didn’t start out that way. In fact, the World Cup has the Olympics to thank for its current iteration and success, because it was the Olympics that gave birth to the World Cup as we know it.

When FIFA was founded in 1904, international football—indeed, professional football—was a phenomenon only affordable for a few countries, and when football was inducted into the Olympic Games in the summer of 1908, only amateurs were represented. Any attempt at organizing a truly international football tournament was undermined by the lack of professional setups in most countries around the world.

But when Uruguay won both the Olympic football tournaments in 1924 and 1928, FIFA, with then president Jules Rimet as a visionary driving force, stood up, took notice, and most importantly, set about realizing his dream. The first FIFA World Cup was to be staged in 1930 in Uruguay, with politics—what else?—at the heart of the host location decision: It was to be the 100th anniversary of Uruguay’s independence, and it was to be made not a great celebration of the game itself, but a spectacular political statement.

How else to explain it, given that the Uruguay national football association was willing to cover all travel and accommodation costs incurred by participating teams? As even FIFA.com concedes, that possible profits would be shared with participants and deficits taken on by the host country won Uruguay the first ever World Cup hosting rights.

The 1934 competition was held in fascist Italy under the dictatorship of Benito Mussolini, and Rimet, according to this excellent Independent feature on his life, was already criticized for politicizing football.

Before the advent of television and the phenomenon of globalization, the World Cup had surrounded itself with politics and money.

(A footnote to add, though, is that Jules Rimet’s vision and dream of uniting the world through sport and creation of the World Cup earned him a Nobel Peace Prize nomination in 1956. Perhaps, hopefully, the World Cup at its heart was actually more than a celebration of the beautiful game, but a triumph of humanity.)

Carlos Alvarez/Getty Images

The Context: Globalization and Technology

But just as we can’t give the Olympics all the credit for introducing the concept of a FIFA World Cup, so Rimet and FIFA can’t claim all the glory for growing the tournament from a small competition featuring just a few countries in Montevideo, Uruguay, to the global spectacle that was the 2010 World Cup in South Africa.

As ever, context is key, and the explosion of global business and trade, just as it’s played a huge role in the history of the 1900s, is an integral part of the World Cup’s continued evolution. Before the business side of things took over, though, first came the phenomenon of television.

According to this TIME feature, the impact of television on the World Cup’s boom cannot be understated: From 1954 to 1986, the number of TV sets worldwide “increased more than twentyfold, from a little more than 30 million to more than 650 million.” This laid the foundations for a truly groundbreaking moment in football history.

The first live World Cup games were broadcast in Europe in the 1954 tournament, which reached only a handful of audiences due to the low volume of matches shown, but the potential of television and TV advertising was already apparent. (Not that the Olympics were to be beaten, of course: The 1936 Summer Olympics were the first to be broadcast on TV to local audiences. International broadcasts came in 1956.)

Fast forward a decade and a half. Spying an opportunity to conquer the world of football and reap the ensuing economic benefits in 1974, was new FIFA president Joao Havelange, who upon taking office turned his organization into a modern international NGO, putting in place the infrastructure, people and income-centered mindset of a corporation.

The only thing left to do for the World Cup, which previously featured 16 national teams, was to expand. And expand Havelange did, opening the doors to developing countries with eight additional slots (which have since been further increased to a total of 32 participants since France 1998), as discussed by Tim Vickery for The World Game. The Havelange era also saw the introduction of the FIFA U-17 World Cup, FIFA U-20 World Cup, FIFA Confederations Cup and FIFA Women’s World Cup.

The costs of hosting such an immense global tournament in one country were too much to bear for one host country and FIFA, and thus came the idea of corporate sponsorship of the World Cup. Havelange struck deals with Horst Dassler, heir to the Adidas fortune, for the German sportswear company and other big-name corporations like Coca-Cola to fund the tournament, paving the way for the commercialization of international football.

So while the advent of television advertising led to increased premiums for marketers to get their spots onto World Cup TV screens, behind the scenes within FIFA itself was a concerted movement to pump money into the World Cup—with political and economic influence once again the main motivation behind all these changes.

(The name Joao Havelange may be familiar. He was the same FIFA ex-president that resigned in April 2013 after a FIFA ethics report ruled that he had taken bribes, as reported by BBC Sport. The culprit in question? International Sport and Leisure [ISL], founded by Horst Dassler. Politics and money, indeed.)

Getty Images/Getty Images

The 1990s and Onwards: Spiraling Out of Control

If ever there was a curious decision in the history of world sport, the idea to host the 1994 World Cup in the US was clearly one, at the time. In hindsight, however, it was just another calculated plan from Havelange to bring the game to North American shores, which had yet to be consumed by football fever.

The legacy was stunning: To this date, USA 1994 still holds the total attendance record (over 3.5 million) and the average attendance record (68,991), according to USSoccer.com. The US’s advancement to the round of 16 for the first time since 1930 contributed to soaring TV ratings.

(Leading up to its hosting of the World Cup, the US also put in place their first ever professional soccer league. It’s no surprise that Major League Soccer was founded in 1993, a year before the 1994 World Cup. We explore the growth of soccer in the US in another article.)

The introduction of the World Cup in practically uncharted territory in 1994 was met with enormous financial successes, and since its foray into the world leader of commercialized sport and corporate sponsorship, FIFA have never looked back. The World Cup has since traveled to Asia (2002) and Africa (2010), goes to Russia in 2018, and brings us to the Middle East in 2022.

According to this Economist article, the World Cup broadcasting rights for France ’98 were sold by FIFA in 1987, before the stunning 1994 American success, for $344 million. An indication of how far the World Cup and FIFA have gone: In 1998, at the time of the article, ISL—which would later collapse, of course—had agreed to pay $2.2 billion to show the games outside America.

The groundwork for corporate sponsorship was laid by Havelange, but was taken to new levels under the leadership of current president Sepp Blatter. Let’s consider the 2010 World Cup, for example: According to a UPenn study, FIFA’s revenues related to the South Africa tournament amounted to a staggering $1.022 billion, of which $650 million belonged to broadcasting rights.

Participating national teams are in on the act too: FIFA was to provide $420 million to all participants and the football league teams providing players to the national teams, $30 million of which would go to the World Cup-winning team (Spain). First-round teams qualified automatically for $8 million each, while $1 million in preparation costs were provided to each participating football association.

This was brought about by the stellar line-up of corporate FIFA sponsors, known as “partners,” which included Adidas, Coca-Cola, Emirates Airlines, Hyundai-Kia Motors, Sony and Visa, who were “guaranteed exposure in the tournament stadium” and would receive “direct advertising and promotional opportunities and preferential access to TV advertising.”

The cost? A minimum of between 100 and million euros through to 2014. By which time, of course, the next World Cup cash cow will be held this summer, this time in Brazil.

Clive Mason/Getty Images

Conclusion: It’ll Only Get More Expensive From Here

Is it damning or merely inevitable that corporate sponsorship and incessant marketing efforts are now part and parcel of any World Cup?

In the build-up to this summer’s tournament, the allegations of corruption have been brushed aside after Havelange’s resignation in 2013, while all the talk of political and commercial interests have been directed towards the distant 2022 World Cup in Qatar, still eight years away.

It’s no longer news—rather, it’s an accepted fact—that the World Cup is now considered an extremely lucrative opportunity for brands and nations alike; this Fox article on Nike and Adidas’ brand battle pre-World Cup is now just part of the fabric. In fact, any sports company—or indeed any business entity at all—would be condemned for not taking advantage of a World Cup year to promote its business.

And so it’s only going to get more expensive from here. The spending and rights associated with the premier world football tournament have skyrocketed in the past decade or so, with the help and under the influence of a few key players, but the brand-new stadiums that are to be constructed in host countries are just the tip of the iceberg when it comes to World Cup spending.

But it’s the World Cup. Just as FIFA continue to rake in the cash, we football fans will continue to ignore the commercial influences and political battles and focus on the spectacle that will unfold before our eyes when the first whistle is blown on June 12 at the Arena de Sao Paulo.

An event of this magnitude only comes once every four years, after all. When the winning team hoists the Jules Rimet trophy on July 13, for once the celebrations will be directed entirely towards the football that they have played, not the money they will make.

This article first appeared on Bleacher Report, where I contribute regularly on Liverpool and the Premier League, and at times on the business of football.

Branding and marketing, Football Business, Politics, Stadiums and events, TV and broadcasting, World Cup

The Football Business Column: The Business and Politics Behind the 2022 Qatar World Cup Controversies

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“It may well be that we made a mistake at the time.”

Given the fresh controversy surrounding the death of migrant workers on the building sites for the 2022 Qatar World Cup, Sepp Blatter’s public admission in early September to Inside World Football (h/t ESPN) seems all the more pertinent. If only he’d thought of such implications and possibilities before actually approving the final decision.

No matter. What’s happened has already happened, but FIFA are now left to pick up the considerable refuse that has been generated in the wake of the significant recent fallout over the decision to award the tiny Middle Eastern emirate the hosting rights of the world’s most prestigious single-sport tournament. The problems are rooted in politics, as they were always going to be given the universality of the world’s most popular sport, and the international involvement in and exposure to the game.

Surely more background digging should’ve been conducted prior to the bid, and surely more scrutiny should’ve been paid to the implementation process by FIFA and the Qatari authorities, to avoid any potential banana skin in their grand ambitious plan to bring the tournament to new and exotic places on the planet.

Simply put, the migrant worker situation should’ve been researched and taken into consideration in the bid process. It might have been a bit too political to go into the human rights records and agendas of host countries, but it’s FIFA, it’s the World Cup and it’s all about politics anyway.

David Cannon/Getty Images

The Politics

“The World Cup and foreign labor abuse in host countries” sounds exactly like the kind of problem that should never have been inflicted on FIFA in the first place, such is the emphasis given to the separation of football from politics and anything of the sort. Sadly, this was always going to be tough.

Especially with, in Blatter’s words, football being “a global unifying force for the good, a force that offers to be inclusive in every which way and a force that has written anti-discrimination on its banner under my presidency.” Especially with FIFA’s goal to bring the World Cup to places that haven’t hosted it before—South Africa, Brazil, Russia and now Qatar (representing the Middle East); the likes of Australia and China are surely not far behind.

It’s in this context that Blatter’s admission to German newspaper Die Zeit (h/t The Guardian)—“European leaders recommended to its voting members to opt for Qatar, because of major economic interests in this country”—appears particularly worrying. Not only this: UEFA president Michel Platini has one-upped Blatter and suggested to the Associated Press (h/t The Washington Post) that this sort of political influence was commonplace in international tournaments: “With the extraordinary influence Mr. Blatter has, he has only all of a sudden realized there are political and economic influences when we decide who will host an Olympic Games and so forth?”

A public spat that not only casts a pessimistic, cynical light over proceedings, but one that should be avoided in the first place. Not even Platini’s insistence that former French president Nicolas Sarkozy didn’t personally ask him to vote for Qatar despite Sarkozy’s political support will clear anything up.

And it’s led to Qatar’s FIFA 2022 World Cup Organizing Committee secretary-general Hassan Al Thawadi defending his country’s bid and its legality. There will be lots of questions thrown his way; he’d better get used to fighting the fire.

Handout/Getty Images

The Scheduling

Possibly the biggest question of all when the subject of the 2022 World Cup in Qatar is brought up is this: Will it be held in the summer or will it be moved to the winter?

The first thing that comes to mind when we consider a winter World Cup is: What happens to all the leagues that run throughout the year except during the summer? It just so happens that those are the European leagues that have the most worldwide interest, the highest-profile players and the best quality and competition. Just a simple statement from the EPFL, the umbrella body of the major European leagues, will have FIFA scrambling.

The potential problems brought about by disrupting the league calendar are quite significant. It’s not just about asking those leagues to move their domestic calendars for just a season. It’s not just about the feasibility of working out a schedule that also fits in with the Winter Olympics. And it’s not just about moving a four-week tournament, as they’re finally starting to find out, and FIFA will have all kinds of oppositions, protestations and storms to weather in the coming weeks and months (hopefully not years).

Speaking of the weather, never mind the considerations that FIFA should have made regarding the scheduling due to the summer temperatures in Qatar even during the bidding process; now that the question of whether Qatar should host the World Cup at all is being asked again, even the chairman of FIFA’s medical committee has come out in public opposition.

Michel D’Hooghe has gone on record questioning the prospect of holding the tournament in the summer from a medical perspective and has included aspects other than players training and competing in scorching temperatures while he was at it: He mentioned the delegates, the “FIFA family,” the media and would you know it, the fans as well. A FIFA executive keeping the fans in mind?

Another perspective also had the fans’ interests in mind, or so it claimed. This time it was the Australian Football Federation, who lost its original bid for the 2022 World Cup, who has asked for compensation in the event that FIFA do move the tournament to the winter, just because it feels like it’s entitled to “just and fair” compensation to “those nations that invested many millions, and national prestige, in bidding for a summer event.”

The FFA did give some context, acknowledging the place football has in Australia by citing the fact that the A-League runs through the Australian summer (winter in the northern hemisphere) because high-quality stadiums Down Under aren’t as accessible during the rest of the year. FFA chairman Frank Lowy claimed that “clubs, investors, broadcasters, players and fans would all be affected,” which is a valid argument and observation.

Laurence Griffiths/Getty Images

The TV Money

Just in case we were getting carried away with the seemingly alien notion that football authorities actually care about the common fan, there are other high-profile cases that shoot us right back down.

Fox Sports, a division of the US television network Fox, have made public theiropposition to any potential switch of the tournament to the winter (h/t Nick Harris of the Daily Mail), simply because “Fox Sports bought the World Cup rights with the understanding they would be in the summer as they have been since the 1930s.”

In this case, it’s about the finance and economics of broadcasting such an event, which, when the numbers involved come to light, are hardly a small matter. FIFA earned a whopping $1.1 billion for the rights to the 2018 and 2022 World Cups; Fox paid around $450 million, while NBC Universal’s Telemundo division bought the Spanish-language rights for $600 million.

And these are US networks that have acknowledged the rise in interest in the “beautiful” game (in quotes for obvious reasons considering the topic of this article) by shelling out for the English Premier League this season, but that are also cautious about having football competing for high-profile prime-time spots alongside the traditional big American sports during the regular American season.

Such is the importance and influence of broadcasters that Ben Rumsby of The Daily Telegraph reports FIFA have allegedly held secret meetings with them in an attempt to “quell opposition to any move,” which all but shows that FIFA are the mercy of their own money-making engines.

Harold Cunningham/Getty Images

The Disillusion

The debate and fevered discussion will no doubt continue for a while yet over the staging of the World Cup—and indeed if it will still be held in Qatar at all—but one thing’s for sure: Given the amount of money and politics involved in the game now, surely these were things that FIFA should’ve considered before awarding the hosting rights to Qatar?

If there had been a clear plan and clear communication during the process—even accounting for the widespread unwillingness to change across footballing authorities and TV networks (understandable, considering the financial implications)—perhaps right now, instead of clashing over it all, everyone would be celebrating that the World Cup Finals are finally arriving in the Middle East.

A disappointing chapter in the history of arguably the world’s most inclusive and socially impactful sport, and an undoubted tarnishing of FIFA’s slogan: “For the game, for the world.” Plenty of work to do still.

This piece originally appeared on Bleacher Report and is also part of my Football Business Column for SWOL.co, in which I discuss some of the latest news, trends and developments on the business side of football—everything including marketing, strategy, technology and finance.