2014 FIFA WORLD CUP BRAZIL - A Fiscal perspective!

Posted on July 17, 2014
Location: London
2014 FIFA WORLD CUP BRAZIL - A Fiscal perspective!

The football world cup is over. Argentina lost the FIFA World Cup 2014 final 1-0 in extra time to Germany     and four-time World Player of the Year Messi missed a great chance to score in the second half. Argentine football icon Diego Maradona felt Lionel Messi should not have been given the Golden Ball award at this year's World Cup in Brazil because he did not deserve it. Right; but Argentine football icon did not say who he thought deserved the Golden Ball award.     "it is not right" carries further significance, when comes together with "what is right"!!!    Never mind – that’s not the point I wanted to make. Some 250 million people play soccer regularly in more than 200 countries    , according to Goldman Sachs.     Since the first FIFA World Cup was hosted in Uruguay in 1930, more than 70 countries have participated in various qualifying round s.   

World Cup in Brazil has generated more than $4 billion in total revenue for FIFA    , or 66% more than the previous tournament in South Africa in 2010. The vast majority of the money came from the sale of television and marketing rights. The World Cup generates more revenue for its association than any other sports tournament, save the Olympics (based on revenue per-event-day, the NFL’s Super Bowl reigns supreme).     FIFA’s profit for the Brazil World Cup:     $2 billion.

Most of the revenue FIFA generates comes from television rights ($1.7 billion) and marketing rights ($1.35 billion) from corporate partners     like Adidas, Emirates, Sony, Visa, Hyundai and Coca-Cola. Blue chip companies love to throw money at the World Cup because it is followed passionately throughout most of the world.

For Brazil, FIFA made total payments of $576 million to the participating member associations, the clubs of participating players and for the club protection program, 37% more than the World Cup in South Africa for years ago.     The biggest lion’s share of the payments went towards a record $70 million of prize money, 75% more than the 2010 competition. The 2014 World Cup winners received $35 million, while the 16 teams that are eliminated in the group stage each collected $8 million.     Taking into account the total number of teams, players and the duration of the World Cup, the per-player, per-day amount  was $2,800 in Brazil.      

The growth in the business of the World Cup has been robust since the late 1990s due to the big jump in broadcasting rights.     Television rights outside of the U.S. for the 2002 and 2006 World Cup were sold for $2 billion, a six-fold increase versus the $310 million paid by the European Broadcasting Union, a consortium representing the interests and financial power of Europe’s public broadcasters, for the three tournaments held in the 1990s.     Since 1998, overall World Cup revenue for FIFA has increased 11-fold.       England football team’s performance in the world-cup, has cost UK supermarkets up to £55m in lost sales over the two weeks since they were unceremoniously booted out of the 2014 World Cup.     In some depth, here are more highlights from the IRI analysis:

  • The value growth for soft drinks reduced significantly, from 18% in week one to 9% in week two, and just under 6% in week three.     Sales were £5.2m lower in week three of the World Cup than they were in week one.
  • Altogether, value sales of bagged snacks, pizza, chilled party snacks, bread rolls, baguettes, coleslaw, chilled salads and dips were £3.3m lower through the UK’s major supermarket chains in week three than they were in week one. 
  • Ale and stout had sales volumes increase by 13.9%, the highest in sales volumes.
  • Champagne and sparkling wine continued to grow strongly, with volumes up by 13.3% and value up by 15.7%.
  • Cider maintained its momentum with volume and value sales in the last week, still up on the four weeks immediately prior to the World Cup (volume +2.7%, value +6.9%).
  • Net sales for beer, wines and spirits in week three were up by £5.7m compared to the same week in 2013.     However, this was a £37.1m reduction in sales value compared to week one of the World Cup.

If the claims are to be believed;     a lot of road-accidents, bad-moods, fights-arguments, hiring-firing, drinking-quitting, smoking-cooling, mood swings, peace-violence and “much more than that…” during last four weeks;     were direct results of the frustration/excitement caused by football world cup 2014.      

My drycleaner was closing his shop;     when I checked-in to collect my cloths. He kindly offered to drop me home with the cloths. We just narrowly escaped an accident at a road turning. Someone was driving very fast and did not see us approaching. My drycleaner got off from his car and went up to the other car to give an earful to the speeding driver. I saw him being angry for the first time…he is generally a peaceful man! It was funny for me…he was going back and forth and shouting    ….”I know what it is…where it is coming from…it is the stupid football doing this, to our people…to our country…now on the road”,     trying to make it audible to every one passing by.

But to this accountant customer sitting inside the car;     my dry-cleaner had already pervaded an inquisitiveness to take a dip in the numbers & understand the impact of this world-cup statistically. It is incredible indeed;    BIGGEST SPORTING SHOW/EVENT ON THE EARTH, IN THE UNIVERSE!!!

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