The FIFA World Cup Has a Significant Impact on the Global Economy

7/16/2019 The FIFA World Cup Has a Significant Impact on the Global Economy

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The FIFA World Cup has a significant impact on the global economy. FIFA, football’s global governing

body with 204 member countries, is beginning to view itself as a global “big business”. This self -image is

no assumption. It has been proven throughout various World Cups that this football tournament has a

global impact.

Corporate sponsors

World Cup sponsorship has risen from two thousand dollars in 1984 to 16 thousand dollars in 1996.The

tournament attracts 3.6 billion viewers on average from beginning to end of the tournament.These

sponsors include Coca-Cola, McDonalds, and Adidas. In the United States (the 1994 host), 65% of the

total money spent on sponsrship is in sports. Furthermore, 63% of the sponsorship in Germany (2006

Host) is in sports and 80% in South Africa (2010 host). With this value of sport sponsorship, it is evident

that hosting a World Cup will strongly impact a global economy.

North America

The 1994 World Cup in the United States was hosted in a number of different cities. In Los Angeles, siteof the final, there was a total economic profit of 623 million dollars that went directly into the US

economy.To help one better understand this figure, in comparison of that same year the Super Bowl

only accounted for 182 million dollars (Nodell). These figures were calculated over just a one month

period in which these games took place. Just in California, reports from the Pasadena Convention and

Visitor’s Bureau conclude that 1,700 part-time jobs became available during the preparation and

duration of the event (Deady). New York, San Francisco, and Boston received combined revenue of one

billion and forty-five million dollars.The overall increase on hotels and food and beverages was ten and

fifteen percent from the previous year. This money spent on hotels and restaurants helps the entire U.S.

economy in that many of these hotels and restaurants are chains and corporations. Hence, the money

made is spread throughout the corporation and it was found to be used for the opening of new facilitiesand expansions of the corporation.

In addition to the direct impacts of the 1994 World Cup, there are many indirect impacts as well. In

order to host the Cup the USA had to develop a national soccer league. This necessity quickly led to the

formation of the MLS or Major League Soccer in 1996. This created an ongoing economic factor for the

United States. This opened doors for new facilities to be built, sponsorship of new teams, and the

revenue of the ticket sales. The indirect impacts didn’t stop there either; the newly introduced

professional league in the US endgendered one of the fastest growing youth sports in the country. Youth

soccer took off and the selling of apparel and gear for the sport was a target for private businesses to

focus on selling.However, a critic has argued that the event cost the U.S. $5.6 billion.

Asia

In the 2002 World Cup, several other advantages were discovered when the host was split between

Japan and Korea. This was the first time the tournament had been hosted in two countries, with thirty



two matches being played in each country with a grand total of sixty four matches. With the three

million live spectators ticket sales were an astronomical 1.2 billion dollars. FIFA alone promised each

country 110 million for hosting and all revenue from their ticket sales. Also, each country expanded their

20 soccer facilities with an investment of 4.7 billion dollars to prepare for this global event.This gave

birth to another realization of hosting this event. Japan’s ten new facilities were a lmost solely built in

competition with Korea’s expansion and the previous World Cup’s host France. A host country in the

world cup feels this sense of pride and national exposure with so many people viewing and attending

the event. Many times they feel it can show the world their economic success and the progress they

have made in bracing the global sport of soccer. This sense of nationalism actually caused a loss for the

Japanese while hosting the Cup.

The expansions in Korea will leave longer lasting impressions for their economy because all ten of their

newly developed stadiums are currently used by their professional teams. Japan was only able to

maintain two of the ten facilities that they built in preparation for the 2002 Cup. Therefore, the return

on investment for Korea is much greater. Moreover, the attendance in these countries was

predominantly European and American in which the trip of these fans was more of a vacation and theirstay accounted for more profits than the typical World Cup attendees.

It was predicted prior to the 2002 Cup that the England team's absence would cost the economy 4.7

billion in lost output or about .3% of their GDP (Gross Domestic Product) if they were to win the entire

tournament. If the England team loses in just the first two weeks however, the losses are only expected

to reach a total of 1.8 billion. A broader scope of Europe suggests that the top ten other soccer

enthusiasts may contribute a loss of 8.1 billion of economic output or .3% to .75% of second quarter

GDP. This is proven more significant in that of the thirty two nations participating, those nations account

for 84% of the global GDP.

Europe

The 2006 World Cup was adjudged a success comparable to that of the 1994 US World Cup.The German

government reported that tourism revenue over the month of the World Cup was up roughly 400

million dollars. They made about 3 billion more dollars in retail such as jerseys and other paraphernalia

regarding the Cup. Lastly, a reported 50,000 new jobs were yielded in preparation for the tournament.

This impact sends ripples through an economy. Restaurants and bars were full to capacity at all hours of

the tournament, and 15 million more spectators arrived in Germany than was expected.

This success drew attention to the German professional league, the Bundesliga. As a result, sales of

tickets and team paraphernalia have increased drastically. Many global corporations witnessed the craze

in Germany during the world cup and in recognizing the countries passion for the sport they have begun

to sponsor many more German teams than prior to 2006. The global viewing of Bundesliga games has

increased as well, helping these sponsors and German telecasters the profits they were expecting.



The 2006 World Cup had an operating budget (for staging the event, not inclusive of capital

infrastructure costs) of €430 million. The German Football Association announced a profit before tax of

€135 million. After tax and repaying the FIFA contribution of €40.8 million - the net profit was €56.6

million which was distributed to the German Football Association (DFB) and the German FootballLeague.

For Germany 2006 that the host country was entitled to the gross receipts of all ticket sales. In October

2007 FIFA announced : "FIFA has reassumed responsibility for ticket sales and will establish a company

named '2010 FIFA World Cup Ticketing Ltd' to this end.".

Africa

The 2010 FIFA World Cup will be held in South Africa, for the first time in the tournament's history. Even

though it may not attract as many foreign visitors as the USA and Germany World Cups, it will still have

an economic benefit due to the location and already emerging economy.

Any predictions about the economic impact of the 2010 FIFA World Cup on South Africa have to take

into account the present state of the South African economy, which still has one of the largest

disparities between the rich and the poor. One main factor for South Africa is attracting international

investors. To increase the international trade and foreign direct investment, South Africa must have

stability throughout their whole region in their economy and government. If this is achieved then South

Africa could be in the top choices for foreign direct investment and collect the potential benefits of the

2010 FIFA games.Because FIFA gathers all of its finances through marketing tournaments such as the

World Cup, they aim to ensure the event's success, and assist the hosting country accordingly. Since

South Africa is still a developing country, FIFA will have an important role in funding the tournament.Along with other developing countries that host mega-events, the investment of larger capital

investment is required.

The projected total direct economic value for GDP is approximately $21.3 billion. Also, 159,000 new jobs

are predicted, including full- and part- time jobs, both permanent and temporary. The government also

plans to spend millions on upgrading stadiums and building a new international airport. The tournament

will host 32 teams with an average of 50 people per team, 14,500 VIPs and dignitaries, 500 officials and

10,500 media. A projected number of half a million foreign visitors (located outside of Africa) are

expected and staying an average of 15 days.

http://en.wikipedia.org/wiki/Economics_of_the_FIFA_World_Cup






cricket

MUMBAI: The International Cricket Council has earned $321.2 million from the successful 2011

ICC Cricket World Cup that was staged in the Indian sub-continent, reinforcing its dependence

on the tentpole property for its revenues.

In comparison, the ICC had earned $105.1 million from the ICC World Twenty in 2010.

The ICC had sold the global broadcast rights to ESPN Star Sports till 2015 for $1.1 billion. As per

the deal, ESS got the telecast rights for 18 ICC tournaments, including two World Cups and five

T20 World Cups.

Though the major portion of ICC's 2011 World Cup revenues were from the sale of the

broadcast rights, it also got income from ten sponsors that included Hero MotoCorp, Pepsi,

Emirates, LG, Reliance Communications, Reebok, Castrol, Hyundai and MoneyGram.

The ICC’s total revenue for the year stood at $353.8 million, up from $134.9 million in 2010.

The revenue from the World Cup pushed the world cricket governing body's surplus to $203.8

million for the year ending 31 December compared to $76.1 million in the year ago period. The

World Cup takes place every four years.

It must noted that the ICC had got a Rs 450 million tax exemption from the Indian government

on a part of its income arising in India from the ICC CWC.

Its subscription income went up from $21.9 million in 2010 to $24.1 million. Subscription

income is the amount ICC’s Full Members (Test playing nations) pay every year to fund the

annual budget of the ICC.

The ICC’s income from commercial and other activities grew to $5.9 million from $5.2 million

while interest and other financial income totaled $2.6 million, a slight drop from $2.7 million

that it earned in 2010.

Operating costs amounted to $149.9 million, up from $58.8 million as the event cost of $121.9

million for staging the staging the ICC CWC. The event cost in 2010 stood at $30.2 million, which

went into staging the ICC T20 WC.

General and administrative expenses relating to the management of the global game of cricket

totaled $28 million, a decline from $28.6 million in the previous year.

During the year, member boards were paid dividends amounting to $180 million. In 2010, the

amount toted up to $69 million.



Capital and Reserves amount to $33.6 million (2010: $29.4 million), represented by Reserves of

$29 million (2010: $19.9 million) and Retained Surplus of $4.6 million (2010: $9.5 million).

The consolidated financial statements comprise the results of ICC Development International

and its subsidiary companies ICC Events, International Cricket Council FZ-LLC, IDI Mauritius

Limited and IDI Hungary KFT. The Group is owned by ICC for the benefit of all its Members.

The FIFA World Cup Has a Significant Impact on the Global Economy

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