– about FIFA money.
One of the main features of the 2017 Confederations Cup is the small number of sponsors. The tournament has already begun, and FIFA has as much as 40 percent fewer partners than during the 2013 Confederations Cup. In Brazil there were 20 companies of different levels, and in Russia there were only 12.
Traditionally, all sponsors of major tournaments are divided into three categories: FIFA partners (top level, widest involvement and greatest publicity), Confederations Cup and World Cup sponsors (second level) and regional partners from the country where the matches are taking place.
Now the category of regional sponsors has fallen the most significantly: in Russia it just one(“Alfa-Bank”), while in Brazil there was 6 : Trade and investment agency Apex-Brasil, sports retailer Centauro, chocolate maker Garoto, Bank Itau, insurer Liberty Seguros and English language school for adults Wise Up.
Last year, Alfa Bank paid FIFA $2.425 million: it became the official bank of the World Cup.
In Brazil it was 8 sponsors of the tournament, 2 of them are Brazilian (Oi and Seara). Currently sponsoring the Confederations Cup total 4, and there is not a single Russian one: Budweiser beer and the fast food chain McDonald’s represent the USA, and the manufacturer of various equipment Hisense and the smartphone manufacturer Vivo represent China.
Over four years, the number of sponsors has increased only in the highest category ( from 6 to 7) - thanks to contracts with Gazprom and the Chinese giant Wanda. Otherwise, the partners remained the same: adidas, Coca Cola, Visa, Hyundai-Kia, only Emirates airline was replaced by Qatar Airways from the same Asian region.
To understand what is happening with FIFA sponsorship contracts, Sport Connect spoke with the CEO of the Octagon Russia agency Ekaterina Bokova and the executive director of Octagon Russia Matthew Fener.
– Over the past three months, three new brands have become FIFA partners. This suggests that companies see the huge opportunity that comes with the World Cup and understand that it is a long-term platform that can strengthen their brand and give them global reach.
The World Cup is a one-of-a-kind sponsorship asset of this scale, which has repeatedly demonstrated its uniqueness through the positive results of its sponsoring brands in terms of positioning, increased knowledge of products or services and sales growth. In 2014, the World Cup in Brazil was attended by more than three million people, and the total television coverage of this event was 3.2 billion.
– What is special about the World Cup in Russia in terms of sponsorship?
– The sponsorship industry in Russia has matured greatly in recent years; after the 2016 Olympic Games, virtually the same thing happened to it as in Brazil after the 2014 FIFA World Cup: now decisions on sponsorship are made more rationally, with an understanding of the results, and the times, when decisions to sign a sponsorship asset were given from top to bottom, without any real justification for their need, almost ended.
So, how do I see the sports marketing industry in Russia?
The Olympic Games in Sochi were the first stage in the maturation of the industry in Russia, and the World Cup will be another serious step forward. The Confederations Cup and the FIFA World Cup will raise the level of professionalism in sports marketing and create new opportunities through new sports venues.
Russian and international brands in our market believe in the power of sponsorship (example: KHL / World Cup)
Sponsorship is based on building emotional relationships with brands, so beyond 2018 the market will continue to grow and develop. Passion for sports is a very powerful basis for building relationships between consumers and brands, regardless of what marketing tools are used in communications - television, new media, social networks or creating a unique experience for the consumer using phygital.
– What features of the Russian audience should brands take into account?
– Many countries in 2014 targeted a young audience of fans, while in Russia the picture is a little different. Russian football fans, according to the FIFA – FWC 2014 study, are 48% represented by the age group 50+, 22% are those aged 35-49, and 27% are a young audience from 16 to 34 years old.
They are 63% male, which is different from, for example, the Brazilian public, where there was a gender balance of 51% male and 49% female.
In terms of social status, 47% are people with an average income level, 28% with a low income and 25% with a high income category.
– How has the football sponsorship market changed in general after the 2014 World Cup?
– I would highlight three main trends.
Firstly, the football sponsorship market continues to grow worldwide. Global sponsorship spending is projected to exceed $62 billion in 2017, up 1.8 times from 2010.
Thirdly, today China has become one of the largest players in the global sports market: Chinese companies are actively investing in sponsorship. Three companies (Wanda Group, Hisense and Vivo) have recently become FIFA sponsors, and I believe that the participation of countries in the Asian region will increase.
– To what do you attribute the difficulties that FIFA encountered in finding sponsors for the 2018 World Cup?
– I would highlight two main reasons. The first reason is the internal difficulties that FIFA faces after the end of the 2014 World Cup. The second reason is the economic downturn that Russia is experiencing, which makes it difficult for Russian companies to get involved.
– Do you think that FIFA will be able to sign all 20 regional contracts, including 4 in Russia?
– I expect that FIFA will sign a number of new contracts with regional partners on the eve of the 2018 World Cup, as interest in this will increase as the start of the championship approaches.
– Several traditional categories are still open - for example, the category of health and beauty products, telecommunications, chocolate bars, tires, insurance companies.
Also read on Sport Connect:
There are less than 200 days left until the start of the 2018 FIFA World Cup in Russia. The period when it makes sense for sponsors to enter into an agreement with FIFA to support the tournament is ending. FIFA, accustomed to swimming in sponsorship money, this time could not find Russian sponsors for the 2018 World Cup in Russia. There is room for twenty companies on the list of regional corporate sponsors. But all of them are vacant, with the exception of one: in the summer of 2016, Alfa Bank agreed to become a FIFA sponsor.
So-called “regional partners” are the most budget-friendly form of sponsorship in FIFA. The status of sponsor of the championship is more expensive, and the main football organization on the planet also lacks partners - there are only four companies on the list out of eight possible. Of the eight "global partners" envisaged in FIFA's plan - the most expensive level of engagement - one is missing.
The weak interest - the second Russian World Cup sponsor is FIFA's "global partner" Gazprom - contrasts with the 2014 Sochi Olympics. The organizing committee had no problems gathering more than a dozen large Russian enterprises ready to sponsor the sports tournament. Today, for example, the Megafon company, which was among the main sponsors of the Winter Games in Sochi, refuses to talk about why they are not interested in sponsoring the football tournament.
FIFA fights 'toxic brand' image"
“The bad times are behind us. And in general, we are creating the biggest show on the planet,” Fédération Internationale de Football Association (FIFA) commercial director Philippe Le Floc told the AP in his first interview after more than a year on the job. It is difficult to disagree only with the second statement: football as a spectacle is truly at the peak of popularity in the world. But with regard to the difficulties already overcome, the situation is more complicated.
For four years the situation was completely different. Six months before the start of the world football championship in Rio, FIFA proudly announced that all sponsors had been found and applications were no longer accepted. This was a record cycle for the organization from a financial point of view. This was followed by another peak in the corruption scandal, when in May 2015 a number of FIFA functionaries were arrested. Since then, a criminal trial has been unfolding in New York, which has spoiled the already tarnished reputation of the association.
The FIFA brand has not become less “toxic” after the lifelong disqualification of Vitaly Mutko from all IOC events
Large companies, primarily Western, one by one withdrew from sponsorship programs: Continental, Johnson & Johnson, Castrol, as well as Sony and Emirates. Some are openly threatening to reconsider their cooperation with FIFA, such as Adidas. Against this background, FIFA President Gianni Infantino’s assurances that FIFA is no longer a “toxic brand” look like complacency.
Costly and risky for sponsors
However, the non-participation of Russian sponsors is explained not only by FIFA’s image problems. Against the backdrop of the economically difficult situation in Russia, many companies were probably scared off by the high financial costs associated with cooperation with the football association. Despite the crisis of confidence, the FIFA leadership takes a tough position in the negotiations: “Obviously, the more positions we take (meaning the conclusion of sponsorship contracts. – Ed.), the better. But, on the other hand, this does not mean that cooperation with us will be cheap,” the organization’s commercial director, Philippe Le Floc, told the AP.
The amounts of individual contracts are not disclosed, but even in the case of the “cheapest” contract we are talking about millions of dollars. Alfa Bank transferred 4 million to FIFA in 2016, as can be understood from the organization’s annual report.
On the other hand, the authorities in Russia, apparently, did not force the participation of domestic companies in the preparation of the 2018 World Cup with the help of tax incentives, as happened in the case of the Sochi Olympics. The Ministry of Finance of the Russian Federation, as the Vedomosti newspaper wrote in 2015, exempted FIFA's partners and suppliers only from paying VAT, while sponsors of the Sochi Olympics enjoyed a wider range of benefits. For example, the Adamas company showed public interest in sponsoring the 2018 World Cup back in 2015, but at the moment they chose to remain silent when asked to comment on the situation.
“There is interest, it’s hard to say why this hasn’t happened yet. This is happening progressively,” Alexey Sorokin, general director of the Organizing Committee of the Russia 2018 World Cup, tried to explain the difficulties with finding sponsors at the beginning of 2017.
Context
When asked by DW to comment on why no one appeared in a year, Sorokin did not respond. Perhaps interest in the football championship has weakened amid the doping scandal with the IOC. "The general mood in power circles is: let's get this over with as quickly as possible," Sven Daniel Wolf of the University of Lausanne, an expert on Russian sports policy, told the Financial Times (FT).
FIFAassures that everything is fine
Corporate regional sponsors could also come from other European regions. According to FT, potential partners are held back by reputational risks associated with the host of the championship - Russia. These include international sanctions, which the Russian Federation is still under, and now also the consequences of the doping scandal, for example, the lifelong ban from the Olympic Games of the chairman of the 2018 World Cup organizing committee, Deputy Prime Minister of the Russian Federation Vitaly Mutko.
Despite numerous problems - Russia, for example, has still not bought the rights to broadcast the 2018 World Cup - FIFA believes that the financial plan is not in jeopardy. The association expects to receive $5.66 billion from 2015 to 2018.
FIFA's optimism is based on the fact that the loss of a number of sponsors was partially compensated by companies from China: the Wanda holding and consumer electronics manufacturers Hisense and Vivo. Wanda's sponsorship contract alone, according to The New York Times, brought FIFA $150 million. The participation of Chinese sponsors is believed to be able to increase China's chances of hosting the World Cup in 2030.
See also:
Luzhniki Stadium, Moscow
Key events of the World Cup take place at the famous Moscow Luzhniki Stadium, built in 1956. For the 2018 World Cup, the sports complex was reconstructed, increasing its capacity to 81,000 seats. On June 14, the opening match of the tournament with the participation of the Russian national team took place here, and on July 15, the final match will take place at the capital’s arena.
Host stadiums of the 2018 FIFA World Cup
"Spartak Stadium", Moscow
The Otkritie Arena stadium, which is named after its sponsor, Otkritie Bank, was put into operation in 2014. The sports complex with 45,000 seats became the home stadium of the Moscow FC Spartak. As part of the 2018 World Cup, four group stage matches and a 1/8 final match will take place here. According to FIFA rules, at this time the arena will not be able to bear a sponsor's name and will be called Spartak Stadium.
Host stadiums of the 2018 FIFA World Cup
The new home arena of the St. Petersburg FC Zenit was built on Krestovsky Island - on the site of the S. M. Kirov stadium, demolished in 2006. The capacity of the sports complex is about 65,000 seats. The stadium was put into operation in 2017: it was initially planned that its construction would cost 7 billion rubles, but in the end this amount increased to 48 billion rubles.
Host stadiums of the 2018 FIFA World Cup
The stadium in Yekaterinburg hosts matches of the group stage of the World Cup. Temporary stands were built here especially for the World Cup, with them the arena can accommodate 35,000 people. After the World Cup, additional structures will be dismantled, and the stadium's capacity will be reduced to 23,000 spectators.
Host stadiums of the 2018 FIFA World Cup
Volgograd Arena was built on the banks of the Volga at the foot of Mamayev Kurgan on the site of the old Central Stadium. The sports complex can accommodate 45,000 spectators. As part of the World Cup, four group stage matches will be held here. After the tournament, Volgograd Arena will become the home stadium of the local football club Rotor-Volgograd.
Host stadiums of the 2018 FIFA World Cup
"Rostov Arena", Rostov-on-Don
The Rostov Arena stadium was built specifically for the 2018 World Cup. It seats 45,000 spectators. Four group stage matches and a 1/8 final match will be held here. After the World Cup, the arena will serve as the home stadium of the local football club Rostov. During construction work, several unexploded aerial bombs from World War II were discovered in the ground.
Host stadiums of the 2018 FIFA World Cup
The World Cup is also hosted by a stadium in the capital of Tatarstan, Kazan, built in 2013. The first stone for its foundation in 2010 was laid personally by Vladimir Putin, who at that time served as Prime Minister of the Russian Federation. Kazan Arena seats 45,000 spectators and is the home stadium of the local club Rubin, which in the past twice became the champion of Russia.
Host stadiums of the 2018 FIFA World Cup
Samara Arena is shaped like a space object. The stadium, which opened in 2018, seats approximately 45,000 spectators. It is worth noting that the development area was gradually increased from 27 to 930 hectares: the modernization of the territory involves the demolition of dacha cooperatives and private houses, which caused protests among the local population.
Host stadiums of the 2018 FIFA World Cup
The stadium in Nizhny Novgorod is one of nine sports complexes built specifically for the 2018 World Cup. The arena was built on Strelka, the confluence of the Oka River and the Volga. The stadium's capacity is 45,000 seats. As part of the 2018 World Cup, four group stage matches, a 1/8 final match and a quarter-final game will be held here. Subsequently, the local FC Olympiets will hold its home matches at the arena.
Host stadiums of the 2018 FIFA World Cup
The world championship is also being hosted by the westernmost point of Russia - Kaliningrad. A stadium for 35,000 spectators was built here especially for the 2018 World Cup. Oktyabrsky Island was chosen for construction, where nothing had previously been built due to swampy soil. In connection with the construction of this arena, a criminal case was opened against the businessmen Magomedov brothers for the theft of more than 752 million rubles.
Host stadiums of the 2018 FIFA World Cup
"Mordovia Arena", Saransk
The football stadium in the capital of Mordovia, Saransk, was built according to the design of the German architect Tim Hupe. During the World Cup, the arena will accommodate about 45,000 fans. At the end of the tournament, the stadium's capacity will be reduced to 30,000 seats. Subsequently, the arena will become home to the local FC Mordovia, which currently plays in the first division (FNL).
Host stadiums of the 2018 FIFA World Cup
Olympic Stadium "Fisht", Sochi
The Fisht Stadium, built in 2013 for the opening of the XXII Winter Olympic Games, can accommodate about 45,000 people. According to FIFA requirements, during the 2018 World Cup the central part of the stadium must be open, so the spherical dome had to be partially dismantled. In addition to the group stage matches, Sochi will host one round of 16 match and one quarter-final.
However, before you start chasing a football fan's wallet, it's useful to understand some of the tricks and pitfalls that you may encounter on the way to creating an advertising campaign. We are talking primarily about FIFA copyrights, related prohibitions and the possibilities of circumventing them.
Sponsorship with FIFA
Traditionally, companies that have the right to use the symbols of the world championship are divided into three large groups.
1. FIFA partners– corporations that have full advertising and marketing rights to all competitions held under the auspices of the association.
In 2018, their list includes such giants as Adidas, Coca-Cola, Hyundai/Kia, Qatar Airways, VISA, Gazprom and the debutant of the current World Cup - the Chinese concern Wanda Group, which signed a contract with FIFA in the spring of 2016.
2. Sponsors of the World Cup– companies that own the rights to everything that is directly related to a specific World Cup.
The World Cup in Russia is supported by such traditional sponsors as Bud and MacDonald’s, the electronics and household appliances company Hisense, which already has experience in sponsoring the 2016 European Football Championship in France, as well as a newcomer, the Chinese smartphone manufacturer Vivo.
3. Regional sponsors. The new model of division of sponsorship positions, which has replaced national sponsors, involves cooperation with four corporations on each continent. According to rumors, the organizers are not doing well with the sale of these sponsorship packages on the eve of the 2018 World Cup. Thus, Europe is currently represented only by Alfa-Bank, which, as part of the championship, will be able to offer its services and products to fans.
Who is allowed, and who is careful?
Before and during the 2018 World Cup, all of these corporations will be able to freely use the tournament and FIFA logos, official symbols to promote their products, produce souvenirs, and distribute tickets to matches as part of their promotions. What should companies do that cannot boast of sponsorship packages?
The answer is simple - everything is the same, but without piracy and attacks on marketing rights. In its rules, FIFA notes that it welcomes the use of the World Cup by any company as an information opportunity, but clearly notes that consumers should not get the false impression that advertisers are involved in sponsoring the tournament.
Balls, goals, stadiums, images of fans and country flags - everything associated with the world of football can and should be used. In the end, the lack of official agreements with FIFA does not prevent either Nike or PepsiCo from time after time creating bright and memorable advertising campaigns that are in no way inferior to the work of their competitors.
But besides this, for example, you need to remember that if in the run-up to the championship you are holding a lottery or promotion, you will not be able to win tickets for the matches. Only copyright holders are allowed to do this.
Another rule should be golden for owners of bars and cafes, where they traditionally count on good revenue on match days. You can attract fans to your bar counter by any means, but there should be no “copyright” materials either in your advertising materials or in the design of the counter itself. That is, no one will forbid you to hang an advertising poster in your window announcing the broadcast of the match, made in the colors of the Russian flag or in the shape of a soccer ball. But if the World Cup logo is drawn on it or official fonts, also protected by copyright, are used, this will already be a violation.
FIFA vs Dr. Dre
Failure to comply with the notorious FIFA copyrights, oddly enough, often becomes one of the main failures in advertising campaigns related to the World Cup.
Natalya Belkova, General Director of Business Communications Agency 4D
However, sometimes advertisers can play on the verge of a legal “foul” by using so-called Ambush marketing, creating a false impression among viewers that their brand is among the official sponsors of the tournament. Here a fair amount of humor, pre-planned actions and even personal agreements with football players are used.
Thus, during the 2012 European Championship, Danish national team striker Nicklas Bendtner was fined 100 thousand euros for displaying the name of a bookmaker’s office on the elastic band of his shorts during a goal celebration. The company, of course, was not among the official sponsors of Euro 2012, and the Dane could hardly have not known this. As a result, the bookmakers and the football player himself (who, by the way, is known for a whole collection of other antics) received their share of fame.
A similar story happened during the 2014 World Cup in Brazil. The wrath of FIFA was then caused by the headphone manufacturer Beats by Dr. Dre. In anticipation of the World Cup, Beats launched a vibrant advertising campaign, The Game Before The Game, featuring football stars such as Neymar, Bastian Schweinsteiger, Luis Suarez and Mario Götze. Actually, the series of videos itself did not encroach on the rights of official sponsors, but after the start of the championship the manufacturer found itself at the center of a small scandal.
The fact is that the official sponsor of the World Cup at that time was Sony, which, as usual, provided all tournament participants with sets of its devices, which included headphones. However, some football players happily ignored the requirement to use only sponsors' products and regularly began to be captured by cameras wearing Monster Beat headphones. However, as representatives of the corporation stated, despite the claims from FIFA, such PR only benefited them.
Another example of how FIFA is fighting Ambush marketing can be recalled from the 2010 World Cup in South Africa. In the second half of the match between the Netherlands and Denmark, 36 young Dutch women of model appearance, dressed in orange dresses, were detained by stewards at the stadium. Everything would be fine, especially since orange, as you know, is the national color of the Netherlands, but this is exactly the kind of clothing that was sold by the beer company Bavaria Beer. At the same time, the only brewer that had the right to advertise at the stadium was Budweiser. Despite the fact that there was no company logo on the dresses, the fans had to continue the evening at the FIFA office, denying accusations of violating marketing rights.
Tverskoye OFAS vs "Afanasy"
However, if we ignore large corporations that have the opportunity to pay for the hype around such scandals, then in reality, violating licensing rights is more likely to result in proceedings with the antimonopoly services than fame throughout the world.
For example, in St. Petersburg alone, a number of companies were caught illegally using the symbols of the FIFA Confederations Cup in the summer of 2017. Among others, a number of cafes, bars and restaurants were targeted. Some of them used the symbols of the Cup in the design of their interiors, which is prohibited, and the well-known chain of bars XXXX was even caught using the official logo on its website.
Such giants as the retailer Semia, which used the tournament logo to promote beer and chips, and the M-Video chain, in whose stores pirated posters with the symbols of the Cup were found, also “communicated” with the OFAS.
Naturally, these stories did not add points to the advertisers’ karma, although they were replicated by the local media.
Antimonopoly officials are not sleeping even on the eve of the 2018 World Cup. Thus, in the Tver region, after complaints from FIFA representatives, they attracted the Afanasy brewery, which violated the requirements during its promotion.
However, here we must pay tribute to the PR people who, hot on the heels of the scandal, launched an entire campaign on social networks, built on the confrontation between the “Russian manufacturer” and the “FIFA mafia.” Both bloggers and thematic (football, beer and patriotic) public pages on VKontakte were involved in the promotion, where intriguing posts began to appear like: “The football fields are Russian, but the beer is foreign. Russian manufacturers who pay taxes to the treasury of our country are not allowed to even mention the upcoming 2018 World Cup with calls to “like ours” and a link to the promotion website.
Prepare a sleigh in the summer and a soccer ball in the winter
So, let’s say you have studied the rules for using the official symbols of the World Cup, figured out how to avoid unnecessary problems, and are ready to comply with or circumvent the prohibitions. Here are a couple more life hacks that will help make your advertising campaign attractive and memorable.
Seize the moment. Follow what is happening on the football fields, matches with epic scores on the scoreboard, which of the “dark horses” suddenly becomes a discovery and everyone’s favorite, and which of the favorites suffers a sudden collapse. And for other scandalous, funny and strange moments that inevitably surround any World Cup. Follow and use them.
And the sooner the better, because such trends are short-lived. Remember, for example, how quickly and ironically Audi played up the story of the unopened ring at the Olympics in Sochi, and also seize the moment. Social networks will come to the rescue here, allowing you to speed up the transfer of information to consumers. And it doesn’t matter what exactly you are promoting: table reservations for the final in your pub or banking services.
Another life hack is timeliness. Prepare a sleigh in the summer and a soccer ball in the winter. Already, many advertisers are launching long-term promotions, and with each passing month their number will only grow, reaching the stage of general insanity by the beginning of summer.
So take care of your campaign in advance. Moreover, for different products this “in advance” may have different time frames. Thus, it is better to start advertising gadgets, electronics and a number of other goods long before the start of the World Cup.
For manufacturers of soda, beer and various snacks, as well as for owners of drinking establishments, the count can go on for a week or two, when fans begin to plan to watch matches that are important to them. For food delivery services, we are talking about a period from a day to a couple of hours before the start of the match. It is during this period that SMS messaging and advertising in mobile applications and social networks should be intensified.
Less than 200 days remain until the opening of the 2018 World Cup, which means it’s time to start full-scale preparation of your advertising campaign. Use your imagination, don’t forget to keep your finger on the pulse of football events and follow the rules of fair play.
The FIFA World Cup and the Pyeongchang Winter Olympics are the two main sporting events of 2018. Events of this level, as a rule, arouse enormous interest and attract the attention of billions of fans.
Problems with sponsors of the 2018 FIFA World Cup
Where there is a billion-dollar audience, there are billions in advertising profits, which is why planetary-scale tournaments usually do not lack World Cup sponsors. Unfortunately, this cannot yet be said about the World Championships in Russia.
Numerous corruption scandals have turned FIFA into a “toxic brand” that few people want to associate with. Because of this, six months before the start of the first match, most sponsorship slots are still unfilled. Moreover, not only global corporations, but also their own Russian companies are refusing to support the Russian World Cup.
World Cup costs and basic income
According to Swiss Appraisal estimates, FIFA should in any case remain in the black, albeit not as significant as in previous years. The situation is much more complicated with the host country. The budget allocated for holding the World Cup in Russia has already been revised upward several times and now amounts to about 680 billion rubles. At the same time, private companies should contribute about 200 billion, but, to put it mildly, they are not lining up yet.
As for profit, there may be none at all. For example, following the results of the World Cup in Brazil, according to Reuters, the increase in Brazil's GDP amounted to a pitiful 0.2%. According to some other agencies, it was not possible to make a profit at all. In 2018, everything could be even worse: according to the most pessimistic estimates, costs can exceed profits by 10 (!) times.
The organizing committee soberly assesses the prospects. For example, its head Alexey Sorokin has already emphasized that the task of “definitely making money at the World Cup” is not worth it. Much more important are “long-term benefits in the form of an improved image of Russia and a general improvement in infrastructure.”
List of sponsors of the 2018 World Cup
Now FIFA and the Organizing Committee are working to at least break even. To do this, it is necessary to conclude lucrative contracts for the sale of television rights and enter into as many lucrative agreements with sponsors as possible.
Official sponsors of the 2018 World Cup for now:
- Adidas.
- Coca-Cola.
- Wanda Group.
- Gazprom.
- Hyundai-Kiamotors.
- Alfabank.
- McDonald's.
Significant support for the tournament will be provided Russian Railways. Russian Railways organizes special ones for fans who have. These flights will quickly transport fans from city to city, allowing them to attend all the matches of their favorite team. By the way, registration for these trains is already open on the company’s website.
What is FIFA
Founded in 1904, FIFA (Fédération Internationale de Football Association, FIFA) is today one of the largest commercial entities in world sports with a turnover of billions. The main function of the organization, whose members are 211 national football associations (more than members of the UN), is to organize international football competitions, including beach, women's, youth and e-football. In total, FIFA organizes 16 international tournaments, the largest of which is the FIFA World Cup for men's teams. Since it is the World Cup that generates the main income of FIFA, the organization lives in a four-year budget planning cycle from championship to championship.
According to The New York Times, citing internal FIFA documents, in the current budget cycle the organization was able to receive $450 million more than planned in the budget, thanks to several large contracts concluded with new partners shortly before the 2018 World Cup. Chinese companies made the main contribution to FIFA's additional income. In 2016, Wanda Group (specializing in development, retail, logistics, etc.) became a global partner of FIFA, signing a contract until 2030.
The companies Hisense (electronics manufacturer), Mengniu (dairy products manufacturer) and Vivo (smartphone manufacturer) also became FIFA sponsors in the status of “partner of the World Cup”. The agreements with them were concluded in 2017 and are valid until the end of the 2018 World Cup.
Moreover, since Russia was chosen as the host country of the 2018 World Cup in 2011, not a single new company representing Western Europe or North America has signed a sponsorship contract with FIFA. The current Western sponsors: Coca-Cola, Adidas, Bud, Visa, McDonalds - had long-term contracts with FIFA. In 2015, these companies threatened to break contracts with FIFA, demanding the resignation of the head of the association, Joseph Blatter, who was at the center of a corruption scandal. That same year, Blatter was sacked and banned from all football activities for eight years.
Another major budget item that has increased FIFA's revenue over the past four years has been the sale of licensing rights. Revenue from the sale of the FIFA license increased from $50 million in the previous period to $160 million after signing a contract with EA Sports, the developer of popular e-sports games. As part of the contract, EA Sports acted as the organizer of the FIFA eWorld Cup 2018, a global e-football world championship, the final of which will be held in August 2018.
How much does FIFA spend?
FIFA traditionally spends about a third of the money earned over four years directly on hosting the World Cup. The organization's expenses for the 2018 World Cup are $1.948 billion. A significant part of this amount, $627 million (32%), will be paid to the Russian organizing committee as partial compensation for costs incurred. The second major expense item is $400 million in prize money for the participating teams, which will be distributed depending on the results achieved. Thus, the world champion will receive $38 million from FIFA. The Russian team that reaches the quarterfinals will receive $16 million in prize money. FIFA's remaining expenses include payment for television production, payments to referees, development of IT solutions, payment for championship insurance, etc.
FIFA's contribution to the organization of the remaining 15 competitions that take place under the auspices of FIFA over a four-year period (children's, women's, e-sports, etc.) amounts to only $600 million per budget cycle.
Among FIFA's expenditures that are not directly related to the organization of competitions are investments in educational programs and the development of football around the world. This article is used for annual targeted payments to national football federations, training seminars for coaches and referees, construction of the World Football Museum, etc. In 2015-2018, FIFA spent $1.65 billion for these purposes. Almost $1 billion ($891 million) goes to pay for offices, salaries, trips around the world for football officials, etc.
FIFA spent a total of $5.556 billion between 2015 and 2018, allowing it to record a four-year profit of $544 million, the highest in the organization's history.
How much did Russia spend on organizing the 2018 World Cup?
Russia spent much more than FIFA on organizing the World Cup. The total amount for preparations for the World Cup, indicated in the federal state program adopted by the government for preparations for the 2018 World Cup in Russia, amounted to 679 billion rubles, that is, almost $11 billion at the current exchange rate. At the same time, an additional 850 million rubles. were already after the start of the world championship. According to RBC's source in the World Cup organizing committee, this money was allocated at the last moment due to additional requests from FIFA for the infrastructure of new stadiums, including the equipment of VIP boxes.
Basic expenses - 551.93 billion rubles. (81.4%) - were associated with the construction of stadiums and training fields, as well as transport infrastructure for the World Cup. Seven of the 12 stadiums that hosted the 2018 World Cup games were built from scratch using federal funds. 92 training fields were also built. In total, their construction cost the budget 150 billion rubles.
The program allocated 352.5 billion rubles for the construction of transport infrastructure, of which 170.3 billion came from the federal budget. In this part, the most was spent on the construction and reconstruction of airport complexes. Thus, a new Platov airport was built in Rostov. The cost of construction amounted to 37 billion rubles, of which 19 billion were invested by the Airports of the Regions company of Viktor Vekselberg. In other World Cup cities, new terminals at existing airports appeared and runways were updated.
Part of the costs of preparing for the World Cup was borne by the regions. Their expenses were mainly related to the repair of facades, roads, pedestrian areas, sewerage systems, the purchase of new buses, ambulances, etc. In addition, the funds were used to “increase the tourist attractiveness of the region.” The most large-scale regional programs for the 2018 World Cup were implemented in Moscow and St. Petersburg, where interchanges, bridges and new metro stations were built for the 2018 World Cup.
According to RBC, the total contribution of the regions in excess of that prescribed in the federal program amounted to 205 billion rubles. Russia's total expenses for hosting the 2018 World Cup in Russia amounted to 884 billion rubles. ($14.2 billion).
Championships only for big ones
The general policy of FIFA is to expand the geography of the World Cup, and taking into account the upcoming increase in the number of participants in the final stage to 48 teams (from 32), holding the tournament becomes “only feasible for countries that are very serious in economic terms, or it will be a collaboration of several countries, such as the USA, Mexico, Canada” (chosen as hosts of the 2026 World Cup), recalls former General Secretary of the Russian Football Union, Doctor of Economics Anatoly Vorobyov. After Qatar, which intends to spend $200 billion on preparing the next World Cup in 2022, only countries like China will be able to organize the World Cup, Vorobiev believes.
The question of whether it is profitable to hold the World Cup at all is very complex: it is necessary to take into account not only the monetary costs incurred, but also intangible benefits - goodwill, including image dividends, but it is almost impossible to strictly measure them, argues Vorobiev. The main beneficiary will be the tourism industry: “After fans have seen Moscow and other cities so attractive, word of mouth will work, many South Americans and Europeans will want to come and see Russia.” “As for the sports component, of course, there are risks that stadiums in a number of cities will become unclaimed, as in South Korea or South Africa, especially where there are no Premier League teams (Saransk, Volgograd, Nizhny Novgorod). The costs of maintaining these stadiums are already known, and it is not yet clear how they will pay off,” adds Vorobiev.
In 2019, the cost of maintaining seven regional arenas will range from 276 million to 338 million rubles, or 2.2 billion rubles. taken together, follows from the draft World Cup legacy concept published by the Ministry of Sports in April 2018.
University of Chicago economist Konstantin Sonin believes that the main benefit of the World Cup in Russia is increased fan engagement and the prospect of a long-term increase in interest in football among a wide audience; The $10-15 billion spent on the championship is “a small amount for the economy as a whole”, and “the huge involvement of fans, disproportionate to the costs, is in some ways even more important for the development of football than the construction of stadiums and infrastructure,” says Sonin. The big role of the championship is that it sets standards for the organization of sporting events, and the championship in Russia demonstrated that “everything can be organized in such a way that people come [to the stadiums] not only in Moscow and St. Petersburg, but also in Saransk, Saratov and other cities” so that football begins to be attended by the middle class and families with children, etc., the economist said.
And this, in turn, gives hope for an increase in the income of football clubs from television rights and visits to stadiums, the expert concluded.
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