Milking the Cash Cow

It is no longer a game alone. It is an industry. An industry which grows so rapidly that the GDP of Germany increased by nine to ten billion euros from 2004 to 2006, purely as a result of this world cup.

The global outreach of the tournament is so large that the world body governing football thrives financially, only because of the money generated from the tournament. The exclusive rights for all commercial activities of the tournament like broadcasting rights, sponsorship rights, hospitality rights and licensing rights are held exclusively by FIFA though it does share a lot of it with local organizing committee.

Independent observers say that from the total revenue generated, 53% comes from selling broadcasting rights, 35% from broadcasting deals, 8% from ticket sales and the remaining 4% from merchandising/licensing rights.

Between 1998 and 2006, the marketing and television rights have increased from 175 million euros to 1.9 billion euros. If everything works out according to the plan, the European television rights for world cup 2010 alone will fetch FIFA, a staggering one billion euros. FIFA has signed a deal worth US$ 425 million with ABC/ESPN (English) and Univision (Spanish) for the US television rights to all FIFA competitions from 2007 to 2014, making it the biggest ever television deal that has been signed by FIFA in a single country.

FIFA is also expected to get a bigger sponsorship deals for the 2010 and 2014 world cups. If the sponsors had to pay FIFA $50 million each for the sponsorship rights, the sum involved for the future two tournaments is expected to touch $150 million from each of the sponsors.

With the revenue, expenses have also increased substantially. The total cost incurred by both FIFA and the German organizing Committee is estimated at a staggering one billion euros. The 215 million euros that FIFA paid for the 32 participation nations as preparation costs alone is an all time record.

The grant given to the local organizing committee by FIFA will come to around 170 million euros. In addition to the FIFA grant, the LOC is expected to rake in at least 200 million euros from the sale of three million tickets.

FIFA pumps back around 370 million euros for developing the game at the grass root level. Similarly, FIFA pays around 270 million euros as financial assistance to confederations and fellow associations.

Germans have gained enormously from the world cup as far as income generation is concerned. Germany generated three billion euros from tourism alone. The cities of Munich and Dortmund are expecting additional revenue of 44 million euros and 36 million euros respectively.

Along with automatic qualification, the prospects of generating huge revenue has made the race for hosting the world cup a highly competitive one.