FIFA, an Ultimate User of Football to Make Profits

Published: 22nd June 2014 06:00 AM  |   Last Updated: 22nd June 2014 08:51 AM   |  A+A-

20user.JPGWorld Cup football has shot itself beyond the boundaries of the game. Football fever is a social epidemic spreading across the globe now. 

The international football, kickstarted in 1872 between England and Scotland, opened a new era of high-class football among nations. Federation Internationale de Football Association (FIFA), which was founded in 1904, set the rules of the games for this fascinating sport. Though it was started as a European organisation, FIFA has grown fast. Especially after the introduction of World Cup in 1930, it has been expanded to include 208 national associations.

In the new millennium, particularly after the penetration of television and social media network into every nook and corner of the world, dimension of the game has been elevated to the level of ‘Numero Uno’ event which can spin the economy mainly in the host country and elsewhere in the world. It has been identified as a catalyst of macro-level infrastructure changes in the host nation, resulting in huge quantities of investment. It has been identified as a ‘development milestone’ in the history of the nation.

20user01.jpg2014 World Cup in Brazil is one of the rare international events that drew heated debate in the media and fiercely fought riots on the streets. Rioters and protesters in the country argued that a developing nation need not spend such large amounts of money for hosting a game since the same quantity of money can alleviate poverty and reduce the disparity between the rich and the poor.

But the football lovers and those who believe in sports-induced ‘economic development’ reject this argument. But when these mega events are hosted in developing nations, organisations like FIFA should see that the host country must be the first beneficiary compared to the organisers and sponsors.

In 2010, FIFA made $3.7 billion. Its president Sepp Blatter says, “The World Cup in South Africa was a huge, huge success for South Africa, for Africa and for FIFA.” The association’s profit was as high as $631 million from that World Cup. But critics counter it by saying that while FIFA made huge profits, for South Africa it was a break-even event in terms of financial gains. South Africa had a buoyancy of 0.5 per cent for its GDP, but FIFA’s profit was equal to 0.7 per cent of South African GDP. Of course, the social capital created by South Africa was really massive. In the Brazil World Cup, FIFA’s profit is estimated to be $4 billion. What Brazil will get is unknown. 

In short, FIFA has become an ultimate user of football to make profits, utilising the host nations and billions of viewers across the world. The association should use this profit to promote competitive football and football as a community sport in countries where it is not yet well popularised. 

Besides the economic development calculations, top-class investment research groups such as Goldman Sachs are busy making statistical models for predicting the outcome of 2014 World Cup using tools of regression analysis. The calculations are based on FIFA ratings, World Cup effect, home advantage effect, etc. (for instance, home team has won 30 per cent of all World Cup since 1930 and over 50 per cent of all World Cups held in traditional football powerhouses such as Brazil, Italy, Germany, Argentina, Uruguay, Spain, France and England).

Using this model, host nation Brazil has a clear advantage over others with 48 points. Argentina (14), Germany (11), Spain (10) are among the top four. In the last World Cup, Brazil was projected as the champion and Spain the challenger, but Spain won. 

It means football is a real-life game which will not yield to sophisticated predictions just like our lives. That is the beauty of it.

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