Broadcast haul of FIFA World Cup 2018 in Russia leaps to $3 billion

22 June 2018 Authored by Consultancy.uk

The 2018 FIFA World Cup in Russia has seen a week of highs and lows since its initial kick-off. While goals have not been in short supply, matches have been sparsely attended, placing an increased importance on the broadcasting of the showpiece tournament. Fortunately for FIFA, the global footballing body looks set to benefit from record broadcast revenues of more than $3 billion in 2018.

According to the latest footballing benchmark from Big Four professional service firm KPMG, the previous World Cup in Brazil generated $4.8 billion in revenues for FIFA, half of which originated from the sale of broadcasting rights, while sponsorship fees accounted for $1.6 billion. Considering the importance of those two revenue streams for the football governing body, it is not surprising that the bidding process for sponsor and broadcasting rights was launched long before a ball had been kicked at this year’s premier global football event.

FIFA previously announced it was going to improve on the previous haul, which had stagnated between World Cups at South Africa and Brazil. Now, the estimated total of $6.1 billion in 2018 from broadcasting and advertising has surpassed its envisaged goal by 10%.

In terms of growing its sponsorship, Russia’s frosty international relationship with many leading economies and FIFA’s tattered, scandal-stricken reputation had threatened to scupper FIFA efforts. In 2015 American prosecutors indicted some 40 individuals and entities associated with FIFA on a broad range of corruption charges, including racketeering, wire fraud and money-laundering conspiracy. Possibly worrying that associations with FIFA exposed them to reputational and financial jeopardy, big names including Emirates, Continental, Johnson & Johnson and Sony refused to renew their sponsorship contracts when they expired.

FIFA World Cup Media Rights Revenue

Of the 34 sponsorship slots on offer for the tournament in Russia, only 19 have subsequently been filled, a stark change from 2014 when sponsorship packages were sold out long before kick-off. FIFA’s only new deals since the scandal broke have been with companies from Russia, Qatar (which hosts the tournament in 2022) and China, whose businesses seem to be less concerned about being associated with FIFA. Among those Chinese companies mobile-phone company Vivo; electronics manufacturer Hisense; electric scooter company Yadea; Mengniu, China’s second-largest dairy company; and Dalian Wanda, a conglomerate which mainly focuses on property and cinemas. However, that has been enough for sponsorship deals to generated $200 million more for FIFA than the organisation’s projected $1.45 billion, according to KPMG.

While this is an improvement, but mixed with mediocre ticket sales and poor physical attendance at games, the slow uptake of sponsorship does place an even greater emphasis on football’s seemingly bottomless pot of gold – broadcasting rights. The FIFA World Cup was first broadcast on television in 1954 and thanks to the all-conquering universality of the beautiful game, it is now the most widely viewed and followed sporting event in the world, exceeding even the Olympic Games. FIFA stated that more than a billion fans tuned-in to watch the final of the 2014 World Cup in Brazil. This demand means FIFA’s revenues from media rights have been growing consistently, doubling income from $1.2 billion in 2002 to $2.4 billion in 2010 and 2014.

Package deals

FIFA has been selling packages for this year’s tournament since 2011, with the first lot being scooped up by for Russia 2018 to BeIn Sport (at the time, Al Jazeera) seven years ago. Since then, the broadcasting rights for the 2018 competition have been sold directly or through licensed companies to a total of 217 territories, across five different regions (Africa, Americas, Asia, Europe and Oceania).

As well as the immediate profitability of booming broadcast revenues, then, this success could also help FIFA push sales for sponsorship in the future. While advertisers who have spent large sums to appear at stadiums are likely to take a dim view of the empty seats blighting the tournament – almost 20% of seats (around 6,000) at Uruguay's Group A match against Egypt were unfilled, while England’s opener against Tunisia saw attendance of roughly 35,000, some 10,000 shy of the Volgograd Arena’s attendance – broadcast figures remain strong. In England, that poorly attended match was also the most viewed television event of 2018 – beating a royal wedding and the Winter Olympics among other events – while the expansion of games into nations not even at the tournament offers access to new markets for FIFA’s partners.

Distribution of Licensees Broadcasting Formats

In total, 685 licensees aquired the media rights for this year’s World Cup, and while unsurprisingly, the majority of territories broadcasting the competition are located in Europe at 55, this is closely followed by Africa on 54. The majority of licensees purchasing rights from FIFA came from these territories, with 274 being based in Africa, followed by Europe at 175. Africa also acquired the biggest share of mobile/internet licensing formats of any region. FIFA distinguishes between TV, radio, mobile and internet, and it is interesting to note that the number of traditional broadcasting formats (TV and radio) is comparable to the share of digital broadcasting (mobile and internet), which demonstrates the growing importance of streaming platforms as a future revenue stream.

Asia accounted for a meagre 59 outlets, something which FIFA will be keen to improve on as the market there becomes increasingly lucrative, however this is also due to the fact that all of China’s FIFA rights are owned and controlled by CCTV, who sublicensed rights to only two other outlets. Despite the nation’s absence from football’s greatest stage since its sole appearance in 2002, China paid between $300 and $400 million to secure the rights for 2018 and 2022. CCTV then went on to sell the digital rights to streaming platforms Migu (owned by mobile carrier China Mobile) and Youku (Alibaba-owned). As China continues to push for footballing success, and profitability, the importance of these broadcasting rights is likely to grow substantially before Qatar 2022.

While the US missed its first World Cup since 1986, Fox Sports also reportedly paid a record $400 million to take over the English-language rights to the 2018 and 2022 World Cups from Walt Disney Co.’s ESPN/ABC. Despite the US football team’s failure to qualify for the tournament, demand for the event is still high in America, and initial sales figures from FIFA showed that fans from the US had purchased the most tickets of any group outside the host nation at 80,000.

Commenting on KPMG’s findings, Andrea Sartori and Partner and Global Head of Sport at the firm, said, “The World Cup will, as ever, captivate TV audiences across the globe. The appeal of the game, coupled with the commercial opportunities that have emerged over the past decade, have transformed FIFA’s flagship competition into a huge and lucrative business venture that has no equals in international sport. Despite all controversies surrounding the football governing body, it appears that the tournament format can still attract a substantial number of sponsors and broadcasters. As soon as 2018 is over and the iconic trophy is raised by the winners, the machine will have already moved on to 2022.”

Related: KPMG launches internal probe into audits of FIFA.

News

More news on