FIFA plays risky game with World Cup model sustainability
Whether or not “football’s coming home”, the World Cup in Russia has beguiled fans around the globe with a storming showcase of attacking soccer. Once the last of the teams have vacated their luxurious hotels, and the hordes of loyal fans have finally departed on the long trip home, however, questions of sustainability regarding the costs of hosting, and the price of attendance have already been asked.
On paper, the latest edition of football’s global showpiece has been an undisputable economic success, for FIFA at least. Russian media group RBK estimates that it cost Russia $14.2 billion to build or repair infrastructure such as airports, high-speed rail lines, hotels, and stadiums in preparation for the World Cup, according to figures from the Russian Budget and Russian Government data. The commonly cited 678 billion rubles ($11.7 billion) spent on the games came solely from Russia's Federal State Budget, but what is commonly overlooked is the rest of the cost, taken on by the Russian regions in which the games were held.
While Russia's total spend is still less than the estimated $15 billion spent by Brazil on the 2014 World Cup, the host nation does not make money from the games, and FIFA pays no tax on ticket sales. This ultimately means hosts stand to make a loss – something which triggered mass protests in Brazil in the lead up to 2014. The tournament also left a large amount of essentially useless infrastructure in its wake in Brazil, continuing a troubling trend from the 2010 tournament in South Africa. Many of the stadiums built especially for the World Cup’s first African staging were underused at best, following a colossal spend on them, while access to FIFA’s $100 million “legacy fund” pales in comparison to each host’s spending in the build up to the games.
According to new research by KPMG’s Football Benchmark team, Russia could be set to join these former hosts, as the nation is now outfitted with a number of centerpiece stadia which are unlikely to be required further down the line. Russia’s domestic football league sees a relative lack of popularity. The national Premier League boasts average attendances of 13,971, which does not seem to bode well for a number of the new stadiums. This is exemplified by the club Rotor Volgograd, which is set to inherit a new 43,713-capacity stadium after the World Cup, while the average attendance for the team’s games this year stood at 3,800. Indeed, the size of the stadiums has often been surplus to requirements during the grand showcase itself – with a significant number of World Cup matches featuring thousands of empty seats – something which prompted an investigation from FIFA itself after one particularly sparsely attended encounter between Uruguay and Egypt.
While the sustainability of hosting a tournament has long been questioned in terms of its cost to the country the tournament occurs in, however, Russia has also seen holes poked in FIFA’s armour. For some time, the popularity of football as a global phenomenon seemed enough to allow FIFA to charge what it liked for access to the game’s biggest stage. However, a large part of the flagging attendance at many games is likely due to the fact FIFA asked for a record premium for tickets this year.
The price of football
In comparison to Brazil – which saw group stage prices fall to £57 from £61 in South Africa 2010 – Russia’s bill for comparable games has typically been 24% more expensive in real terms across different ticket types. Even the previous record holder for the most costly tickets, the first African host nation of South Africa in 2010, had prices 15% lower than Russia’s hefty entrance fees, according to a recent analysis by Simon-Kucher Partners. Before the tournament, support for England’s football team was anticipated to decline by around 15,000 at Russia 2018, with spiralling costs being the key cause. According to that study, if a fan followed England’s previously unthinkable progression to the final weekend of the World Cup, a Three Lions fan will have faced a minimum spend of £967 on tickets, compared to a 2006 equivalent of £565.
Ticket sales before the tournament were subsequently found to be below the 3 million mark achieved in South Africa and Brazil, and on top of this, according to KPMG’s analysis, should a fan fancy taking their place in some of the best seats at the World Cup final on Sunday, it will set them back more than that whole minimum spend. Category one tickets cost $1,100, a $200 increase on those for the 2014 decider between Germany and Argentina. While cheaper tickets are available, the not insignificant $455 this time round is still a $15 increase on the previous figures. In fact, the only ticket variant not to have seen a major ramping up was the category three segment pertaining to the group stage; which remained $220, yet still saw the England team’s opening game against Tunisia attended by roughly 35,000, some 10,000 shy of the Volgograd Arena’s attendance.
As a result of this, and FIFA’s usual ability to draw major advertising being hamstrung by a host of financial and institutional scandals, the global footballing body has become more dependent on broadcasting revenues than ever before. FIFA said in March 2018 that broadcasting would provide half of all its revenues in the next four years, and its haul for Russia has topped $3 billion. While the final itself will undoubtedly take place in front of a sell-out crowd exceeding 78,000 in Moscow, as well as a gigantic global broadcast audience, to some it might seem as though FIFA’s model is becoming top-heavy.
With the World Cup’s next outing set to take place in Qatar in four years’ time, FIFA’s eggs may further have moved into the single proverbial basket. With the human rights record of Qatar’s regime under intense scrutiny, a report published by the International Trades Union Confederation (ITUC) stated that approximately 1200 workers have already died since the World Cup was awarded to Qatar in 2010 – with migrant labourers subjected to long working days in extreme temperatures, while often being denied the right to leave the country, should they feel they cannot go on. As the implications of being linked to what some human rights advocates have labelled a “modern slave state”, sponsorship may once more prove hard to come by, while the country’s average Qatar Stars League attendance is 672 (the all-time record attendance for Qatar’s top division is 7,703).
On top of this, the substantial heat, the distance many fans will have to travel, and the price of attendance could all hamper the attendance at the tournament itself. With this in mind, and while digital disruptors such as Amazon and Netflix stand posed to disrupt the broadcasting rights game – with Amazon becoming the first OTT provider to obtain a Premier League rights package from 2019 – FIFA’s growing dependence on what is a fast changing method of distribution could put the sustainability of its business model in a period of uncertainty.