Over the next few days, we will be taking at the economic and financial gains (and losses) from the World Cup. Today we look at Fifa. Subsequent posts will look at the impact on the UK domestic economy and on South Africa, although there the issues are as much to do with politics and prestige as with economics.
Over the next few days, we will be taking at the economic and financial gains (and losses) from the World Cup. Today we look at Fifa. Subsequent posts will look at the impact on the UK domestic economy and on South Africa, although there the issues are as much to do with politics and prestige as with economics.
Fifa expects to make $1bn out of the World Cup, although it is at pains to call it a surplus rather than a profit. It seen as a reserve to insulate the organisation from any unforseen financial problems. It also has an insurance policy worth $650m in the event of the tournament being postponed because of terrorism, war or natural disasters.
The tournament will generate $3.3bn from commercial revenues, although Fifa’s hospitality income is down more than 50 per cent on 2006. This is partly because of the global economic downturn, but also because of fear of crime in South Africa as well as high hotel costs. Fifa will spend $1.2bn, including $700bn being spent in South Africa. About $1bn is being spent on development programmes, financial assistance to national associations and other projects.
Hotels selliing rooms through Fifa will have to pay a 30 per cent cut to Match, a Swiss firm that is part owned by a company whose president is Sepp Blatter’s nephew, Philippe Blatter. Street vendors have fallen foul of Fifa’s commercial department which pursues anyone using the logo ‘World Cup’ without paying a licence fee. No doubt it would seem them as counterfeiters rather than relatively poor people trying to make a living.
Fifa sold exclusive merchandising rights to Global Brands Group. The Singapore-based conglomerate is then alleged to have sub-contracted the production of mascot toys to a Chinese sweatshop.
Fifa is a non-governmental organisation with a highly commercial outlook. On one level such an outlook is necessary if an event like the World Cup is to be staged successfully at all. But it has also caused some resentment in South Africa.