Quantfury Daily Gazette
A rocky path ahead for soccer
2022 seems like another year that begins amid a pandemic, but I would say that still there’s something special about it and if you are a soccer fan, then you would agree with me. It’s the year of one of the biggest sports event in the world, the FIFA World Cup Qatar 2022.
There are a billion reasons why the world cup is so important not only for soccer fans but also for FIFA and its business model, which is going through rocky times. A drastic change that may affect you and the way you are used to following the world cup may happen soon.
The main source of revenue for FIFA is the men’s world cup. So, what better idea than squeezing a bit more out of the current format of a world cup every 4 years, and instead hosting it every 2-years – a biennial world cup. The latter would be one of the biggest changes in soccer history, and welcomed by FIFA and world cup sponsors such as Coca-Cola (NYSE: KO), Visa (NYSE: V), and Anheuser-Busch InBev’s (BATS Europe: ABI) Budweiser. It would be a more frequent opportunity for sponsors to participate in soccer’s multi-billion dollar business.
This is the FIFA president’s new idea. I shall say that Gianni Infantino did mention that his new plan would only “probably” have enough support to be approved. So, it is not a certainty that it’s happening yet. The question is, why wouldn’t he go ahead if he’s at least somewhat confident that the majority of FIFA stakeholders would back it?
First, whether running a biennial world cup would generate extra revenue is still unclear. So far, independent research regarding the economic impact of a biennial cup is at best mixed or not conclusive.
What is probable is the increased fatigue and injury risk that players would have to bear. Also, rich clubs which pay the players aren’t big fans of the idea. Having FIFA decide how to allocate the extra amount of revenue generated among FIFA members doesn’t sound exciting to them. In addition, there’s a chance of seeing a drop in revenue in continental tournaments – such as the Euro and Copa América – as partners and investors could see them as less appealing than the world cup.
Therefore, biennial world cup revenues from sponsors or television rights – which is the biggest source of revenue for FIFA – may come at the expense of football clubs and domestic competitions. Companies such as Fox Corp (NASDAQ: FOXA), who acquired television rights for the 2022 World Cup through Fox Sports, may want to invest in global rather than continental tournaments. Media companies like Fox (NASDAQ: FOXA) are examples of the few stakeholders that will happily support a biennial world cup.
But there’s more. It’s not only rich clubs that are currently unsatisfied with FIFA and its plans, but also the small clubs that develop new talent. Training compensation payments to clubs stalled between 2011-2020, whereas commissions for players’ representatives per transfer jumped 5 times in the same period.
So, here’s my question: would you support having a world cup every 2 years instead of every 4 years?
Although fans’ support might not seem essential for FIFA right now, it will be eventually. I believe that a biennial world cup sounds exciting, but it could potentially harm soccer at a domestic level. So, to answer the question, you would have to weigh how important soccer is for you at the national or club level. Because the impact is yet to be known, we can’t say whether the positives outweigh the negatives.
For now, the 2022 world cup countdown has started, and all soccer lovers can look forward to seeing their teams playoff before thinking of the next 2 or 4 years ahead.
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