As the globe’s biggest sporting event kicks off in Russia Thursday, business has never looked better, despite corruption scandals and the absence of Team USA.
The 2018 World Cup, soccer’s premiere tournament, was supposed to be a disaster.
Scandal — corruption allegations against FIFA, soccer’s global governing body, and doping charges levied at Russia, this year’s tournament hosts — left a stain on the World Cup that most expected would result in dampened enthusiasm from broadcasters, fans and advertisers.
Not so. Just hours ahead of the opening match in Moscow Thursday night — Russia vs. Saudi Arabia — the numbers show this could be the biggest World Cup in history. Whatever happens on the field in the next four weeks until the final on July 15, the business of the World Cup looks better than ever. Everything, from TV to online viewership, from licensing revenue to sponsorship cash, is on the up.
Take FIFA. Internal financial documents, first reviewed by The New York Times, show the world soccer body is set to generate $6.1 billion in revenue from this tournament, $1.3 billion more than the last World Cup in Brazil in 2014 and fully 10 percent above FIFA’s own predictions.
The reason, in a word: China.
While TV revenue was slightly (2 percent) above FIFA’s target of $3 billion, sponsorship deals generated $1.65 billion, $200 million more than projected, largely due to deals with Chinese companies. In 2014, just one Chinese company sponsored the World Cup. This year, seven of the 20 official tournament sponsors are from the Middle Kingdom, led by property giant Wanda Group, whose sports marketing firm InFront Media conveniently holds media rights to the 2018 and 2022 World Cups across 26 Asian territories.
China’s interest in soccer, like so much in the country, is a top-down affair. Chinese President Xi Jinping made developing soccer a national priority back in 2015. While it hasn’t helped the national team, which failed to qualify for the 2018 World Cup, it has meant Chinese firms are eager to sign up with FIFA.
Their cash has more than compensated for the decline in Western support, as many American and European companies, including Johnson & Johnson, Castrol and Continental, pulled back from FIFA amid the corruption investigation launched by the United States Justice Department in 2015, which alleges widespread bribery and vote buying in the selection of World Cup hosts, particularly the 2022 World Cup in Qatar. FIFA has not signed a new sponsor from a Western nation since 2011, although long-term backers of the tournament, including Adidas, Visa and Coca-Cola, are still on board for 2018.
The corruption scandal, and FIFA’s efforts to clean up its act, including introducing a more modernized accounting system, have cut into profits at the organization, which reported profits of just over $100 million for the four-year cycle that ends after the tournament. Losses of some $997 million over the past three years are set against an estimated $1.1 billion profit for 2018. By the end of the year, FIFA is forecast to have some $1.7 billion in cash and assets.
FIFA’s decision, announced just ahead of the World Cup, to grant the 2026 tournament to a joint bid by the United States, Mexico and Canada, should help the company’s bottom line by encouraging American sponsors to return to the FIFA fold.
Here is THR‘s look at more key business trends related to the World Cup:
Television Audiences to Top 3.4 Billion
When it comes to TV audiences, World Cup 2018 looks set to break all-time records. Research company GlobalWebIndex is forecasting total viewership of 3.4 billion, or nearly half the total world population of 7.6 billion, for the entire tournament. That compares to 3.2 billion who tuned in for the 2014 event in Brazil. More than 1 billion viewers caught the final match, when Germany eked out a narrow win against Argentina. The company surveyed more than 80,000 people from over 40 leading markets to compile its forecast.
The 2018 games are particularly favorable for viewers in soccer-mad Europe, and slightly better for Asian fans than the 2014 tournament in Brazil (Moscow is 5 hours behind Beijing, compared to an 11-hour gap between the Chinese capital and Rio de Janeiro). Things will be tougher for fans in the Americas, who will have to rise early for most of the matches, which will air in the morning, but that isn’t expected to impact viewing much. GlobalWebIndex is forecasting the largest TV audiences for this year’s World Cup will again be in Latin America, followed by the Middle East and Africa, Asia Pacific and Europe.
Within Europe, big TV markets Germany, England, France and Spain, all of which are fielding strong teams at the World Cup this year, are expected to lead the charge in viewing figures. There’s a bigger question mark over Italy, which failed to qualify for the tournament for the first time since 1958. But soccer is akin to a religion among most Italians and Mediaset, which is carrying all 64 matches live on its free-TV networks and online, still expects strong figures. In a statement to shareholders, Mediaset CEO Silvio Berlusconi said the cost of acquiring World Cup rights in Italy and Spain, around $47 million-$53 million, will pay off with increased revenue and ad sales for the group. Mediaset got the World Cup rights at a discount after Italy was eliminated from qualification in November, at a reported cost of $100 million to FIFA.
No Team USA Could Hurt Ratings for Fox
After the U.S. team failed to qualify for the World Cup (for the first time since 1986), TV numbers stateside are expected to slip. It’s thought less than a quarter of the U.S. population will tune in to watch any of the tournament matches this year, and the bulk of them could likely those cheering on the Mexican team.
Fox Sports, which is airing 38 of the 64 World Cup matches live, can’t expect the record ratings ABC and ESPN enjoyed in Brazil 2014. ESPN’s broadcast of the first round game between the U.S. and Portugal drew 18.2 million viewers, making it the most-watched soccer game ever in the U.S..
Telemundo, which has Spanish-language rights in the U.S. to all of the matches, however, is forecasting a strong tournament. The hispanic network has doubled down on coverage for 2018 tournament and recently announced a partnership with Google which will allow fans to see real-time video highlights, including goals and match previews, on Google subsidiary YouTube.
Fox agreed to pay $425 million for the rights to the 2018 and 2022 World Cups, while Telemundo, owned by Comcast/NBC, will pay about $600 million to broadcast those two men’s events, according to reports. The agreements also give Fox and Telemundo the rights to the 2015 and 2019 Women’s World Cups and other international tournaments. Those deals compare to the $325 million Univision and $100 million ESPN paid for the rights to the 2014 World Cup in South Africa.
Both Fox and Telemundo, however, are sitting pretty when it comes to 2026, where they will enjoy home nation status as joint hosts of the tournament. In an unusual deal, both networks secured rights for 2026 early, betting FIFA would give the tournament to North America . Fox, in particular, is believed to have gotten a good deal for the rights, which were negotiated at the height of the FIFA corruption scandal, with sources pegging the price tag at just 10 percent over the cost for the 2018 and 2022 tournaments. An added bonus: FIFA is planning to expand the World Cup from 32 teams currently to 48 for the 2026 event, providing even more matches, and advertising opportunities, for broadcasters.
A Month of Super Bowls
The World Cup is the equivalent of a month of Super Bowls, and brands will be taking advantage of audiences’s extra screen time by plying them with commercial spots. Advertising research and forecast group Zenith estimates this year’s tournament will add $2.4 billion to global ad spend, fully 10 percent of the total growth for the year. Unsurprisingly, China is forecast to see the biggest increase, with the World Cup generating $835 million in extra ad spend. Zenith says host nation Russia will see a $64 million boost, equivalent to 2.1 percent of the total ad expenditure for 2018.
Audience reach is expected to exceed that of World Cup 2014, with some 3.5 billion viewers from 200 countries forecast to watch in the four-week period. The Brazil tournament was the first social media event, with an estimated 280 million people watching matches online or on mobile devices.
World Cup 2014 set several social media records. 88 million people worldwide engaged with the 2014 final match on Facebook, racking up 280 million Facebook interactions (for comparison, Superbowl 2018 had 62 million people and 270 million interactions on FB). Twitter exploded during Brazil’s 7-1 defeat to Germany in the semi-finals, with 35.6 million tweets on the match, making it the most-discussed single sports game even on the platform (the World Cup final came second with 35.1 million tweets).
This year, mobile and online viewing, as well as social media chatter around the matches, is looking to be even stronger. GlobalWebIndex’s survey found 47 percent of the online population plans to watch the World Cup, with 55 percent of male internet users planning to catch at least some matches, and just over a third (37 percent) of female users.
Expect YouTube, Facebook, Instagram, Twitter and Snapchat to light up over the next four weeks, while China will have its own World Cup-driven social media storm on local services WeChat, Youku and Weibo. Advertisers in particular will be paying attention to online viewers, which skew younger and more upscale. Fully a quarter of World Cup fans aged 11-20 say they plan to watch the tournament via smartphone or tablet.