Success on the Field Is Just The Beginning for World Cup
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
Is the World Cup all about soccer or is it, like the Olympics, more about being a corporate bazaar? FIFA, the governing body of soccer, needs big dollars to stage the globe’s biggest and longest sporting event every four years, and corporations pay big money to become an “official” this or that of the World Cup.
There are 16 official sponsors for this year’s competition – Adidas, Budweiser, Avaya, Coca-Cola, Continental, Deutsche Telekom, Emirates, Fujifilm, Gillette, Hyundai, MasterCard, McDonald’s, Philips, Toshiba, and Yahoo! Each paid a reported $40 million to earn that title. In Germany, there are 15 additional sponsors who paid about $15 million apiece to help defray costs. One of the sponsors is AOL, an American company that has its name on a stadium. Each of the national teams has its own sponsors.
FIFA also sold global TV, radio, and multimedia rights, including broadband and cellular for hundreds of millions of dollars. Then there is officially licensed merchandise, including an official song and album. Il Divo and R &B songstress Toni Braxton sang ditty, “Time of Our Lives.” The album was released in May and included a special version of Shakira’s newest hit “Hips Don’t Lie.” EA Sports is publishing the 2006 FIFA World Cup, the official computer and video game for the World Cup.
In a lot of ways, the World Cup is all making money and extracting it from the billions worldwide who attend games, watch games on TV, listen on radio, and follow the action on both broadband and cellular phones. Many fans treat the games as historic events, but the World Cup is a business first and foremost.
And there are other businesses, which don’t have “official” World Cup designations, that are banking on the tournament to establish credentials in the business world. Companies like Viva! Vision, a provider of branded and original mobile video programming to the Latino and Hispanic community worldwide, which announced during the first week of Cup action that it created five new mobile TV channels including one that showed ESPN World Cup action. Viva! Vision knows 600 million people in Latin America are watching the World Cup on televisions, PCs, and on mobile phones. Viva! Vision wants a piece of that action.
Out in Asia, a Taiwanese company, CyberLink, launched software for playing soccer highlights. CyberLink is sort of like TiVo in that the software analyzes recorded soccer programs and extracts the most exciting moments from each game. The software is designed for football fanatics who don’t have time to watch every minute of every game.
Both Viva! Vision and CyberLink, who are not a part of the official World Cup family, are using the World Cup to attract people to use their products long after the competition ends on July 9. The tournament is on the cutting edge of new technology and in many ways, more so than this year’s Winter Olympics. It is creating new ways fans can follow sports, whether it’s on ABC, ESPN2, Spanish language Univision, the Internet through Yahoo!, or cellular phones.
Germany is at the center of the soccer world, but the world is as connected as can be to the World Cup. In America, World Cup soccer seems to be a novelty act that’s part of a parade of sporting events, including the NBA Finals, the Stanley Cup playoffs, baseball, NFL mini-camps, the U.S. Open in golf, the French Open and Wimbledon in tennis, and the Belmont Stakes.
But if you really want to know how well the World Cup is doing in America, take a look at Univision’s TV ratings and Yahoo! The latter reported recorded numbers to its FIFA World Cup site, and Univision’s June 10 Mexico vs. Iran match was the no. 1 weekend daytime program among men, women, and adults ages 18-34 among all networks. It was also the no. 2 sports telecast for the entire weekend among men and adults ages 18-34, behind only ABC’s primetime coverage of Game 2 of the NBA Finals. ESPN2 scored is highest soccer ratings ever with the USA vs. Czech Republic match on June 12. More than two million American households tuned into the game at some point.
That’s a big improvement over 2002 TV ratings for the World Cup, which were down from 1998 levels. Host nation Germany must be hoping for the same type of improvement in its 2006 World Cup investment, because neither Japan nor South Korea got a sufficient return on building 19 venues for the 2002 event. Germany spent about $1.7 billion to upgrade the stadiums being used in this year’s competition, and the government is hoping to recoup that money from tourists attending the World Cup.
It’s awfully hard, though, to gauge how much money Germany will take in. Sure, there’s a bump in tourism, but over the long term, will hosting a World Cup have a lasting impact? How many permanent jobs will have been created? How many people who have worked to stage the competition will still have jobs after a champion is crowned? How many service industry jobs that were created in the tourism business – whether it’s in construction, hotels, restaurants or travel – will be eliminated?
The 2002 World Cup was a success on the field, but the host countries, Japan and South Korea, took financial baths in building new facilities to satisfy FIFA’s requirements for venues. Japan has fared a bit better in utilizing the stadiums, while the Koreans have been left with numerous white elephants around the country. Japan spent $4.5 billion on nine stadiums and most of them are still used by soccer teams in the nation’s J-League. Like in America, Japanese corporations spent a lot of money on naming rights for the stadiums. Meanwhile, soccer leagues in South Korea have floundered.
The World Cup, like all other sporting events, is mostly about money – that is, how to stage it fiscally and make it profitable. International soccer officials are like their American counterparts in that they go after government support, then media dollars, and finally corporate support before they start thinking of putting on an event for spectators. Someone has to pay for the largess.