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Is Fifa practising clever spin or Chinese bookkeeping?
This year’s Fifa Soccer World Cup in South Africa is set to generate the highest commercial revenue ever for an edition of the event, said chief executive officer of the Local Organising Committee (LOC) Danny Jordaan, during a recent lecture organised by the Royal African Society in London. At the same time, according to a report circulated in February by the website "Project 2010", Fifa expects to make a marginal loss on the 2010 World Cup. Are the public being lied to? Is clever spin at work? Does Fifa simply not know how to work with money, or is it a case of Chinese bookkeeping?
Quoting a report in "The Guardian", the Project 2010 report said that the expected “small” loss is in contrast to the £178 million profit it made in the 2006 tournament year.
According to Jordaan’s lecture, however, revenues for the “South African edition (of the World Cup) will be $3.5 billion, some $900m up on the Germany World Cup in 2006.”
Jordaan also assured those present that the event will be delivered within the $423-million operating budget.
A senior Fifa source told "The Guardian" that the governing body expects to be called upon to underwrite "a few thousand dollars" in overall losses in South Africa this year.
While the host of the event carries most of the cost associated with staging the event, the Fifa claims are perplexing and beg the question if it is perhaps merely some clever spin to keep South Africans grateful for the opportunity to stage the event and keep them ready to continue making concessions.
To guard against financial risks, Fifa has been hoarding cash since the 2002 World Cup and by January 2009, it had exceeded its £500-million equity target by £63m.
A statement with those accounts also quoted in the report read: "At the halfway stage in the 2007 to 2010 period, Fifa had already achieved its objective of increasing equity to at least £500m by the end of 2010. "
Guy Lundy, CEO of Accelerate Cape Town, told "Leadership Intelligence Bulletin" that he questions the statement that Fifa would make a marginal loss in the 2010 World Cup.
“I think their main concern is about the slow pace of ticket sales. Their travel company Match has sold fewer packages than they had originally contracted, demonstrated by the fact that they released a large number of room nights a while ago," said Lundy.
“This is probably because of a combination of the poor global economic climate, combined with long travel distances and high travel prices.”
He also pointed out that the largest part of Fifa’s income comes from sponsorship packages, which were paid for a long time ago, so they are not going to lose money.
Fifa is learning some lessons from selecting a host country with limited travel options, with fans having to travel long distances.
Gillian Saunders, director of Grant Thornton Strategic Solutions, said it is probably working out less profitable for Fifa than expected due to more tickets being sold at reduced prices, and extra funding of $250m provided by Fifa to the LOC. Instead of only 11%, 20% of the tickets will now be sold as local or category-four seats to residents of the host nation for about $20, or about R150.
“The projected loss as a percentage of the latest total Fifa World Cup costs of $1.08bn is probably minimal,” said Saunders. “Really, it all depends on how Fifa allocates revenue it earns.
“Overall, it has earned $3.2bn from 2007 to 2010, of which $2bn is media rights, but some of this is global partnerships which are not only for 2010,” Saunders told "Leadership Intelligence Bulletin". All the tickets for matches in Cape Town, as well as the quarterfinals, semifinals and final are sold out, but another 600 000 tickets are still up for grabs.
Fifa granted Match exclusive rights to sell travel and ticket packages for the 2010 and 2014 tournaments, but its near-monopoly on hotel rooms has seen supporters asked to pay high prices.
The "Telegraph" does not mention that the original decision to award Match the exclusive rights generated considerable controversy.
It just so happens that Match is part-owned by Swiss company Infront Sports & Media, whose president and CEO is Philippe Blatter – nephew of Sepp Blatter, president of Fifa – reported the website www.pitchinvasion.net.
In February, Andrew Jennings, author of "The Lords of the Rings" and "Foul" (award-winning books on Olympic corruption), reported on Match which stood to earn as much as $342m from the contract, and its expensive surcharges that have raised prices for everyone.
Travel agents have to pay Match $30 000 simply to be allowed to buy tickets to package with rooms and sometimes flights.
Then they have to pay up to 35% in surcharges on every ticket that Match sells them – boosting a ticket with a face value of $160 to as much $244. So Match can take up to $84 from each fan, according to www.pitchinvasion.net.
The company also has established an iron grip on rooms. Hotel chains and Bed & Breakfasts want business from fans and have signed up with Match – and must pay the agency $30 of their gross charges – in so doing, driving up prices again.
Switzerland is a heaven for Criminels since the
1930,s and Blatter is going for 1st Price.
Me thinks Gaddaffi may have a point,aslong as he invites Bob and Jacob to the opening Party.