The World Cup of Brands part 5: Brazil, FIFA and where does all money go?
Posted by : Dr John Jewell
The focus of this series of articles has predominantly been upon advertising, brands and, to some extent, the footballers who benefit from the culture of rampant commercialism which is a feature of top level professional sport. Now it’s time to concentrate on perhaps the most important story in the build up to the tournament: the mass protests against the event by Brazilian citizens.
Demonstrations, marches and rallies against austerity, government cuts and the staging of the World Cup were a feature of the summer of 2013 and as we draw closer to kick off on June 12th tensions have once again risen to the surface. 26th May saw protest in 12 cities across the country following strikes earlier that week in Rio de Janeiro and as I write news comes in of Police firing tear at gas at anti-World Cup and indigenous demonstrators in the capital, Brasilia.
The Financial Times highlights the experience of Janderson de Almeida Pintel a 24-year-old shop assistant from Cuiabá in the northwest of Brazil. As the cost of Cuiabá’s new soccer stadium has risen to $257million Mr de Almeida Pintel thinks the money could have been better spent elsewhere, such as in improving local hospitals. ‘When my wife’s uncle was shot they just left him in the corridor for three weeks . . . he didn’t make it,’
The problem for the protestors – and a recent poll indicated that just 48% of the population support the country’s host status – is that a vast amount of money has been spent on the tournament whilst the country’s infrastructures and social services have been wilfully and appallingly neglected. In the capital Brasilia, for example, families have been forced out of their homes to make way for stadium construction. A stadium which, when finished, according to auditors will have cost $849.26 million to build. The saddest fact is that after the tournament is over there is little likelihood of the venue being used with any frequency. As noted football writer and author of Soccernomics, Simon Kuper has pointed out: no club from Brasilia plays in the two divisions of the Brazilian national league. The biggest club in the area, Brasilia Futebol Clube, plays only in the local state league and attracts on average below 1,000 fans per game. In Kuper’s estimation this episode is indicative of a nationwide financial disaster He writes: The country’s original budget for stadiums was less than $1 billion, which was supposed to be entirely funded by private business. But they didn’t come through as planned. The current budget (which will rise) is about $3.5 billion, almost entirely funded by Brazilian taxpayers, who are angry to find themselves on the hook. Other World Cup-related infrastructure — such as approach roads to the stadiums, security and some attempts to beef up weak, local public transport — will cost about three times that figure.’
For FIFA, the problems are nothing to do with them. The governing body’s Secretary General Jérôme Valcke told FIFA. Com ‘It is easy to criticise FIFA, it’s easy to use the Confederations Cup or World Cup to organise demonstrations. But the target is wrong if the target is that FIFA are the reason for what’s happening in a country’. There is some validity in this argument: after all, who are FIFA to instruct indigenous governments in how to spend their money? BUT anger is directed at FIFA because the general wisdom is that it takes a great deal and gives very little back.
In 2011 The Brazilian government granted exemption to FIFA from all taxes relating to the World Cup. According to a decree published in Brazil’s official journal, FIFA is able to import fuels, food and sports equipment without paying import taxes. CNN reports that according to, ‘Brazil’s Internal Revenue Service the tax exemptions will cost $248.7 million, though other reports estimate the figure could be as twice as high for the period between 2011 and 2015. The International Olympic Committee will receive similar exemptions when the South American country hosts the Olympics in 2016’.
For one of Brazil’s most famous footballing sons, Romario, this is simply outrageous. In an article printed in the Guardian in June last year, he wrote: ‘Why are we organising the most expensive World Cup in history, without any of the benefits to the community we were promised? Fifa has announced that it will make a R$4bn profit from Brazil’s World Cup tax free……Only Fifa is profiting, and this is one more good reason to go to the streets and protest.’
There is some optimism that the tournament will be to be the economic benefit of to Brazil. Business Insider reports that the Brazilian government is expecting to garner $11 billion in revenue with the Institute of Tourism calculating that that around 600,000 tourists will visit the country spending approximately $2.6 billion. It’s hoped that the 3 million Brazilians estimated to attend will spend about $7.9 billion.
Sadly, expert analysis suggests that the reality will be far different. University of Maryland sports economist Dennis Coates has written that ‘there is no evidence that the benefits promised by event organizers have ever materialized’. South Africa, hosts in 2010, made a return of just £323m on the £3bn it spent on building stadiums and infrastructure for the tournament, according to official figures. As David Conn has written, ‘with the country still riven by gaping inequality, poverty and social struggle, questions are sticking about whether the World Cup really did produce a lasting legacy worth the billions spent’. For FIFA things were rather different, Conn writes, earning £2.2bilion returning to Zurich with a £394 profit. According to its own documentation for years 2007 to 2010: ‘the 2010 FIFA World Cup South Africa™ was a major success from both an organisational and a financial perspective. Overall, FIFA recorded a positive four-year result of $631 million. This result is based on total revenue of $4,189 million and total expenditure of $3,558 million.
Come the final whistle on July 13th there will be many financial winners, not just FIFA with estimated earnings of $5 billion and the victorious nation crowned world champions who will receive $35 million for their trouble. We can be sure that Coca Cola, Nike, Adidas and the like will benefit from this tournament just as they did in 2010 as billions of people watch the action unfold and interact on social media .It looks increasingly unlikely, though, that the people of Brazil will feel any positive economic effects any time soon. It may be that the image of a starving child eating a football painted on a School in Sao Palo on May 10th and shared thousands of times on Facebook, becomes emblematic of World Cup 2014. Let’s hope it doesn’t become prophetic, too.
The World Cup of Brands part 1: Meet the Sponsors
The World Cup of brands part 2: Water breaks and Ad breaks.
The World Cup of brands part 3: Adidas v Nike and Coke v Pepsi
The World Cup of Brands part 4: Ronaldo brands it like Beckham