Hello, friends! Fifa World Cup is among the biggest sports tournament in the world. The 2018 World Cup held in Russia was watched by about 3. 5 billion viewers as reported by FIFA either on TV or on digital platforms. Friends, can you imagine half the people living on Earth watched a single sporting event. This year too, FIFA World Cup's matches are watched by record number of viewers. But have you ever wondered how does the business model of FIFA work? How does FIFA, as an agency, generate revenues? And why do countries all around the world, want to organise the World Cup? Come, let's understand this, in today's video. "Qatar! " "There are 32 teams in the 22nd World Cup being held in Qatar. " "FIFA says alcohol sales have been banned. " "The decision is clear. " "I think, personally, for 3 hours a day if you cannot drink a beer you will survive. " "The most deadly Middle-East construction project. " "Qatar's treatment of the LGBTQ+ community. " "FIFA is under fire. " FIFA stands for This is a French phrase, since I don't speak French, I might not pronounce it properly, but in English, it translates to It was founded in 1904 by Robert Guerin. He brought together the representatives of seven member countries they met in Paris and signed the FIFA Foundation Act. He was the first President of FIFA, after its establishment. Fast forwarding 118 years, 211 teams are affiliated with FIFA. Interestingly, these teams do not necessarily represent countries. Some of these teams represent certain territories of some nations. Such as Macao and US Virgin Islands. They have a team in FIFA, but they aren't independent countries. These teams are divided into 6 broader confederations. There's a confederation of FIFA on each continent. Namely, Africa, Europe, South America, Oceania, North and Central America and the Caribbean are grouped as one, And Asia and Australia are grouped as one. Antarctica is the only continent that doesn't have a confederation. Because, obviously, there are not enough people. One thing that might shock you, even though FIFA makes billions of dollars, FIFA is an NGO. It is a Non-Governmental Organisation. The purpose of its creation is said to be promoting football all around the world. But similar to how other NGOs are involved in social work, FIFA runs social development programs as well. Such as Education For All. Save the Planet. Protect Children. FIFA Foundation was established in 2018 as an independent entity with the purpose of mobilising the positive power of football, to improve the lives of people. To quite an extent, FIFA engages in social work like other NGOs. But the next question to arise is who is at the top of the organisation? Friends, the main decision-making body of FIFA is the FIFA Council. There are 37 members of the FIFA Council. There's a President of the Council elected by the FIFA Congress, 8 Vice Presidents, and 28 other members. Financially, FIFA operates on a 4-year cycle. Its cycles revolve around the World Cups. In the 2015-2018 cycle, in these 4 years, FIFA earned a revenue of $6. 4 Billion. Including that in the 2018 World Cup. 83% of the $6. 4 Billion revenue, was from the 2018 World Cup. For the next cycle, 2019-2022, we'll get to know the actual financial details only after the end of the 2022 World Cup, But it is estimated that FIFA has already earned record revenues of $7. 5 Billion. In the next cycle, the revenue may very well reach $10 Billion. Showing nearly a double growth in these cycles. What are the reasons for this? There are two main reasons. First, their new financial strategy for Women's Soccer. The 2023 FIFA Women's World Cup scheduled to be held in Australia and New Zealand, already have signed separate sponsor deals. Since Women's world cup is gaining popularity, it is a new source of revenue for FIFA. And the second reason is that the 2026 FIFA World Cup, will be on a larger scale. There will be 48 participating teams in it instead of 32. There will be more football matches and with more matches advertisers will have more opportunities to show their content and the attention of the audience would be engaged for a longer time on the World Cup. The 2026 World Cup will be hosted by the USA, Canada, and Mexico. One thing is clear that since FIFA World Cup is the most popular tournament in FIFA, 95% of FIFA's revenue is generated from the FIFA World Cups. Let's look at the exact revenue sheet, but keep in mind, we won't have the data for this World Cup because the exact calculations will be possible only after the World Cup wraps up. For this video, we'll look at the calculations from the 2015-2018 cycle. The first and largest source of revenue is Broadcasting Rights. Of the $6. 4 Billion generated in the previous cycle, $3. 1 Billion was solely from TV rights. The World Cup is telecasted in more than 140 countries. And each country has their own TV channels. on which you can watch these football matches. These TV channels pay FIFA, to buy the rights to broadcast the matches on their channels. For example, in India, Reliance-backed Viacom 18 bagged the deal at ₹4. 5 Billion. This is why you can watch the FIFA matches on channel Sports18 and JioCinema app. Then is the second source, Marketing Rights. In the previous World Cup cycle, FIFA earned about $1. 66 Billion from it. Various companies and brands pay FIFA to run their adverts during the matches. At the top are the FIFA Partner Companies. Such as Adidas, Coca-Cola, Wanda Group, Hyundai Kia, Qatar Airways, Qatar Energy, Visa. And then come the specific World Cup sponsors. Who pay to run their ads only during the World Cup. These include McDonald's, Vivo, Crypto. com Budweiser, Byju's. In 2018, a Russian gas company Gazprom was also a sponsor, but heavy sanctions are placed on it due to the Ukraine war. And then are the regional supporters. Boss, Fine Wipes, Yadea, official timekeeper of FIFA Hublot. These companies paid FIFA to run their ads. And they amount to about 26% of the revenue. If you add up the two sources, Broadcasting rights and Marketing rights, about 75% of FIFA's revenue comes from these. Then we come to the third revenue Ticketing rights. The tickets being sold at the stadiums, the revenue generated from the audience at the stadiums. In the previous cycle, FIFA earned $564 Million from ticket sales. This year, more tickets are expected to be sold so that's an increase in revenue. Another $148 Million, were generated from the hospitality and accommodation rights. During the 2018 FIFA World Cup. About 11% of the total revenue was from this category. The fourth source is the licensing rights of FIFA's brand. For example, in a video game, or a football game, to put FIFA's logo on it, the rights have to be bought from FIFA, thus this is another source of revenue. In the previous cycle, $600 million was from this. a concrete example of it is the FIFA eWorld Cup Grand Final 18. An event with more than 20 million people participating. The fifth and last source is the accumulation of the remaining minor sources. Such as FIFA Club World Cup. Penalties and Appeals during the game. FIFA Quality Program. Renting out real estate. FIFA World Football Museum. Selling Film and Video rights. These are the minor sources compared to the total amount amount to an aggregate of $322 million. Of these minor sources, the biggest source was the annual FIFA Club World Cup. Earning $123 million. In this, 7 teams participate in the knockout tournament. The 6 winners of the continental champion league compete with each other and the host country is the 7th team. Last year, Chelsea won this tournament. "Chelsea are the Club World Cup champions. " "A dramatic final; Chelsea 2. " Friends, let's discuss the expenditures. On what does FIFA spend? This might seem very shocking to you but actually, FIFA hardly has to spend any money. They have next to no expenses. The cost of organising the matches are borne by the host country. The government of the country hosting the World Cup is the one to pay to organise the matches. In terms of taxes, FIFA doesn't have to pay any taxes as I'll discuss later in this video. Simply the cost of the Prize Money

that is awarded to the team winning the FIFA World Cup. This is the only major component of the cost borne by FIFA. For 2022 World Cup, the total prize is of $440 million. The winning team will get $42 million. The runner-up team will get $32 million. And then there's distribution among the remaining teams, in decreasing order, ranging from $27 million to $9 million. The lesson from such business models can be implemented in our lives with the help of the business audiobooks on KUKU FM. There are several amazing audiobooks on it. How To Be A Good Leader The Business Of The 21st Century The Greatest Salesman In The World New Year is just around the corner, if you have not subscribed to KUKU FM yet, this is a wonderful opportunity for you. When you set your personal goals for 2023. You can use this platform to enhance your skills and knowledge. KUKU FM is a brilliant app for listening to audiobooks. If you use the coupon code DHRUV50 you will get 50% off of their annual subscription plan. Now, let's get back to the topic. Additionally, how much is the cost of organising the games for the host country? For example, in the 2022 World Cup, multiple mainstream media reports have estimated such as Forbes and Bloomberg, Qatar has spent $200 Billion to organise the World Cup. But this number, $200 Billion, is a bit misleading. Because hosting this World Cup by Qatar is seen as a part of Qatar National Vision 2030. For this World Cup, Qatar built a modern metro system. Obviously, it will be used later by the residents there. They expanded the airport, built new hotels, built new districts in their capital city, Doha. A portion of the expenditure was for a greater purpose than the World Cup. It will be utilised after the World Cup as well. Despite that, the cost of hosting the World Cup for Qatar, will be in billions of dollars. For example, the matches are being hosted across 8 venues in Qatar. Of them, 7 were built for this World Cup. The government claimed that the cost of building the stadiums was $6. 5 Billion. Qatar was chosen to host the 2022 World Cup back in 2010. "The winner to organise the 2022 FIFA World Cup is Qatar. " The USA, South Korea, Japan, Australia, several countries had put in bids to host the 2022 World Cup. Of them, Qatar was chosen. This created a lot of controversies. Corruption was also alleged. The then FIFA President Sepp Blatter claimed it was a positive improvement that FIFA World Cup was being hosted in new countries. It was the first time that FIFA World Cup is hosted in a Middle-Eastern country. But now, the same man says that it was a mistake allowing them to host the World Cup. Why? There are several reasons for this. Several controversies arising out of Qatar. First, Migrant Exploitation. workers from Bangladesh, India, Pakistan, Sri Lanka, and Nepal, were allegedly made to work as forced labour. They couldn't change their jobs, couldn't leave the country, and had to wait for their payments for months. "Since the early 2000s, so many foreigners have come to work in Qatar, that they now make up 80% of the total population. They were the ones to develop the stadiums and built the infrastructure. Reportedly, more than 6,700 South Asian migrant workers died since 2010. According to a poll from Amnesty International, 73% of the respondents said that FIFA should put aside $440 million to compensate migrant workers for human rights abuses. The second controversy was LGBTQ+ rights. Unconventional relationships aren't legal in Qatar, in fact, the famous rainbow flags of the LGBTQ+ community even the mere depiction of them has been banned. There was a controversy about alcohol. Budweiser is a brand of alcohol that had a $75 million deal with FIFA, so that only this brand of alcohol could be sold in the stadiums, but about 2 days before the tournament began, they were informed that alcohol will not be sold during the matches. Finally, the biggest controversial matter in this issue was how Qatar bagged the hosting rights for the 2022 FIFA World Cup. Since this decision was taken in 2010, more than half of the 22 members of FIFA's Executive Committee have either been implicated or investigated for alleged corruption and bad practices. Several brands such as Fly Emirates, Coca-Cola, Sony, Adidas, and Visa, have released statements concerning this issue. There are accusations that the top members of FIFA were bribed into giving the hosting rights to Qatar. Did you know that FIFA requires 7 guarantees and declarations from the government of the country hosting the World Cup. These guarantees are related to several issues. Such as visas, permits, and immigration issues. Work permits and labour law exemptions. Safety and security. Protection and exploitation of commercial rights. Telecommunications. Waiver indemnifications and other legal issues. And finally tax exemptions. FIFA imposes so many requirements for any country that wishes to host the World Cup they have to meet all conditions. No tax will be paid, they'll have to bear the entire costs, and the controversies are almost a given at the point. This might make you think what does a country gain by hosting the World Cup? Why would any country want to host the World Cup when they have to bear so many expenditures. The biggest benefit of hosting the event is said to be the increase in the Soft Power of the country. If the country successfully hosts an event of this scale, it shows that the country is quite stable, financially secure, and thus, it becomes a viable option for foreign investment. But in the case of Qatar, since there have been so many controversies, critics believe that perhaps it will not draw in a lot of foreign investments, and this might not become a real benefit for them. The second benefit is said to be the newly built stadiums that can be used by the citizens and residents of the country later. This will give a boost to sports in the country. But does this actually happen? The reverse is true in many countries. After the end of the World Cup, the newly built stadiums, are left useless. When the 2014 FIFA World Cup was held in Brazil, they spent $3 billion, to build 12 new or heavily refurbished stadiums, but one year later, it was found that the $550 billion Mané Garrincha Stadium, is now being used as a bus parking. In the stadium built in Cuiabá at the cost of $215 million, the locker rooms proved to be shelters for homeless people at night. The stadium in Natal, was trying to generate some revenue by turning into a venue for weddings and birthday parties, but unfortunately, that plan was not successful. Another benefit is said to be the development of the infrastructure in the country. But in developing countries, it has the opposite impact. The existing infrastructure gets heavily strained. Swiss NGO Terre des Hommes revealed that for the 2014 World Cup in Brazil thousands of families were forcefully resettled in basic huts without electricity or water, thousands were pushed into poverty. Apart from this, when the Commonwealth Games were held in Delhi, similar accusations were seen there as well. HLRN estimated that thousands of people were evicted from their homes to build stadiums, large parking lots, wider roads, for the beautification of the cities, they estimate that in Delhi, due to the CWG, hundreds of thousands of people became homeless. Another point of criticism was that the money that Brazil spent on hosting the World Cup, was roughly the same amount spent by Brazil's government for their social welfare programme Bolsa Familia in 2013. A social welfare programme on which about 50 million people relied. The money that could have been spent on the welfare of their citizen, was spent on making the stadiums. The stadiums that aren't useful now. In India, we still come across stories about how our athletes do not have even the basic facilities. Perhaps we may conclude that in developing countries such as Brazil and India if a World Cup is hosted, it isn't as beneficial as it can be to a developed country. Apart from these, another benefit is said to be a boost in the GDP. If a country hosts a World Cup, people from all around the world would visit, bringing with them foreign reserves, and driving an increase in tourism in the country. There's no uncertainty about this benefit. For the Qatar World Cup, it is estimated that 1. 2 million visitors will go to Qatar, and there will be a $17 billion benefit to the Qatari economy. It isn't necessary that if a country hosts the World Cup it will have to bear losses only. There will be benefits. The thing is that, if a country hosts the World Cup, they will have to run their calculations and have to see that if they host the World Cup in the country, the areas where they will benefit, and the areas where they will incur losses and if the overall impact will be positive or negative. And then should they decide if they want to host the World Cup. Since Qatar has the highest GDP in the world, perhaps, despite these controversies, Qatar would see a positive impact of the World Cup. What do you think? Comment below. it is a whole series on different businesses. We discuss different Business Models in it. Let's meet in the next post. Thank you very much!