It's that time again. A time when the flags wave and the pubs heave. When normally indifferent folk suddenly start discussing the fundamental flaws in Algeria's sweeper system as if they know what they're talking about. When massive hope and keen anticipation fill the hearts of England supporters. For a while, at least…
Yes, this summer South Africa is hosting the 19th FIFA World Cup Finals and, as ever, the whole world is watching. In the UK, it's estimated that England's presence in the Finals will be worth around £1.25bn to the British economy as fans clear the supermarket shelves of beer and bar snacks, the bookies' tills start ringing and large HD-ready television sets become flavour of the month.
For the host country South Africa, however, it has the potential to be a moneyspinning extravaganza unlike any other, with the country expecting to see a one per cent increase in GDP on the back of the Finals.
"In total we have conservatively projected that the gross impact of the event will be some ZAR33bn [£2.9bn] of direct expenditure, ZAR55.7bn [£4.9bn] of total GDP impact and 415,000 annual jobs sustained," says Gillian Saunders, head of specialist advisory services for the accountants Grant Thornton in Johannesburg.
Nearly half a million visitors, meanwhile, are expected to descend on the country. There will also be the 32 teams, with around 50 people per party, 18,000 media representatives and 14,500 VIPs and dignitaries. In short, it's a mammoth month for the country. "The real win for South Africa, though, is not the event's impact," adds Saunders, "but the international profiling of our destination before, during and after the event."
It's pay day for FIFA, too, and come the end of the tournament, its accountants will doubtless be rubbing their hands with glee. At the last Finals in Germany in 2006, FIFA and Germany's World Cup organising committee posted a pre-tax profit of £110m, while at the previous competition, Japan and South Korea also made a tidy profit on their joint hosting of the Finals. The World Cup is a largely privately-funded operation, although the South African government has invested around £2.5bn on legacy projects such as stadia, transport infrastructure and security. FIFA, along with the local organising committee, picks up the remaining tab (nearly £1bn this year) and then retains all the commercial rights to the event.
It's a canny move. The sale of the TV and transmission rights, for instance, will bring in a reported £1.3bn, marketing rights from a string of global corporate partners pull in another £650m, hospitality brings in £78m and licensing another £52m — straight into FIFA's coffers.
"The World Cup is the most watched sporting event in the world," explains Ezechiel Abatan, researcher with sports marketing experts Sportcal Europe. "In terms of revenue it lags behind some of the big American sports like the NFL, NBA and NASCAR, but then they are annual, season-long events and not one-off, four-yearly events like the World Cup."
For the players, meanwhile, the World Cup finals represent not only the pinnacle of their playing careers but also an opportunity to further their careers and/or feather their nests.
"The World Cup is not just a platform for players to show their talent, it also acts as an automatic endorsement of their credentials as players," explains the football agent Sky Andrew. "In other words, they become a recognised, marketable commodity and their market value – their new market value – will reflect that."
Recently, it was reported that the English Football Association was discussing a bonus of £400,000 per player should England manage to win the event for the first time since 1966. If that sounds like a nice little earner, though, think again. To put that figure in some kind of perspective, it's less than many of the first choice England players earn in a single month. Former captain John Terry, for instance, earns a reported basic weekly wage of £150,000 at his club Chelsea, before any add-ons for winning or the revenue from his endorsements with the likes of Umbro, Samsung and the Pro-Evolution Soccer computer game.
Moreover, most of the players' contracts with sponsors will also feature bonuses for performing well in the World Cup. England's golden boy Wayne Rooney, for example, is said to be in line for an extra £500,000 from his boot supplier, Nike, if he ends the tournament as the top scorer.
"A bonus is just a bonus," says Andrew. "It may be hard to believe but the players who are there are more concerned with winning matches and playing their very best. The most important thing to them is fulfilling their dreams, not the money."
For FIFA, the World Cup has become a hugely lucrative cash cow, its appeal stretching to all four corners of the globe. The 2006 final between France and Italy in Berlin's Olympiastadion, for example, was watched by what FIFA claimed was a billion people around the world, although independent analysts put the figure at around 260 million. Exaggeration of viewing figures is commonplace with major sporting events, although not deliberate. While it obviously sounds better to say that a sixth of the planet's population watched the Final, the trouble is that without the necessary systems in place across the world to accurately track the data, there is an element of guesswork. After all, how do we know just how many people in China were watching? This time it's anticipated that a cumulative total of more than 26 billion around the world will watch the Finals.
There's a lot riding on the World Cup for the broadcasters. As commercial stations such as ITV have seen their advertising yields plummet in recent years, the competition represents the ideal chance to claw back some much-needed revenue. The station will be sending a team of around 140 people out to cover the matches while rival the BBC will dispatch nearly 300 people, primarily because they also have to cover the event for BBC interactive, Radio 5 Live, Online and BBC News, as well as their main channels.
"The scale of the BBC operation has changed to fit the nature of our ouptut: in particular to meet the needs of a multimedia approach," explains Philip Bernie, BBC head of TV sport. "We want to ensure that all licence fee payers can absorb the event on the platform they choose, at the time they choose."
The BBC is even constructing a new studio in the shadow of Cape Town's Table Mountain, some 800 miles from the organisational centre for the tournament, Johannesburg, so that Gary Lineker and his team have an impressive backdrop.
"Without doubt, this will be logistically one of the most complex productions the BBC will ever have undertaken considering the geographical spread of the event across South Africa, the logistical challenges and security issues," adds Bernie. "Despite all these factors we are sending 15 per cent fewer people to South Africa than we sent to the World Cup in Germany."
In 2006 the finals had 15 main sponsors, including Adidas, Coca-Cola, MasterCard and McDonald's, who paid a reported total of £517m for the privilege of being an 'official partner', while six national sponsors each paid £11m for local marketing rights. "The exposure from the World Cup is crucial," says Abatan. "For a brand like McDonalds, which is already worldwide, the return on investment for a World Cup sponsorship is much greater than it would be for a conventional advertising campaign on the usual media channels."
This year, following criticism that there were too many sponsors last time around, FIFA has just six 'partners', although they are still supplemented by seven second-tier sponsors and five national supporters as well. Not that it's made a jot of difference. Danny Jordaan, the CEO of the local organising committee, announced in 2009 that with over a year to go until the big kick-off, sponsorship revenues had already exceeded those for the 2006 tournament in Germany.
Let the games begin.
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