How Does FIFA Make Money? Business Model Explained!

FIFA was formed in 1904 to oversee, organize, and promote an increasing number of international football (soccer) competitions. The sport is played in more than 200 countries, making it arguably the most popular sport worldwide. FIFA’s official website explains that the organization is “modernizing football to be global, accessible, and inclusive everywhere, not only on one or two continents.”

The nonprofit organization FIFA invests most of its earnings back into the game’s development, but it also has a great deal of earning potential.

Its main source of revenue comes from organizing and marketing major international competitions, such as the Men’s and Women’s World Cups, which occur every four years. The FIFA Confederations Cup and the continental championships are also quite popular. According to FIFA’s annual financial report, more than $4.6 billion in revenue was generated in that year’s World Cup.

How FIFA Makes Money

In addition to being one of the biggest sports events in the world, the World Cup contributes significantly to FIFA’s revenue. By selling television rights, marketing rights, and licensing rights, as well as ticket sales, FIFA makes a lot of money from this and other events. Apart from that, FIFA’s costs are minimal, which allows it to put as much money back into the development of the sport as possible.

1. Economies of the World Cup

In its capacity as the sole organization of the World Cups and the Women’s World Cups, FIFA retains all revenues. The revenue generated by these events is often in the billions. World Cup host countries are determined through a bidding process, and it’s a fierce competition.4 In 2022, Qatar is set to host the tournament, while the U.S., Canada, and Mexico will host it in 2026.

Building and enhancing world-class infrastructure is one of the most important aspects of organizing such a large and popular event. Thus, winning the bid can generate a lot of investment interest, which can boost the economy. 

FIFA gets a big bargaining chip by holding so many bids for the World Cup and is able to dictate most of the terms. It’s the host nation’s responsibility to create any infrastructure for the Cup; FIFA does not get involved. FIFA pays the local organizing committee to organize and conduct the World Cup. 

In addition, it pays prize money to participating nations, coordinates travel arrangements for players, and provides support for staff and match officials. As part of the FIFA World Cup legacy funds, the host country will also be able to use the funds for the development of the sport there in the future.

FIFA’s major costs include not only those related to FIFA events, but also the cost of development, personnel, and a financial assistance program.

In the four-year period leading up to World Cups, FIFA records its revenue. The majority of these figures are for the period from 2015 to 2018. FIFA reported revenues of over $6 billion in this period. While licensing contracts accounted for the majority of revenue, there were also investments and brand licensing.

2. FIFA’s Television Rights

Four out of every five dollars FIFA generated in revenue in 2018 came from television rights (about $3.13 billion). In specific regions, FIFA licenses rights to broadcast football matches and related events to television stations and broadcasting institutions. Due to the popularity of football around the world, there can be fierce competition among broadcasters for licensing rights.

ESPN and Twenty-First Century Fox Inc. (FOXA) competed for television rights of the 2022 World Cup and FOX won the bid, paying $400 million to FIFA.

Twitter Inc (TWTR), Meta Inc (FB), and Snap Inc. (SNAP) all offered million-dollar highlights rights to FOX.

3. FIFA’s Marketing Rights

In the four years leading up to the current World Cup, FIFA received $1.66 billion in income from the sale of marketing rights. In light of the widely publicized corruption scandal that involved numerous high-level figures in FIFA during this cycle, this figure is especially awe-inspiring.

4. FIFA’s Licensing Rights

In the 2015-2018 licensing cycle, FIFA generated $600 million, an increase of 114%. Brand licensing agreements, royalty payments, and other sources contribute to this revenue.

5. FIFA’s Hospitality Rights and Ticket Sales

Ticket sales and hospitality and accommodation rights are the last significant revenue streams for FIFA. FIFA’s direct subsidiary owns 100% of the revenue from ticket sales. FIFA reported revenues from hospitality rights and ticket sales of $712 million for 2015-2018. The 2018 World Cup events in Russia have been requested for more than 10 million tickets.

FIFA’s Expenses

According to FIFA’s financial report for 2015-2018, the organization spent $5.36 billion on event-related expenses ($2.56 billion), development and education projects ($1.67 billion), and FIFA governance and administration ($797 million).

Another notable expenditure from 2015-2018 was on Football Governance, which included legal fees, information technology, and building expenses. In total, $124 million was spent on Football Governance. Finally, FIFA spent $211 million on marketing and television broadcasts.

Future Growth

FIFA will likely generate massive revenue from the World Cup and other major events so long as football remains a popular sport with an international fan base. Accordingly, FIFA’s future plans involve reinvesting in the sport, developing the host bidding process transparently and objectively, adhering to compliance programs, and promoting gender equality within the sport.

As with its strategy, FIFA improved its sponsorship model as well. At present, FIFA offers four levels of sponsorship: FIFA Partners, FIFA World Cup Sponsors, Regional Supporters, and National Supporters. 

FIFA Partners are involved in social responsibility and help develop the FIFA brand. Sponsors of the FIFA World Cup are entitled to promote their brands and the World Cup. Various regions and/or the host nation have regional and/or national supporters who have the rights to promote their brands in those areas.

Controversies

During the bidding process for the World Cup, FIFA has sometimes been accused of mismanagement and malpractice. In 2015, the president and other executives who were named in the corruption controversy were arrested. There have only been nine head of the organization in its 115-year history, leading to questions regarding transparency and governance.1617 Despite the organization’s successful 2018 World Cup, concern remains over the possibility of corruption in future years.

Despite this, FIFA generates impressive earnings numbers thanks to its little-to-lose business strategy. It does not need to build infrastructure for competitions or take on the financial risk involved. FIFA is the one that generates huge revenues, primarily from television and marketing rights.

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