A money machine

What is it about the FIFA World Cup football tournament that convulses even non-football fans for one month every four years? What is it that brings in consolidated TV-viewing figures of a stupendous 30 billion""which roughly translates into six games per person on the planet, more than any other single sports tournament? Why did more than a billion people across time zones watch Italy and France battle it out in""and Zidane literally head out of""the final on July 9? Step away from the hyperbole and regular football fans will tell you that, frankly, you often get to see talent as sumptuous and matches as riveting in the annual European and South American club leagues and tournaments or in competitions such as the Confederations Cup and Copa America and, indeed, even in the qualifying matches leading up to the World Cup. Ronaldinho, Kaka, Lampard, Totti, Rooney will still hold cult status though they reached no great heights in Germany. And yet, to miss watching the World Cup Finals these days is to almost risk pariah status. And that's because, at bottom, the World Cup is one of the most skilful examples of monopoly marketing to be found anywhere in the entertainment business.

Leveraging the unparalleled reach of global television audiences and the advertising revenues and image rights that accrue from it, FIFA, the world body governing the sport, has created an event that generates gargantuan revenues both for itself and the institutions and countries associated with the tournament. For example, in 2002, the first World Cup to be hosted in Asia, FIFA came away with a profit of $260 million. For the 2006 World Cup, FIFA is expected to generate revenues of $3 billion from the media rights (TV, broadband and mobile phones), sponsorships, ticket and merchandise sales and licensing rights. TV rights alone would have generated $1.8 billion""compared with $108 million in France '98. To put things in perspective, the one-month World Cup earns this non-profit organisation, headquartered in Switzerland, the equivalent of two months of the revenues of Reliance Industries, India's largest private sector company. In fact, it is telling that FIFA has a four-year fiscal year ending with the World Cup.

FIFA manages this revenue feat principally by building on a huge monopoly power that it has accumulated over the years""powers that few other global sports federations can boast of. It owns trademarks of such terms as FIFA World Cup and 2006 FIFA World Cup Germany and, by extension, is the "owner" of all the matches that it sells to a wide range of buyers. As economist and soccer fan Mathew Higginson put it, FIFA is like a film production company that does not pay its world-famous actors, and sells tickets to their films to theatres that then pay FIFA to screen them! To be fair, even as commentators and sports administrators regularly""and often justifiably""excoriate FIFA for corruption and the way it manages the sport, the federation maintains its dominance by re-investing its earnings in development programmes and promotion. This is the single reason why football has evolved from a local obsession in the backwaters in England to one of the fastest-growing entertainment businesses worldwide. If you consider the African and South Americans stars, it would be fair to say that it has also indirectly genuinely empowered thousands of people in the world's poorer countries. Perhaps, there is a lesson in all of this for the BCCI, one of the world's richest cricket federations.