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CONCACAF bids for World Cup

The 2014 World Cup was in Brazil

The United States, Mexico and Canada will make a bid to host jointly the FIFA 2026 World Cup.

At the recent Confederation of North, Central America and Caribbean Association Football (CONACAF) conference in Aruba, the 41-member continent-wide organisation which the Cayman Islands belongs to, gave their blessing for a bid by its three largest members to jointly host the 2026 FIFA World Cup. Football in the U.S. has grown in popularity since they hosted it in 1994. The brilliance of players such as Tim Howard, Clint Dempsey and captain Michael Bradley has helped raise the profile of the sport there.

The FIFA World Cup is by far the largest sporting event on the planet, with a 2014 global in-home television audience of 3.2 billion and over one billion enthusiasts watching the finals in Rio de Janeiro, Brazil, according to data released by FIFA and Kantar Media.

FIFA reported that 5.1 million attended FIFA Fan Fests across Brazil during the 2014 World Cup, with Rio de Janeiro’s Copacabana site attracting 937,330 attendees. The World Cup also attracted a digital audience with 280 million fans that viewed games online and on mobile devices.

That compares to Neilsen Ratings estimate that 111.3 million people viewed the National Football League’s 2017 Super Bowl on TV, and the 48.3 million people interacted on social media.

World Cup joint bids to share facilities, and hedge the hosting costs of the event that is held every four years, have become common after South Korea and Japan hosted the 2002 World Cup.

A Harvard study of event hosting costs found that every nation lost money since the 1894 revival of the Olympic Games by France’s Baron Pierre de Coubertin and the 1930 inaugural FIFA soccer tournament held in Uruguay, except for the 1984 Los Angeles Olympics. Recent examples of extreme financial losses include:

• The 1976 Montreal Summer Olympics was supposed to cost $150 million, but the total cost to the city came in at $1.2 billion.
• The 1992 Barcelona Olympics cost about $10.7 bn, a 266 percent cost overrun.

• The 2002 World Cup cost Japan $4.5 bn to build seven new stadiums and refurbish three; while the cost to South Korea to build ten new stadiums was $2 bn. Both nations now have little use for the huge facilities.

• The 2004 Athens Olympics cost about $9.3 bn, a cost overrun of 49 percent which virtually bankrupt the tiny nation.

• The 2008 Beijing Olympics cost about $43 bn, mostly to build 21 extravagant facilities that essentially have no current use.

• The 2010 World Cup required South Africa to build five new stadiums and upgrade five more; but combined with selling about a third less tickets than expected resulted in about a $5.4 bn loss.

• The Brazil 2014 World Cup had a cost overrun of 75 percent, or $2.7 bn, to build and refurbish 12 stadiums.

According to David Goldblatt’s book The Games: A Global History of the Olympics, the reason that the 1984 L.A. Olympics resulted in a profit is that the private sector organization committee led by businessman Peter Ueberroth that led the local organizing committee refused to build any new opulent facilities and negotiated a great TV contract.

ESPN FC reported last week that the U.S., Mexico and Canada would make a joint-bid that would “rise above politics” to host the 2026 World Cup in an expanded 48-game tournament. With the three nations sharing their most competitive facilities, the joint venture should be able to drastically reduce the hosting costs.

FIFA is expected to set the 2026 World Cup tournament hosting requirements at its Congress meeting in Bahrain on May 11 and make its final award determination in May 2020.

Meanwhile, FIFA announced a $369m loss for 2016, a second straight annual deficit, as it recovers from bribery scandals and acknowledged it had spent a huge chunk of its reserves in the past year.

It blamed the cost of investigating the scandals, bad investments and accounting changes. But there is worse to come for the organisation, which is rebuilding after its near collapse at the end of the tainted Sepp Blatter era.

It expects to lose $489m, before tax, in 2017 before a World Cup revenue bonanza in 2018 rescues the accounts.

FIFA’s losses for 2015-17 are set to hit $910m even though it revised its 2015 deficit down from $122m to $52m. Revenues fell to $502m in 2016 from $544m in 2015.

FIFA said its reserves had fallen from $1.4bn in 2015 to $1.04bn in 2016 and they are expected to crash to $605m this year.
FIFA is banking on making $1.1bn in profits in 2018 when the World Cup is held in Russia, which would give a surplus of about $100m for the organisation’s four-year accounting cycle.

The organisation said the bumper profits, mainly from television deals, would help bring its reserves back to $1.7bn in 2018.

Since a police raid on a FIFA congress hotel in May 2015 when seven football officials were arrested – including Cayman’s Jeffrey Webb – Blatter and his two top deputies, secretary general Jerome Valcke and finance officer Markus Kattner, have been suspended or fired.

The three awarded themselves huge bonuses and pay rises during their final years in power and all face criminal investigation.

New FIFA president Gianni Infantino took over promising reform but also higher payments to the 200-plus national federations that are now costing FIFA dearly.

Hailing his moves toward greater transparency, Infantino said: “The gravity of the crisis that assailed FIFA in recent years called for equally radical measures. Our response was to express our unshakeable commitment to drawing a line under the events that had so tarnished the image and reputation of the organisation.”

Infantino’s annual salary was stated in the accounts at $1.5m, less than half that of Blatter.

FIFA said the main cause of the 2016 loss was new accounting rules. Before they booked profits when contracts were signed, now they can only be counted when the contract, such as the World Cup, is completed.

Accounting experts said, however, this change would only account for about $35m of the 2016 loss. FIFA also spent $50m on investigating the lingering scandals.

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