The Christmas World Cup – it’s all about the money

Anyone with a modicum of interest in football has long accepted that the award of the World Cup to Qatar in 2022 was first and foremost a grave error for the tournament and football as a whole, even when holding one’s nose to stifle the strong smell of corruption. The “FIFA Taskforce” set up to look at the scheduling has probably made a sensisble decision to recommend November and December given their remit, but has that recommendation increased the possibility that the World Cup could be taken away from the gulf state?

Much as the English, and most of the Europeans, have lost any respect for Sepp Blatter and FIFA as an organisation, I suspect that most of the current Executive Committee are regretting the decision to award the World Cup to a tiny state with summer temperatures in excess of 40 degrees Celsius, and a fair proportion may even like to reverse it, but at the end of the day, it all comes down to one thing. Money.

I’m no legal expert and I’ve not seen the contracts that FIFA and Qatar signed in the wake of the vote, but there will obviously be penalty clauses on both sides should the agreement be cancelled and that will be dependent on the reason given for that cancellation.

A key element in this movement of the timeframe is that the Qataris have always maintained that they could stage a summer World Cup. They have to do that as it was part of the bid document – any change from the Qatari side would give FIFA grounds to cancel the agreement. It was FIFA that pushed for the change of schedule, and the Qataris have been happy to accede. Having accepted a summer tournament as feasible by awarding the tournament to Qatar in the first place, FIFA cannot now use that as a reason for cancellation.

The obvious place to start would be the allegations of corruption, although this would most likely tarnish sitting ExCo members, or it could look at the gulf state’s questionable human rights record. But one thing that it is important to understand about this agreement that is different from probably every other hosting agreement that FIFA, and probably the IOC, has signed before, is that from a financial point of view, the host country are the financial heavyweights.

The Qatari bid for the World Cup was purely for the prestige. Building nine new world class stadia in a country the size of East Anglia was always going to be a white elephant of massive proportions, but its one that Qatar can afford. It also means that it can afford to fight any legal battle that it could face should FIFA try and take away the World Cup. FIFA is rich, but it can’t compete with the Qataris.

FIFA’s wealth is largely based on two sources of income, World Cup broadcasting rights and World Cup sponsorship. Based on the four years leading up to the 2010 World Cup (2014 figures are not yet published), FIFA’s own Financial Accounts show that from a total of (US)$3.9bn of revenue, $3.4bn was directly attributable to the World Cup in South Africa of which $2.4bn came from broadcasting rights. I would expect the figures for 2014 to be higher, perhaps significantly so.

But since the fall out of the corruption scandal, five of FIFA’s key sponsors have decided not to renew their agreements going forward. Sony and Emirates pulled out last year, while Castrol, Continental and Johnson & Johnson all publicised their decisions to dump FIFA last month. Unsurprisingly, Qatar Airways are rumoured to be happy to replace Emirates as the official airline.

Broadcasters, however, have remained largely unmoved so far, not only because the key rights for 2018 and 2022 were agreed before the corruption scandal broke last summer, but also because they know that, whenever and wherever the World Cup is held, it is a prime TV event. Much as fans may whinge and whine about the corruption at FIFA, and fewer fans are likely to travel to Qatar than normal, they will always watch the World Cup on TV.

It is interesting to note, however, that the rights in the US and Canada were unexpectedly extended last week to include the 2026 tournament without any opportunity for other broadcasters to bid.

This is unusual given that FIFA would normally seek to maximise revenue by means of a bidding process, so there are inevitable questions as to why this decision was taken. The most likely seems to be that it is a deal done to compensate those broadcasters, and Fox in particular, for the impact of moving the World Cup from the prime summer period, but there have been no announcements regarding rights for the rest of the world.

The run up to Christmas is already an advertising-rich period for the broadcasters, so the World Cup will have less impact on revenue than it would in the quieter summer period. The value of rights would, therefore, most likely be lower for a winter tournament so you can expect further compensation discussions with broadcasters if this switch is confirmed – and that’s without considering the potential impact to mainstream broadcasters’ Christmas scheduling.

So FIFA may be facing a decline in income from both sponsors and broadcasters due to the Qatar debacle, but whether that would be enough of an enticement to try to take on the Qataris in court is debateable. It would probably take something more cataclysmic for FIFA to consider that battle, and the only organisations capable of producing that effect are Europe’s major clubs.

It is, therefore, dangerous for FIFA to have seemingly ignored the feelings of the ECA (European Clubs Association) with regard to the rescheduling of the World Cup. ECA chairman, Karl-Heinz Rummenigge, made a statement yesterday to the effect that he would expect clubs to be compensated for the effects of the schedule change, something that was quickly rebuffed by FIFA Secretary General, Jerome Valcke, today. One would further question UEFA’s support of the FIFA Task Force’s recommendation given that it is the ECA members that are responsible for the vast majority of their own Champions League income.

With a two week warm up period, the potential break in European seasons for a World Cup is at least six weeks, meaning that, for the Premier League, the season could run from late July to early June with the FA Cup final being in the middle of June.

If the final is, as proposed, just two days before Christmas, one would expect that players in the latter stages of the tournament would be unlikely to be ready to resume league football until early January at the earliest, which would leave the Christmas schedule in doubt, thereby potentially further extending the season.

While that might be a good excuse for introducing the much-discussed winter break, the main objections to that hold true, that the Christmas run of games is the most lucrative portion of the season for broadcasters. Let’s face it, if it was about the good of the players, a winter break would have been introduced long ago.

To return to the original question as to whether this makes the 2022 World Cup venue closer to a change than before, probably not, but that may depend on the small print in the bidding agreements.  In the wake of the corruption allegations, the most likely challenge to a Qatari World Cup was most likely to have come from a legal challenge from one of the other bids on the basis of it being a corrupt bidding process.  There may be faint ray of hope could be revelations in the final “legally-appropriate” release of the Garcia Report, but even that chance seems remote.

However, all the bids were made on the basis of a tournament being held in June/July of 2022. A formal change to that schedule could give rise to a legal challenge, but given that FIFA is, in effect, a private club that changes rules as it sees fit, it may not be legally possible, but I’m sure that the Australian and American bid teams will be consulting their lawyers.

In the absence of legal recourse from the other bidding nations, the odds are that some agreement will be reached on the rescheduling with the European leagues, but FIFA need to remember that the clubs hold the power in football. The $2.4bn figure for worldwide broadcasting rights for FIFA over four years is huge, but the recent domestic Premier League deal is more than three times as much over a shorter period, for just one league to be broadcast in two countries (UK and Ireland).

Without the clubs, there is no World Cup. As unlikely as it may seem at the moment, it is not beyond the realms of possibility for a group of clubs, whether that be ECA members, three or four of the top European leagues or some other amalgam of the real power in football, to break away from FIFA and all its affiliated organisation and go it alone.

That would not only leave FIFA without a credible World Cup, it would mean an end to meaningful international football.

As a fan of the international game, I sincerely hope that this will not happen, but I also hope that something seismic happens to bring about the much-needed shake up at FIFA. This current disagreement may be a small tremor, but with the ECA and other bidding nations looking at their options, could it be a precursor of the earthquake to come?

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