By Dr Abdel K Halabi
While there has been a range of controversies in the lead-up and at the start of the Qatar 2022 World Cup, the competition’s movement into the knockout stages and finals has brought the focus back onto the beautiful game itself.
Soccer, or football (let’s not argue), is the most popular game in the world primarily because it is played globally and is a low-cost sport for many. The game also has perhaps the most passionate supporters who can paralyse entire cities and countries during a single game.
So popular is the game, the Qatar World Cup is expected to have a worldwide television audience of 5 billion people – up significantly from four years ago in Russia which had between 3.5-4 billion viewers. With the world’s population reaching 8 billion on November 15 this year, more than half of the population will watch some of the action from Qatar.
The Fédération Internationale de Football Association, or FIFA, is the game’s international governing body and oversees international competitions, including the 2022 World Cup. According to its website, the organisation “exists to govern football and to develop the game around the world”.
In its 2021 annual report, FIFA said “the tournament in Qatar will be the major event of 2022” and that the tournament will naturally feature the best football talent from around the world. It said the unique event would give fans the opportunity to discover the culture of Qatar.
Not surprisingly, the World Cup is set to be a huge financial success for FIFA. Yearly comparisons of FIFA’s financial performance are somewhat meaningless because of the significant impact of the World Cup which happens once every four years.
Even before the important broadcasting, marketing and licencing rights from the actual staging of the World Cup, FIFA is set to exceed its projected revenue target of about $US6.4 billion for the 2019-2022 reporting cycle. FIFA had already contracted 95 per cent of its total budgeted revenue as at 31 December 2021.
By comparison, the 2018 World Cup in Russia led to FIFA recording a net profit of $US1.8 billion that year ($2.65 billion) – 65 per cent higher than budget. The financial strength of FIFA is further shown in its 21 per cent increase in total assets to $US5.5 billion by the end of 2021 from 2020 figures.
FIFA’s spend on the World Cup is also significant. The 2022 World Cup will award a record $US440 million in prize money to the countries competing, up from $US400 million for the 2018 tournament. FIFA also covers the preparation costs of teams (in 2018 this was $US48 million) while money is also provided to the clubs of the participating players (in 2018 this totalled $US209 million).
Football Australia’s bonus
By qualifying for the World Cup, Football Australia was guaranteed a group stage appearance fee of $14 million and about $3 million to cover travel and accommodation for the tournament.
By virtue of reaching the last 16 and unfortunately losing to Argentina, the prize money grew to $19 million. With the increase revenue however come additional costs in the form of player bonuses, staff wages and other logistical costs. For reaching the last 16, each player on the Australian squad pocketed $316,000.
Australia’s significant World Cup achievement will also financially benefit the teams in the A-League competition, which had seven players in the squad. The 2022 annual report from Football Australia shows the organisation made a profit of $ 4.6 million, down from $11.8 million in 2021.
In 2022, Football Australia also borrowed $6 million from FIFA which is a non-interest-bearing loan for “relief from the impacts of the COVID-19 pandemic”. The repayments on the loan have been agreed to be made in equal annual instalments over a 10-year period starting from 2023.
The Socceroos’ success at the World Cup will no doubt assist in paying off this FIFA debt, and had Australia upset highly rated Argentina, the financial consequences would have been far bigger and better for the beautiful game here.
Dr Abdel K Halabi is an Associate Professor in Accounting. He is a Fellow of the Chartered Accountants of Australia and New Zealand (CAANZ) and a Certified Practising Accountant with CPA Australia. He is co-editor of Sporting Traditions the journal of the Australian Society for Sports History.