By Ian Tomlinson, programme leader for BA (Hons) Football Business & Finance at UCFB Etihad Campus

Ian has a broad range of experience in the education and training sector, from professional groups to schools and colleges. His extensive background of financial management has seen Ian work as a consultant, as well as write and develop bespoke programmes for various companies in finance and accounting. Ian’s published academic papers include looking into the financial heritage of cricket and its commercialisation, as well as the integration and differentiation of commercialisation in the church.


Football Finance and FIFA: a game of two halves, From Stickers to Sponsorships

It’s that time again where everyone starts to be overcome with patriotism and overwhelming optimism, academics start writing about and pundits start talking about the state of football and the possibilities of outcomes. However, I first become aware that the time was approaching due to the concentration and anticipation on the faces of students and staff alike as they opened their sticker packs and waited to see if they had managed to obtain the elusive “Golden” stickers in which to complete their football sticker albums.

FIFA endorsed Panini sticker albums seem to be the official start of the World Cup build up, the first album being produced for the 1970 Mexico World Cup, this year saw an increase of 60% on the cost of a packet of five stickers. This has been calculated to raise the price by nearly 50% compared to the Euro 2016 album to complete it.

Professor Paul Harper from Cardiff University has calculated that it would cost £774 to complete the album, in other words 4,832 stickers. He has used probabilities and the formula below to arrive at this staggering figure.

n (ln (n) + γ) (where γ = Euler’s constant = 0.557)

Calculating that 967 packets are needed to achieve the task of completion and when only 19 stickers are left to buy, Harper states “you would still be required to buy 483 packets of stickers, or half the total number of expected packets.”

Harper (2018) told the BBC: “Filling an album has become progressively more expensive over the years since then, not just because there are typically more teams competing now, but because Panini has become more creative about allocating spaces.”

The 1970 album only contained 288 stickers, in 1986 it had increased to 427 stickers and this year the album contains 682 stickers, an increase of 137% since its launch.

However, if the ‘transfer market’ is used, Professor Harper has calculated that two people collecting and swapping can reduce the number of packets by 30%, five players by 57% and 10 players by 68%. Even then the cost of completing the album would on average still cost them £247 to complete.

The cheapest possible way of completing the album would be if there were no duplicates, it would take 137 packets and cost £109.60.

Taking the Panini album and the calculation that each sticker could cost upwards of £1.15 and each team comprising of 18 members the cost to complete a squad would be just short of £21.

As with all financial ‘investments’ there are potential returns to be had. A 1970 Mexico World Cup album complete and in good condition is on the market for €3000 and the most valuable was a 1970 Mexico World Cup international album signed by Pelé that was sold for a reported €12,038. It did however also contain a picture of Pelé just after he had scored. In 2011 the first Women’s World Cup (WC) sticker album was launched, following with a WC 2015 edition and a Women’s European Cup album, which is currently worth over €150.

It is not just stickers that are showing incredible increases in costs and potential returns.

Manfred (2015) reporting in the Business Insider commented on the 2014 financial report stating that FIFA made $2.6 billion over the four-year cycle, generating $4.8b in revenue compared to its $2.2b in expenses.

The 2018 winning team will be awarded $38m (£29m) in prize money after a record level boost from FIFA with total prize money now of $400m (£305m) from $358m (£273m), representing a 12% increase from the 2014 competition in Brazil where Germany received $35m (£26.7m).

FIFA president Gianni Infantino said the prize money increase represented “a positive sign in terms of the healthy financial situation of FIFA”, despite the organisation’s $369m loss in 2016.

FIFA made $2.4b in TV rights fees, $1.6b in sponsorship and $527m in ticket sales in 2014 (fig 1) and FIFA will be hoping that the 2018 World Cup will be even bigger, with even larger returns.

Fig 1 FIFA revenue 2014

 

This year has certainly had its share of controversy with both England and Australia having contemplated boycotting and as summarised by Kelly (2018):

“Major advertising partners have backed out, ticket sales aren’t great, the politics remain fraught, but FIFA still expects to make out like bandits.”

Following the FIFA bribery and corruption scandal which has led to the World Cup being hosted by Russia in 2018 and Qatar in 2022, western companies Johnson & Johnson, Sony and BP’s Castrol have amongst others removed their support, only to be replaced by Chinese based companies creating an unprecedented presence in Russia 2018.

The term bandits used by Harper is emotively used to highlight that despite the problems and against the natural laws of business, FIFA appear to be able to increase their revenue being generated through the platform of the World Cup, supported by Kelly as he continued his statement with:

“Its revenues during the four-year cycle connected to this event are projected to reach US$6-billion.”

An increase of 30% from the $4.8b reported in 2014.

In an environment of “Risk v Return” it will be interesting to see if hosting the World Cup in Russia and the absence of western support will harm the overall finances or the revenues and profits will just continue to grow in the unrivalled world of football. It certainly appears that football finance especially when it comes to FIFA is a game of two sides or even two halves!


Read more UCFB World Cup 2018 insights here.