Commercial preparations for Russia’s first Fifa World Cup have been beset by problems ever since the country won the right to host the tournament back in December 2010.
Operating amid a deeply fractured geopolitical landscape, not to mention the fallout from staggering revelations of a state-sponsored doping conspiracy whose perpetrators could be traced to the highest offices of the Kremlin, Fifa and the Russia 2018 local organising committee have had their work cut out to convince companies of the merits of an association with soccer’s showpiece international occasion.
Throughout the preparation process, concerns over Russia’s credibility as a World Cup host have been compounded by suspicions surrounding the integrity of Fifa itself. After the arrests of dozens of high-ranking soccer officials and marketing executives in May 2015, the global governing body – for so long a byword for corruption and financial wrongdoing – spiralled further into chaos. The scandal culminated in the disgrace and downfall of Fifa’s longstanding president Sepp Blatter, sparking lengthy legal proceedings in a US federal court – where several indicted names would later receive convictions – and simultaneous corruption investigations by governments elsewhere.
For Blatter’s replacement, his fellow Swiss Gianni Infantino, the scale of the task of restoring trust and credibility to one of the most tarnished offices and organisations in sport could not be overstated. Then, of course, there was the small matter of organising a World Cup in Russia, of all places.
Fifa’s former longstanding president Sepp Blatter ultimately lost his job as a result of the contentious bidding process for the 2018 World Cup
While a handful of Fifa’s major corporate benefactors declined to renew their contracts following Brazil 2014, one silver lining for the federation was that many of its global partners and World Cup sponsors had already committed to Russia 2018 and beyond. The likes of McDonald’s, Visa, Adidas, Gazprom, Budweiser, Hyundai-Kia and Coca-Cola had all been tied down to long-term deals well before the events of May 2015, helping to prop up the finances of an embattled organisation that has come to rely on World Cup commercial contracts for roughly 85 per cent of its overall income.
Still, with Fifa’s reputation becoming more toxic by the day and sponsors growing increasingly uneasy over the state of its battered brand, commercial activity ahead of Russia 2018 appeared to grind to a halt between late 2014 and early 2016. Corporate anxiety ensured that no partnership announcements were made until Wanda Group, the Beijing-based conglomerate that has been steadily stockpiling interests in sport, became Fifa’s first-ever Chinese top-tier partner, signing a US$150 million agreement that would run for 14 years and four World Cup cycles.
For Fifa’s commercial department, the arrival of Wanda delivered a welcome boost at a time when positive news was in short supply. It was the first major sponsorship deal of Infantino’s reign, and the first since the scandal of 2015 erupted. Tellingly, too, it opened the door to a flurry of fresh investment from China.
With Philippe Le Floc’h, a former Uefa marketing director, installed as chief commercial officer in the autumn of 2016, Fifa soon managed to sign up Hisense, Vivo and Mengniu Group to World Cup sponsorships, while Sunseeker – the luxury yacht maker now owned by Wanda – and Yadea, a Wuxi-based manufacturer of electric-powered two-wheelers, both struck smaller deals. That authorities in China were said to be eyeing a bid for the 2030 World Cup no doubt set the tone for those discussions.
With Fifa’s reputation becoming increasingly toxic, sponsors were uneasy over signing up to back its battered brand
Meanwhile, with preparations continuing ahead of Russia’s staging of the 2017 Confederations Cup, Fifa brought on board Qatar Airways, which became a global partner of the federation in May of last year. Like other companies in Fifa’s top sponsorship category, the airline would have extensive marketing and branding rights around Russia 2018, part of a deal that encompassed the 2022 edition in Qatar and which Fifa itself hailed as ‘one of the biggest sporting sponsorships in the world’.
If those deals helped fill a revenue void for Fifa – which posted a net loss of US$191.5 million for 2017 owing to increased legal fees and depleted commercial revenue in the wake of its latest scandal – there remained the urgent matter of finding companies willing to acquire rights in the federation’s newest sponsorship category. After Alfa Bank, a Russian financial institution, had made history by becoming the first to buy ‘regional supporter’ rights to Russia 2018 in July of 2016, interest in those packages proved lukewarm at best, with no deals forthcoming until Yadea and two Russian state-backed entities, Rostelecom and Russian Railways, finally agreed to support the event in early 2018.
Such apathy will have been deeply disappointing for Fifa. Upon tweaking its World Cup commercial model to open up the regional supporter slots in October 2013, the federation had originally stated that it would be seeking up to 20 sponsors across five geographic regions; instead, it would end up with four.
After Alfa Bank, a Russian financial institution, had made history by becoming the first to buy ‘regional supporter’ rights to Russia 2018 in July of 2016, interest in those packages proved lukewarm at best
Fifa sold the first rights package for Russia 2018 to Al Jazeera, the owners of what would later become BeIN Sport, back in January 2011. Since then, the usual collection of international broadcasters and intermediaries have pocketed rights to what is the planet’s most-watched sporting event, including CCTV in China, Fox and Telemundo in the United States, DirecTV in the Caribbean, and the European Broadcasting Union (EBU) across 37 territories.
Fifa is expected to generate around US$1.85 billion in total broadcast revenue for the 2018-2022 rights cycle, yet it is no secret that the federation’s negotiators struggled to sign networks within the host nation. It was not until December of last year that Channel One, RTR and Match TV finally agreed to split coverage of the tournament across Russia. Throughout what proved to be a drawn-out negotiating process, the state-run TV channels repeatedly baulked at Fifa’s US$120 million asking price, which stood at more than three times the amount Russian networks had paid to air the previous edition in 2014.
Elsewhere, Ukrainian public service broadcaster UA:PBC announced its plan to opt out of covering the tournament in February despite having bought the rights in 2013. The Ukrainian national team had since failed to qualify for the tournament but that did little to stop connections being drawn between the network’s decision and the dire state of Ukraine-Russia relations.
Those challenges aside, this summer’s tournament will mark the first time a World Cup has been produced in Ultra High Definition (UHD). Fifa – along with its partner Host Broadcast Services (HBS), a wholly owned subsidiary of Infront Sports & Media – have also confirmed that viewers will be able to watch matches in virtual reality, both as a live experience and with 360-degree video on demand.
Fifa is expected to generate around US$1.85 billion in total broadcast revenue for the 2018-2022 rights cycle, yet it is no secret that the federation’s negotiators struggled to sign networks within the host nation
If sponsorship and media rights sales have proven challenging, Fifa has had little trouble shifting match tickets for Russia 2018. Demand for tickets among fans has proved typically voracious, despite long travel distances between host cities and international concerns over event security, visa processes and incidences of racism in Russian soccer.
By the time the third and final tickets sales phase – dubbed the ‘last-minute’ phase – began in mid-April, nearly 1.7 million tickets had already been allocated to supporters around the globe. Most of the tickets had been snapped up by Russian fans, with the USA, Brazil, Colombia, Germany, Mexico, Argentina, Peru, China, Australia and England rounding out the top ten countries.
The Russia 2018 global ticketing programme is overseen by Fifa Ticketing AG, a subsidiary of the federation chaired by Victor Montagliani, the president of North and Central American confederation Concacaf. Meanwhile Zurich-based Match Hospitality has the exclusive rights to offer Fifa’s official hospitality packages on a worldwide basis until 2023 – a deal that guarantees the federation some US$300 million in revenue over its 12-year term.
In a first for the World Cup, Russian authorities are operating what is known as FanID, a security programme in which spectators are required to apply for an official identity document in order to gain visa-free entry into the country, attend matches, and access free travel between certain host cities.
If sponsorship and media rights sales have proven challenging, Fifa has had little trouble shifting match tickets for Russia 2018