By Omar Sofradzija
At soccer’s World Cup, on the pitch 11 players per side from 32 nations battle for the ball and a trophy. But outside the lines, marketers and broadcasters fight for the eyeballs and attention spans of billions of people from around the globe.
No matter which nation wins the quadrennial tournament now underway in Russia – and to be hosted by the United States, Canada and Mexico in 2026 – the champions in dollars and cents will be the sponsors that expose their products to a universal audience and the broadcasters who relay games to the world.
“The big moneymaker will be FIFA (soccer’s world governing body) from broadcasting rights and the corporate sponsorships. Other industries that benefit are construction, and travel and tourism industries,” said Sherri Henry, the associate director of undergraduate academic services at the Broad College and program director for the college’s “Business of the Olympics” education abroad program.
That program, offered during Olympic years, looks at that so-called “mega-event” overseen by the International Olympic Committee (IOC) and its economic impact.
“Mega-events in general – whether it’s FIFA World Cup events or Olympic events; whether it’s the World’s Fair – anything that’s a mega-event is going to have some similar issues,” Henry said. “Sponsorships are huge. FIFA, like the IOC, benefits most from sponsorships, ticket sales, and broadcasting. Broadcasting rights are huge in terms of where the money is made by the organizations.”
“It’s all about marketing and legacy,” Henry said. “For these mega-events, marketing is really what it is all about for sponsors. Legacy is where potential future revenue is captured by the host city and the venues used for the events”
That’s because such events are not just something to see; they have become places to be seen.
“Another mega-event – the Super Bowl – is a good example. Everybody will say whether they watch it for the game or they watch it for the halftime show or they watch it for the commercials. Recently, you’ll hear more and more people watch it for the commercials. That’s why it costs so much to sponsor those,” Henry said. “Same thing for any of those mega-events. It is broadcasting rights and it is sponsorships where the organization makes the most money.”
For the Olympics business program, which took place earlier this year during the Winter Olympics, “we would look at the Opening Ceremonies and think about the host city. We look at business models for any business connected to the Olympics, whether it be a world sponsor or whether it be a local business,” Henry said.
“We look at the business model prior to the Olympics, during the Olympics, and after the Olympics. What is the return on the investment? What’s the motivation for a business to actually be connected to the Olympics?” Henry said. “If you’re a sponsor, what benefits are gained by being associated with the Olympic brand and symbols, and what return can you secure?”
Those lessons learned apply widely to events like the World Cup.
Scandals weigh on World Cup sponsorships
Compared with the recent Olympic Games, the World Cup struggled this year to fill its sponsorship lineup, in the wake of a bribery scandal at FIFA. Some high-profile sponsors like Sony have pulled out.
“For FIFA right now, they’re having a difficult time with the buy-in for the sponsorships,” Henry said. “There are scandals with all of these events, whether we’re talking about a World’s Fair or we’re talking about FIFA or we’re talking about the Olympic Games … except the impact FIFA felt was deeper because sponsors don’t want to be associated.”
While an association with FIFA pushed away some traditional corporate heavyweights, those absences opened up room for lesser-known ventures wanting to be associated with FIFA’s World Cup. A number of Chinese companies have jumped into the void, including Hisense, a China-based HDTV manufacturer.
“There’s a good return for Olympic sponsors. Using the Olympic brand and symbols has proven to be a very good way to get your brand known globally. Hisense is a good example” from the World Cup, Henry said. “Alibaba (a Chinese e-commerce company and Olympics sponsor) is a good example of having an international company with a Chinese CEO really making great strides forward because of how they are managing their brand.”
Hosts get attention, but pay a price
The marketing boost can extend to the host communities as well, as hosts are put in a global spotlight. Henry’s class looked at past Olympics host Vancouver, Canada, and the nearby ski resort town of Whistler.
“They still enjoy a lot of increased travel and tourism because they hosted the 2010 Winter Olympic Games. Vancouver and Whistler have already economically come out of it pretty well even though they hosted in 2010 when the economy wasn’t doing well at all,” Henry said. “Immediately it was rough on Vancouver and on Whistler but now they’ve bounced back in a pretty cool way and they are enjoying that investment.”
But that exposure comes at a price: the cost of building up stadiums, mass transit systems, airports, hotels, and the infrastructure to host visitors from around the world.
“Most communities don’t realize the long-term impact of hosting these mega events – if you don’t already have the infrastructure in place, if you don’t have venues already in place – the impact that’s going to have on your city, in particular with your health, education, and welfare budgets for your city for years and years to come, for decades to come,” Henry said. “There is an impact on the host city.”
That impact can linger. It took Montreal, Canada, 30 years to pay off the debt from the 1976 Summer Olympics. “Still, you have people who just love the Olympics and are happy that their cities were in the global spotlight for a while,” Henry said.
Local businesses see uneven results
For local entrepreneurs, such events can have mixed outcomes. In Sydney, Australia, which hosted the 2000 Summer Olympics, the city sold public market spaces to pop-up businesses in high-traffic areas. For those vendors, “they made money. They invested some money, it was a short period of time, they had quite a few people who ventured to their establishment, and then it was all done, everything was cleaned up and they did well.”
“But the restaurants and existing local businesses that were already established who had typically received their produce at certain times, they had to reroute everything because the roads were closed” for the pop-ups. Deliveries were restricted to just a couple of hours per day, Henry said. “They certainly made money in that they had a lot of customers, but it was a compromise” with the disruptions.
There is also a loss of regular customers, who take “flight from the city. People think there is going to be this influx of visitors – which there is – and they don’t want to be part of that. They don’t want to have to deal with the traffic; they don’t want to have to deal with it. So they leave.” In turn, that is creating a moneymaking opportunity for everyday residents via gig economy stalwarts like the Airbnb lodging-sharing service.
“Now, with Airbnb and so forth, there’s local residents think they can make some money on this, so the flight will likely be more in cities now because they think, ‘I’m not going to be here; my business is going to be disrupted a little,’ so they’ll do the Airbnb thing and make money renting their house as opposed to having to be there,” Henry said. “There’s opportunities for the independent person now to make a little bit of money and to not have to deal with the event itself.”
Despite the headaches for locals, the allure of mega-events is hard to pass up. That’s what Henry found in surveying businesspeople in Sydney.
“It was funny, because even though when you talked to business owners who might have lost some money, if you say, ‘do you think Sydney should host the Olympics again?’ they will say, ‘yes.’ There is this huge pride in hosting the Games. They were just very proud that their city was in the spotlight,” Henry said. “Most of the business owners I talked to in Sydney said they would welcome hosting the Olympic Games in Sydney again, no matter what the issues were.”