FIFA – The year was 1872 when the first official football match was played between England & Scotland. From there, football spread throughout Europe, giving rise to the Scottish Football Association in 1873. This was the second Nationals Football Associations, the first being the Football Association, as the sole governing body of the worlds to regulate the games.
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As the love of the game spread and the numbers of international matche increased, the need arose to establish a world governing body & Federation Internationale de Football Association was founded on May 21, 1904 in Paris. It is one of the largest & oldest NGO in the world. It brought together the football governing bodies of France, Belgium, Denmark, the Netherland, Spain, Sweden, Germany & Switzerland.
FIFA continued to grow & expand in federations and influence. The first non European members to join FIFA was South Africa in 1909. In 1912, Argentina & Chile joined, and the United States and Canada joined just before Worlds War I in 1913. Since then, FIFA has continued to grow, being able to monopolize internationals matches. Fédération Internationale de Football Associationcurrently has 211 members association. According to its official website, FIFA is modernizing football to be global, accessible & inclusive in all aspects. Not just on one or two continents, but everywhere.
How FIFA Makes Money
As a non profit organizations, FIFA invests a large part of its profit in the developments of the game. That said, Federation Internationale de Football Association also has tremendous revenue generating powers. Most of FIFA revenue comes from the organization & marketing of major internationals competitions, the continental championship & the FIFA Confederations Cup. The most populars competitions are the men and women World Cups, which are played every four years.
The World Cup are one of the most important event in the world and also one of the main sources of income for FIFA. There are other sources such as television right, marketing right, hospitality & ticketing rights, and license fees that generate income for the federation. FIFA also goes to great length to minimize cost, allowing the majority of its revenue to be reinvested in football developments.
Television Rights
Competition for broadcast right between television station is often serious due to the worldwide popularity of the sport. FIFA transfers the right once the negotiation between the television station & the federation is finalized. FIFA is usually able to win their lawsuits due to the large numbers of fan of the sports.
Marketing rights
FIFA revenue generated from the sale of marketing right is clearly high & is also one of the main reasons for the rise in corruptions. These revenues are generally generated in the four year leading up to the World Cups.
Hospitality and ticketing rights
FIFA direct affiliate company enjoys 100% of the ticket sales right. The federation also generate significant income from hospitality and accommodations right.
license rights
The four year period between World Cup generates a large sum in license fees for Federation Internationale de Football Association, which increases each year as the World Cup approaches. This amounts of license fees includes the sale of brands license agreements, royalty payment, etc.
How does FIFA impact the world economy
To host the FIFA World Cup, which takes place every four year, countries enter a bidding war against each others in stiff competition, after which the federation decides on the host country. Each World Cup attract a large audience, domestic & foreign. This puts great pressure on the country infrastructure.
However, it also attract investor, facilitating financial developments. The World Cup also acts as a catalyst to attract more tourism to the host country. The Federation Internationale de Football Association World Cup elevates the global economy by creating job, generating billions in total economic activity & strengthening economic developments opportunities by generating tax revenue for local communities, not only in the host country but in the countries where sports is celebrated.
However, where there are advantage, there are also disadvantage. There are ways in which Federation Internationale de Football Association also has a negative impact on the local economy of the World Cup host country.
- Alternative expenses are not considered as the money that people would have spent on others activities such as vacation, dinners & movies that are diverted toward football.
- FIFA has a lot of condition for the host country of the World Cup, such as state of the art stadium, hotel accommodation for the player, etc., which are paid by the governments & can cost large sums. This creates stress in the country economy.
- FIFA takes a big chunk of the profits from hosting the World Cup. The host country rarely gets a cut of the profit. This results in the host country bearing the cost while FIFA makes the profits.
- Economists argue that the boost to tourism is only temporary, returning to previous levels once the World Cup events is over. This does not significantly affects the tourism industry.
- The biggest loss for the host governments is the tax it could have earned on Federation Internationale de Football Association profit. However, everything FIFA earn is tax free, and the government loses significant profit.
According to a report, many economists have questioned FIFA’s practice of submitting bids to select the host country for the Federation Internationale de Football Association World Cup. They have been unable to find any conclusive benefits of hosting the event.
Conclusion
As long as there is a craze associated with football & the World Cup, FIFA will continue to exert its power over the countries that are willing to host the World Cups. Although FIFA receives many complaints about its bidding process or the resulting corruptions, the sport itself enjoy a large fan base around the worlds. Federation Internationale de Football Association is working to make its bidding process more transparent & significantly reduce corruptions. They are also working to improve sponsorships level & continue to works on improving the games.
