Business Models Inc.

FIFA Business Model visualized

June 16, 2010 | Patrick van der Pijl

(For a full-resolution version of the Business Model Visualization, click here)

Almost every large and small company tries to make money with the World Cup in South Africa. A good business model is a starting point for each action.For South Africa itself the World Cup offers opportunities for e.g. investors. A major quality boost to the infrastructure is given. The World Cup of 2006 from the German economy to almost 3 billion. In addition, over 38,000 new jobs were created . It is estimated that due to the WC 1 billion U.S. dollars of capital will come in South Africa. The money was paid to include six new stadiums and the renovation of the airport so the capacity to process air traffic has increased significantly. Besides that, the construction of the Gautrain (a South African high-speed line), new roads and hotels costs a lot of money. Is there any profit for the local people? Only official FIFA sponsors may advertise terms like 2010 and World Cup and around the stadiums is a sales ban for local entrepreneurs. In addition, there are indications that the actual revenues will not be as good as expected.

A guaranteed commercial success

For FIFA World Cup means South Africa is a guaranteed commercial success. Countries are lining up to organize a European Championship or World Cup and FIFA to take on both sticks profits from ticket sales, sponsorship deals and TV rights. FIFA Secretary General Jerome Valcke said earlier of an income increase of 50 percent over the World Cup in 2006 and expected – despite disappointing ticket sales – a profit of approximately $ 1,000,000,000. Another indicator of ‘football as big business, the report “The World Cup & Economics 2010″, Goldman Sachs, where soccer countries around the world discussed and showing clearly that the Western world no longer has a monopoly on football revenue. Football is a global profit machine, so it seems. With Business Models Inc, a think tank where new innovations in business models are encouraged, we drew an initial design of the business model of FIFA. That would look like this (see above):

5 reasons why FIFA’s business model works best:

1. Virtually all revenue going to the World Cup FIFA with some kick back to the hosting country.

2. Sponsors pay big bucks for the brand and the World Cup / European Championship to be associated.

3. Raw materials (the players at the World Cup) are relatively cheap.

4. Countries are eager for the tournament to take on and invest.

5. FIFA in turn invests little money in the hosting country.

Orange-mania

In the Netherlands, the orange-mania this year is crazy. The Dutch Energy Company offers one year free flow if the Dutch will be world champions. Especially the big supermarkets and food brands bet on World Cup action. It has recently been a real struggle: Who has the best orange premium can be sure of a large increase in sales. Even supermarket chain Dirk van den Broek, traditionally not supporting any promotions is also joining the game. Albert Heijn joined relatively late with their ‘beesies ” special World Cup figures of which 31 million copies have been ordered (as against 15 million’ wuppies’ in 2006).

World cup is big business!

Dutch (top) football clubs will get financial support through FIFA. FIFA will pay each player who travels to the World Cup 1600 Euro per day, starting at fifteen days before the tournament. For Ajax – listed with a total of nine players – this will add up to at around 400,000 euros. Conclusion: World Cup is big business and many companies would be delighted to be part of that.