User:A Brown/FIFA WORLD CUP: the Holy Grail of Australian Football

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The FIFA World Cup bid process strongly reflects an existent relationship between sport, business and politics. The international mega-event has become a huge commodity, with bidding nations committing million of dollars worth of government funds to simply be in with a chance of hosting the event. It then becomes a matter of diplomacy as bidding nations try to secure votes from the 24 members of FIFA's Executive Committee. This report will demonstrate the articulation of business and politics with the FIFA World Cup hosting rights bid process, using Australia's bid for the 2022 World Cup as the case study. The Australian bid was led by multi-billionaire and Football Federation of Australia chairman Frank Lowy. Australia was commended for producing a technically sound bid, experience hosting major sporting events, and strong government support, yet was unable to secure the hosting rights. The Australian bid was hampered by clashes between other football codes, limited relationships within FIFA, a lack of media support due to a lack of public understanding regarding the politics in FIFA and the inability to guarantee FIFA worthwhile commercial revenue. The current bidding policy means that next World Cup Australia will be eligible to bid for will be in 2034.

Alternative Resource[edit]

If you prefer to listen to information and/or follow along with visual aids, view my report in presentation form on Youtube.

FIFA World Cup: The Holy Grail of Australian Football

Introduction[edit]

Joseph Blatter - FIFA President, Source: Agencia Brasil, 2007

December 2nd 2010. A date which while easily over-looked by most of the nation, brought devastating news to the Australian football community. In a crushing defeat at FIFA headquarters in Zurich, the Australian bid for the 2022 FIFA World Cup was outvoted by winning nation Qatar. The Australian bid process took years of planning, millions of tax-payer dollars and the strategic inclusion of many powerful yet delicate political & business dealings.

The FIFA World Cup has evolved into a valuable commodity. Desires to host the event are driven by the opportunity it gives hosts to be a part of world football history, show case their countries best attributes, the economic boost it presumably brings and for the football legacy that is said to remain. The World Cup hosting process mixes international sport with diplomacy. The high value which has been placed on the World Cup means that getting the most technically sound bid is no longer sufficient, as more focus is turned to the actual 'bidding' involved.

This report will demonstrate the articulation of business and politics with the FIFA World Cup hosting rights bid process, using Australia's unsuccessful bid as a case study.

FIFA World Cup Bid Process[edit]

History[edit]

The FIFA World Cup host selection process has required much tinkering and fine tuning since its beginning. Initially the host was chosen by FIFA’s congress, meaning that for years the World Cup did not leave Europe or the Americas – football’s stronghold areas.[1]

Following the decision to award Japan/South Korea the 2002 FIFA World Cup, a rotational system was voted in, outlining that hosting rights would rotate through each confederation. A weakness in this system was highlighted when Brazil was the sole bidder for the 2014 FIFA World Cup. In order to maintain true competition across several bids, a unanimous decision was made to adjust the system once again. The current system stipulates that any nation may bid so long as that they do not belong to the same confederation as the hosts from the two preceding World Cups. [2]

The host is decided via an Exhaustive ballot system as voted by the FIFA Executive Committee. The FIFA Executive Committee (FIFA ExCo) is comprised of 24 members, including: 1 president, 8 vice-presidents and 15 members appointed by the confederations and associations. [1] [3]

Controversy[edit]

Following corruption accusations from British press, FIFA investigated two members of its executive committee over seeking cash in exchange for votes to host the 2018 FIFA World Cup. The two ExCo members were French FIFA vice-president Reynald Temarii, and a Nigerian member on the committee, Amos Adamu who was also the president of the West Africa Football Union. Both members were suspended from taking part in any football-related activity (administrative, sports or any other), meaning that there was only 22 members voting in the 2018/2022 World Cups hosting rights. [4]

The Requirement[edit]

Timeline of the World Cup Bidding Process for 2018/2022 [5]
02 February 2009 Deadline to submit Expression of Interest form to FIFA
16 February 2009 FIFA dispatches Bid Registration form to interested member associations
16 March 2009 Deadline to submit Bid Registration form to FIFA
April 2009 Distribution by FIFA of the Bidding Agreement and Hosting Agreement
11 December 2009 Deadline to submit signed Bidding Agreement to FIFA
14 May 2010 Submission of Bid Book to FIFA and signed Hosting Agreement
26-29 July 2010 Inspection committee visits Australia
December 2010 Appointment of the host nation for the 2018 & 2022 World Cup

On January 15 2009, FIFA sent out a World Cup bidding process invitationto the eligible member associations for the 2018 and 2022 World Cups.[5] This invitation emphasised the minimum stadia infrastructure requirement of the host country. The minimum requirement is 12 stadia with a minimum capacity of 40, 000 for group matches and 80, 000 for the opening match and final. In addition, the invitation stressed the essential need for the highest level of TV broadcasting, information and telecommunications technology, transport and accommodation. [5]

Following a nation's confirmed expression of interest, FIFA sent out a "Hosting Agreement", which explained the steps and requirements that are expected from a strong bid. [1]

The Australian Bid[edit]

Bid Team[edit]

Bid Leader & FFA Chairman - Frank Lowy Image by author: Eva Rinaldi , 2011

The Australian bid for the FIFA 2022 World Cup was led by Football Federation Australia (FFA) chairman Frank Lowy. Lowy is a multi-billionaire who's former passion to build his Westfield Group empire is said to be only rivalled by his passion for building football in Australia (Smithies, T. 2010). Lowy's time in charge has seen the launch of the A-League and Australia's induction into the Asian Football Federation. [6] Lowy's right hand man throughout the process was FFA CEO Ben Buckley. As a requirement of FIFA, a Bid Committee was also established as an internal business unit of the FFA.[7] This committee comprised of 15 members (Treharne, T. 2010).

The Evaluation[edit]

The Australian Bid Evaluation Report for the most part was highly commended. The inspection group made note of Australia's experience hosting major sport events, strong government support, and an easily attainable infrastructure development program. [7]

Australia was labeled a low risk and technically sound potential host, offering the opportunity to bring the tournament to Australia and Oceania for the first time. [7]

So how did the Australian bid which was highly commended for its fulfillment of FIFA requirements only manage to scrape 1 vote? In order to answer this question, it's important to take a closer look at the details and diplomacy behind the Australian bid.

Government Support and Funding[edit]

One of the major strengths of the Australian bid was the support from all levels of government. At the Council of Australian Governments meeting in March 2008, all state governments agreed to work cooperatively with the FFA should they bid to host the World Cup. [8] Federal Government further cemented it's support in December 2008 by allocating $45.6 million to fund the World Cup bid. Lowy noted that "[the money] will be used for professional services that we will hire in Australia and overseas to make sure that we have the best possible bid" to win over the delegates of the FIFA ExCo. [9] Furthermore, support by national and local football authorities, local city governments, stadium authorities and the federal government was confirmed to FIFA via the handing over of signed Host City Agreements, Stadium Agreements and Government Guarantees. [7]

Despite supporting the bid, some reluctance still existed at a state government level. This was due to the fact that should the Australian bid have been successful, a further $2.8 billion would have been required for stadia infrastructure alone. This figure would have been at the cost of the state governments, however the exact details as to which states would meet the cost and to what extent would not be decided until the host decision was made. [10]

Persuasive Strategies[edit]

As made evident by the suspensions of Temarii, Adamu and more recently, the ban of four more FIFA officials for similar breaches, the decision is rarely just the result of the best bid. [4] Former FFA chairman John O'Neill made the comment that "With FIFA, your bid first has to be compliant, then it becomes a combination of strategic importance for the world game combined with the complexities of the politics" (Smithies, T. 2010). In the words of an anonymous senior sporting administrator "Are deals being done? No doubt. But it's so important you understand the rules of engagement. Where do you draw the line?" (Smithies, T. 2010)


, n.d]] It is very important to note that the decision comes down to votes from 22 individuals and is not the collective decision of FIFA as such. Therefore it is important to build relationships with each ExCo member and keep in mind that each member has their own personal agenda to consider.

Lowy himself is one of the greatest assets of the bid. With his mind-blowing wealth, comes unrivaled access to power, whether it is within Australia's federal government or at the top of footballs elite and exclusive circles. Lowy poured much of his own wealth into building relationships with ExCo members and their respective countries. Only some of which examples include private dinners for the ExCo at his Point Piper mansion (Smithies, T. 2010), and entertaining them on his luxury yacht in the Mediterranean and Caribbean. [11]

Whilst Lowy had strengthened his relationships, Australia needed more ties within the FIFA ranks. The FFA used some of their government funding to contract two controversial European 'fixers' in order to get more feet in more doors. Peter Hargitay, former right-hand man to FIFA President Sepp Blatter and Fedor Radmann, who is very close to football royalty Franz Beckenbauer. Both men have jaded pasts, Hargitay working closely for US tax fugitive Marc Rich whilst Radmann was forced to quit the 2006 FIFA World Cup organising committee for awarding contracts to a company he was involved with (Smithies, T 2010). The decision to appoint the two men was heavily criticised by Australian media. Rod Allen, head of the Australian bid's media relations expressed frustrations over this, stating that "[it was] disappointing to see such ignorance from the mainstream media about football and business politics...they are not use to understanding how FIFA operates." (Treharne, T. 2010). Ben Buckley defended the FFA's decision, claiming that they were up against "competitors from longstanding football world powers and countries with huge assets and economies. In this context FFA has to marshall the greatest resources possible to have a genuine chance of success. This requires the input and expertise of international consultants with specific experience in the area of bidding for major football events."[12]

Other strategies to sway votes include when Australia played in a youth tournament in Cyprus and covered some of the costs for Trinidad to join, home of 'at the time' FIFA vice-president, Jack Warner. The expense was justified as aiding the sports global development. In the year leading up to the bid, Australia played friendly matches against Poland, Switzerland (home of Joseph Blatter and the FIFA HQ), Paraguay and Egypt, who both have members on the ExCo (Smithies, T. 2010).

Unfortunately for the FFA, FIFA ExCo members weren't the only party which needed to be persuaded and convinced. Closer to home, there was reluctance from the other football codes within Australia.

Inter-Code Reluctance[edit]

Etihad Stadium (Docklands) - Off limits to FFA Author: Forthevline

The FIFA World Cup takes place over the months of June and July. The National Rugby League (NRL), Australian Football League (AFL) and Super Rugby seasons all overlap with this June/July time frame. This presents problems on multiple levels.

Firstly, given the FIFA requirement of 12 stadia and the timing of the World Cup, this would cause disruption to the AFL, NRL and Super Rugby seasons. Super Rugby would have been less affected due to it's ability to easily relocate games to New Zealand and South Africa.[13] AFL CEO Andrew Demetriou dealt the biggest blow by denying the FFA use of Etihad Stadium (also known as Docklands Stadium). The FFA had planned on utilising Etihad as 1 of the 12 stadia. [14] Throughout the ordeal, Lowy maintained the point that the World Cup would benefit all local sports. Lowy described it as being like the Olympics but 10 times bigger, explaining that the venues that were to be built/refurbished would continue to service football and other sports for a long time after the event was over. [11]

The failure to resolve the tension and inability of each party to come to an agreement led to the government creating a task force whose role was to negotiate an arrangement with the AFL and NRL. A Memorandum of understanding was entered into by the federal government, FFA, AFL, NRL and ARU and contains the guarantee that Australia would lodge a FIFA-compliant bid (availability of 12 stadia), and that each football codes competition would be played as usual, backed by the promise that should any disruption occur they would be financially compensated. [15]

The evaluation report of Australia's bid highlighted a concern about the impact that the AFL and NRL season going ahead may have on the availability of resources and public attention given to the FIFA World Cup. [7]

Profitability & Economic Impact[edit]

A major flaw highlighted in Australia's bid evaluation report was the time zone of Australia and the inconvenience this would have on European and north and south American viewers. This means there is a high risk of reduced TV income and as a result, decreased commercial revenue from Europe and the Americas, where FIFA generates most of it's broadcasting revenue. [7] Furthermore, a McKinsey report commissioned by FIFA found Australia's bid to be the least profitable. The study assessed 5 key revenue areas: ticketing, TV and media rights, sponsorship, hospitality and merchandising. Australia scored just 68%, while the USA scored a perfect 100% - interesting to note however that the eventual winner Qatar, only scored 70%. Lowy tried to shrug off the figures, focusing rather on the potential growth of the Asian market by 2022. [16] Unfortunately this will be a continuing stumbling block for Australia, at least until there is more growth in the Asian market as FIFA generates the majority of it's revenue from these 5 key areas. [17]

In a cost-benefit analysis of Australia's bid commissioned by the Department of Resources, Energy and Tourism, it was found that in the best case scenario, Australia would benefit at a value of $12 per person. Contrasting this is the more likely estimate that it would cost Australia at a value of $66 per person - incurring a huge loss.[18] Analysis of the economic impact it would have found figures to range from $5.3billion [19] to $36billion [20]

Due to the increased spending on bids and evidence of debt following hosting major sporting events, economists suggest that FIFA should rather than look to the most lavish bid, vote for the nations which will support the most fundamental change. [21] Qatar's win to host may indeed be an example of this reasoning, however it is mentioned that the cost of their bid is up at the $65b USD mark and will be more used as a marketing tool rather than development. [22]

Conclusion[edit]

The process requires bidding nations to embark on a huge political campaign, to try and win the powerful votes of the FIFA Executive Committee. The commodification of the FIFA World Cup is apparent as bidding nations spend millions of dollars trying to win votes and make huge monetary commitments to FIFA, underwritten by government guarantees. The strong desire to host the mega-event has resulted in nations taking on many persuasion strategies, often entering political grey areas, which some would suggest evokes corruption.

Despite having a technically sound bid, experience hosting major sporting events, and strong government support, Australia was unable to secure the hosting rights for the 2022 World Cup. The Australian bid was hampered by clashes between other football codes, limited relationships within FIFA, a lack of public understanding regarding the politics in FIFA and the inability to guarantee FIFA worthwhile commercial revenue. The current bidding policy means that next World Cup Australia will be eligible to bid for will be in 2034. Perhaps by then the Asian market will be stronger, and the FFA will have managed to strengthen relationships with both FIFA and it's members, as well as the other football codes within Australia.

The FIFA World Cup bid process is a clear example of the articulation between sport, business and politics.


References[edit]

  1. 1.0 1.1 1.2 "FIFA World Cup". Wikimedia Foundation, Inc. 
  2. "Rotation Ends in 2018". FIFA. 
  3. "FIFA Executive Committee". Wikimedia Foundation, Inc. 
  4. 4.0 4.1 "Ethics Committee suspends six officials for between one and four years". FIFA. 
  5. 5.0 5.1 5.2 "2018/2022 World Cup Bid Invitation". FIFA. 
  6. "Frank Lowy". Wikimedia Foundation, Inc. 
  7. 7.0 7.1 7.2 7.3 7.4 7.5 "2022 FIFA World Cup Bid Evaluation Report: Australia". FIFA. 
  8. "Council of Australian Governments’ Meeting 26 March 2008". Council of Australian Governments'. 
  9. "Government to spend $45-million on 2018 World Cup bid". Australian Broadcasting Corporation. 
  10. "Secret $2.8b plan to rival Olympics". Sydney Morning Herald. 
  11. 11.0 11.1 "Bidding Wars". Australian Financial Review. 
  12. "Ben Buckley's Letter in full". The Age. 
  13. "Cup bid 'takeover' conveniently buried in Christmas crush". The Age. 
  14. "AFL block to World Cup bid". The Age. 
  15. "Rival codes finally shake hands on deal to play through World Cup". Sydney Morning Herald. 
  16. "Australia's World Cup bid 'least profitable'". Australian Broadcasting Corporation. 
  17. "FIFA World Cup 2010: Money Makes the World Cup Go Round". Bleacher Report. 
  18. "Commercial-in-Confidence Cost benefit analysis of the 2022 FIFA World Cup". Access Economics Pty Limited. 
  19. "Waiting for football’s biggest date". Australian Financial Review. 
  20. "PwC backs Australia 2022 World Cup bid". Sport Business. 
  21. "The Curse of Good Hospitality: Why Developing Countries Shouldn't Host International Sporting Events". The SAIS Review of international affairs. 
  22. "Qatar Places $65 Billion Bet on Remaking Economy in World Cup Preparation". Bloomberg. 

Smithies, T. (2010, November). The Big Sell: How Frank Lowy has taken on soccer's elite in his attempt to bring the FIFA World Cup to Australia in 2022. Alpha, 64, 48-50.

Treharne, T. (2010, November). Catch 2022. FourFourTwo, 61, 52-61.