From unlikely triumphs to major upsets, the 2018 Russia World Cup has been a sensational one for football fans so far.

The quarterfinals are set to deliver many more blockbusters in Russia, beginning with the clash between Uruguay and France clash on Friday night (July 6).

Regardless of which team lifts the trophy in Moscow on July 15, there are two parties that are already guaranteed victory off the pitch: Fifa and the players’ agents.

For Fifa, the World Cup is the cash cow that funds their four-year revenue cycle. For the host country however, while it may get to keep tourism dollars and much of the on-the-ground spend, they have to fund all the infrastructure required, including stadium refurbishments, airport terminals, transport and security. Russia has already spent US$11 billion S$(15 billion) on the World Cup, and they estimate that 220,000 jobs have been created, and over 500,000 foreign tourists will visit Russia’s World Cup cities.

The optimistic estimates suggest that GDP could be boosted to between US$26 and US$30.8 billion over the 10 years from 2013 through to 2023. This is thanks to growing tourism and large-scale spending on construction, as well as later knock-on effects from those government investments.  However, similar estimates made before the Brazil tournament never came true.

The 2014 World Cup cost an estimated US$15 billion, a significant portion of which was public money. Many Brazilian politicians remarked then that this amount could have paid the social welfare cost of the country for two years. Brazil spent US$3.6 billion building and renovating 12 stadiums for the tournament alone – and already some of those stadiums are turning into white elephants.

ARE TOURISM DOLLARS WORTH IT?

Whether tourism numbers increase often depends on the attractiveness of the host as a destination. For countries like Brazil and Russia, which don’t usually receive high visitor numbers, they can enjoy the greater exposure and traffic the tournament brings.

Brazil enjoyed its highest-ever number of tourists for a calendar year in 2014, and in particular, a 96 per cent year-on-year increase compared to the same period in 2013, with US$1.58 billion of foreign spending.

However, the tourism boost around the tournament rarely trickles down to the average citizen – business owners will get more revenues, but it doesn’t often translate into higher wages for workers. In fact, some of the increased revenues even go to foreign corporations such as the global hotel chains benefiting from the accommodation boom during the tournament. While citizens may benefit from better infrastructure and transport, most won’t see extra rubles in their pockets.

Fifa takes all of the money from ticket sales – usually around US$500 million – and also the TV rights, which should reach close to US$3 billion for 2018. For 2014, Fifa banked in a total of US$4.83 billion from the World Cup, of which US$2.43 billion came from TV rights, with marketing dollars making up another US$1.58 billion.

Singapore, along with the United States, China and a handful of other markets are some of the most lucrative for Fifa. While the US$20 million or more that the Singaporean broadcasters are estimated to have paid for this World Cup seems high, spare a thought for Fox Sports in the US which paid USS425 million for the 2018 and 2022 World Cups before its national team failed to qualify for Russia.

SPONSORS PAY THEIR PART

Fifa also enjoys lucrative contracts with a stable of big name sponsors including Visa, McDonald’s, Coca-Cola, Adidas, Wanda Group, Qatar Airways, Budweiser and more, with Coca-Cola’s contract worth an estimated US$500 million over 16 years.

In Brazil, the sponsorships were worth US$1.6 billion. However, Fifa lost several big name corporate partners after recent corruption scandals and has struggled to attract local sponsors for this edition.

Both the 2010 and 2014 World Cups accounted for 85 per cent of Fifa's revenue for the four-year cycles between 2007 and 2010, and 2011 and 2014. During those periods, the organisation made profits of US$631 million and US$338 million respectively, with the bulk coming from sponsorships.

The 2014 World Cup generated US$4.8 billion in revenue for Fifa compared to US$2.2 billion in expenses over the four-year cycle, leaving a surplus of US$2.6 billion.

Fifa does at least contribute some costs: they gave US$453 million to Brazil’s Organising Committee between 2011 and 2014, and made a legacy payment of US$100 million to the hosts. However, Fifa also went to great lengths to issue press statements claiming to have covered the entire operational costs of the World Cup itself, totaling US$2 billion.

After the 2010 South Africa World Cup, there was a lot of controversy when the terms of hosting were publicised. It was clear that Fifa was not paying any taxes in the host nation – in that case, an impoverished African country – and they were seen as exploiting the host. While several bidding countries in recent years claim otherwise, Fifa has gone out of its way to try to control the messaging on this topic, continually stating that they do not make any demands for a general tax exemption for sponsors and suppliers, or for any commercial activities in the host country.

TRANSFER WINDOW WINDFALL

The agents of the superstar footballers who will emerge at the World Cup are also preparing for a windfall.

While the players benefit from a high value transfer through signing fees, increased wages and merchandising, it is the agents who really stand to profit. Over the years, big names like Ronaldo, Mesut Ozil, Angel di Maria and Gianluca Zambrotta have moved quickly after the World Cup.

After the last World Cup, big names like James Rodriguez (Colombia), Toni Kroos (Germany), and Luis Suarez (Uruguay) saw their transfer fees and wage packages rocket thanks to their performances in Brazil.

The players benefit, the receiving clubs benefit and the agents – well, they clean up. Jorge Mendes is one of the most famous super agents – he owns the agency Gestifute International – who masterminded the Rodriguez transfer to Real Madrid. It was actually the player’s second huge transfer in the space of a year. His other clients include Cristiano Ronaldo, and he is estimated to collect a 10 per cent commission on any transfer deal he negotiates – so you can imagine why a good World Cup for his stars can make or break his year.

Other major agents include Jon Barnett – whose clients include Glyfi Sigurdsson, Adam Lallana, and Adrien Silva – and Volker Struth, who manages Kroos and 2014 World Cup winning goal scorer Mario Gotze.

Another agent, Mino Raiola, was reported to have made US$55 million on the transfer of Paul Pogba, and he also represents Romelu Lukaku, Blaise Matuidi and Henrikh Mkhitaryan.

All these agents will be hoping that their clients’ performances in Russia will help attract suitors for their stars.

A recent UEFA report estimated that agents have made £2.5 billion (S$4.5 million) on transfers in Europe alone since 2013, and tournaments like the World Cup and the European Championship are effective shop windows for both big names and emerging stars.

BIG TOURNAMENTS, BIG BUSINESS

Ultimately, the World Cup is big business now with corporate hospitality at all the games, and where big deals get done. The money from sponsorships, TV rights and merchandising keeps the Fifa vault topped up for another four-year cycle, while the business owners and agents look to get their cut.

While the action is happening on the pitch, the tills keep ringing over at the stadium, advertising dollars flow in around the world, and player values escalate each time the net bulges.

ABOUT THE AUTHOR:

Mr James Walton is the Sports Business Group Leader of Deloitte Southeast Asia.