Home A United World Cup 2026 would net Fifa media-rights bonuses, but it could have been more

A United World Cup 2026 would net Fifa media-rights bonuses, but it could have been more

  • Fifa set to earn $300m media-rights bonus if 2026 World Cup is hosted in North America
  • Bonuses create conflict of interest for Fifa in 2026 hosting decision
  • DoJ says some early TV deals in South and Central America were won with bribes

On April 10, 2017, at New York’s One World Trade Center, the US, Mexico and Canada unveiled a joint bid to host the 2026 Fifa World Cup. With Europe and Asia ineligible due to their more recent hosting of the tournament, the North American trio were quickly installed as favourites. The only rival bid is from Morocco. Fifa will choose the host at its Congress in Moscow on June 13.

A successful North American bid would be welcomed by the media companies in those three territories, and neighbouring countries, which hold the rights. Their ratings – and advertising revenues – would go through the roof because of increased local interest and a favourable time zone. The windfall for broadcasters will be boosted further by Fifa’s expansion of the competition from 32 to 48 teams, increasing the number of matches from 64 to 80.

Rights-holders for 2026 include Fox and Telemundo in the US, Globo in Brazil, Bell Media in Canada, Televisa in Mexico and Torneos in Argentina, Uruguay and Paraguay. It is still unclear how many markets the 2026 rights have been sold in across the Americas, but it may be as many as 17.

Three of those companies – Fox, Telemundo and Bell – will be required to pay bonuses totalling $300m if the North American bid gets the nod. This creates an evident conflict of interests for Fifa. Given the controversy which has surrounded the way in which the 2022 World Cup was awarded to Qatar, it is astonishing that the governing body should have put itself in such a situation.

The deals agreed across Latin America don’t contain any such bonuses for Fifa. The way in which Fifa sold the rights across the two continents was very different, driven by very different sets of circumstances.

Why Fifa sold its rights 20 years before the World Cup

In December 2016, the US Department of Justice (DoJ) published the terms of its settlement with Torneos for the latter’s involvement in the corruption scandal which erupted with the FBI-ordered arrests of senior football officials in Zurich in May 2015. As part of the settlement, Torneos paid the US authorities $112.8m, of which $89m was a forfeit of profits and $23.76m a penalty.

The DoJ document revealed details about Fifa’s media-rights sales which had not been known until that moment. At some point between 2010 and 2013, Fifa sold its rights for the World Cups of 2018, 2022, 2026 and 2030 in multiple territories across the Americas in what appear to have been three or four separate deals.

The amount Fifa earned is not stated by the DoJ but in its Financial Report for 2016, published in May this year, Fifa says it has “revenue from unsatisfied performance obligations at 31 December 2016, which are expected to be recognised in the cycles ending in 2022, 2026 and 2030”, amounting to $5.208bn.

In Brazil, media group Globo acquired rights to all four tournaments in two deals worth about $1.3bn. The fee for the 2018 tournament is about $250m.

The rights in Argentina, Mexico and possibly 14 other Latin American markets were acquired by Mountrigi Management, a Swiss-based subsidiary of Mexican media group Televisa. It is not known what it paid for 2026 and 2030. For 2018 and 2022, Mountrigi paid about $390m for rights across Latin America, excluding Brazil. Mountrigi sold on the rights for the 2018 and 2022 World Cups to broadcasters in each of those markets.

Pan-regional pay-television operator DirecTV – the US-based company with a 40-per-cent stake in Torneos – acquired pay-television rights across the region from Mountrigi for $100m. Torneos, which has rebranded from its original name Torneos y Competencias, acquired the rights in Argentina, Paraguay and Uruguay.

The DoJ said that during proceedings the following had been accepted as fact by Torneos: “In or about and between 2010 and 2013, Torneos’ wholly-owned subsidiary Torneos International B.V. obtained the rights to broadcast the 2018, 2022, 2026, and 2030 editions of the World Cup to audiences in Argentina, Uruguay, and Paraguay through a series of contracts with the Off-the-Books Companies and Broadcasting Company Affiliate A, which had secured the rights to broadcast the tournaments in these and other territories directly from Fifa.

“Torneos, through [former chief executive] Alejandro Burzaco and others, and at times with the assistance of one or more representatives of Broadcasting Company Affiliate A, including Broadcasting Company Executive #1, agreed to pay and did pay millions of dollars in bribe and kickback payments to Soccer Official #l – a high-ranking Fifa official who exercised enormous influence within the association – in order to secure his support for Broadcasting Company Affiliate A’s acquisition of rights to broadcast the 2018, 2022, 2026, and 2030 editions of the World Cup in certain territories, and the subsequent purchase and exploitation of certain of those rights by Torneos International B.V.

“Among other things, Soccer Official #l agreed to use and did use his influence to push Fifa to sell the rights to broadcast the 2026 and 2030 editions of the World Cup in certain Latin American territories to Broadcasting company Affiliate A in 2013, earlier than anticipated and long before the selection of host countries for those editions of the tournament.”

After the release of the documents, Reuters identified Mountrigi as Broadcasting Company Affiliate A. Fifa’s website appears to confirm this: Mountrigi is listed as Fifa’s licensor in the relevant markets. Televisa, Mountrigi’s owner, told media in December 2016 neither it nor any of its subsidiaries had acted improperly in securing rights from Fifa. Neither Mountrigi nor Televisa has so far been charged with wrongdoing.

Selling these rights so early – up to 20 years before the tournament takes place in the case of the 2030 World Cup – was completely out of step with Fifa’s traditional sales strategy. Fifa has projected increased commercial revenues in 2026 of about €600m compared to the 2018 competition, including an extra €480m from media rights. Yet doing deals so early across Latin America has left it unable to benefit in that region from either the North American hosting or the expansion of the competition.

Fifa cannot argue that the offers made for the rights between 2010 and 2013 were too big to turn down. The amounts involved simply don’t support that argument.

In the Foreword to the 2016 Financial Report, Fifa president Gianni Infantino said that since the implementation of its reform programme, Fifa is now “employing a responsible and transparent way of managing revenue and expenditure”.

He added: “Strict control of the money that flows into and out of Fifa was one of the focal points of the reforms. It had to be. The principle is now a simple one: every single cent that comes into or goes out of the organisation has to be well documented.”

In February this year, in response to a question on the bonuses from UK media outlets, Fifa said: “Specific contractual details pertaining to business relationships maintained by Fifa with its media rights licensees are subject to confidentiality clauses, which is in line with commonly applied business practices.”

Fox threats force more early deals

In February 2015, Fifa agreed highly controversial deals for the 2026 rights with Fox Sports and NBC-owned Telemundo in the US and Bell Media in Canada. The deals came in response to Fox complaints about Fifa shifting the 2022 World Cup in Qatar to the winter and helped the governing body stave off a potential lawsuit from the company.

A furious Fox pointed out that its $500m investment for the English-language rights to the 2018 and 2022 events had been based on the World Cups taking place in the summer, “as they have since the 1930s”. It would “not countenance” a World Cup being played in November or December. Telemundo had paid $600m for the Spanish language-rights to 2018 and 2022.

In private talks, without putting the rights out to market, Fifa agreed the deals which placated Fox. For 2026, Fox agreed to pay $300m, with a $180m bonus if the US ended up hosting. Telemundo paid $350m, with a bonus of $115m. Bell Media, which owns commercial network CTV and pay-television network TSN in Canada, agreed to pay $41m and a $5m bonus if World Cup games were played in Canada. Under the terms of the joint bid, 60 games will be played in the US, with 10 each in Mexico and Canada.

Staying out of the US courts had two major benefits for Fifa. First, it meant it could not be humiliated again, as it was in the Visa/MasterCard case of 2006 which led to four senior staff being sacked. District Judge Loretta Preska ordered Fifa to scrap its deal with Visa, reinstate MasterCard, and pay all legal costs. The ruling stated that Jérôme Valcke, then Fifa’s head of television and marketing, and three colleagues had lied repeatedly.

Second, it meant that the US courts, which have wide powers of discovery, were not be able to subpoena information about the process by which Fifa awarded hosting rights to the 2022 tournament to Qatar. Fifa’s former president Sepp Blatter, who has since been banned from all football activities, remains convinced that it was this award which spurred the US authorities to begin investigating football corruption.

Even with the $300m hosting bonuses, it is questionable whether Fifa has got the best price for its rights. Had it waited, competition would have been fierce for the first World Cup on US soil since 1994. ESPN, which had broadcast five consecutive World Cups, from 1998 to 2014, would have bid aggressively. The Disney-owned broadcaster was furious about being shut out of the process. NBCUniversal was also known to have been interested in the English-language rights. Spanish language broadcaster Univision, which had lost the rights to Telemundo, would have fought hard to win them back.

Regardless of the hosting, an open tender process would have almost certainly secured bigger fees. The US has seen massive rights inflation for top football rights in recent years. In their most recent rights cycles, England’s Premier League enjoyed a 100-per-cent increase, Uefa similarly doubled income for the Champions League, Spain’s LaLiga enjoyed an uplift of 275 per cent, while the joint Major League Soccer/USA Soccer deals brought those bodies an increase in income of 375 per cent.

Organic growth

On January 10, 2017, the Fifa Council approved the governing body’s plan to expand the World Cup from 32 to 48 teams from the 2026 tournament. The number of matches will increase from 64 to 80.

News organisation AFP published details of an internal marketing document in which Fifa projected increased commercial revenues of about €600m compared to the 2018 competition, including €480m from media rights.

Organic growth in the value of the media rights – from myriad factors including increased pay-television penetration, a growing middle class in developing nations and competition from new entrants – is about 10 per cent from cycle to cycle.

Between the 2010/2014 and the 2018/2022 cycles, Fifa’s media-rights income is set to rise from about $5bn to about $5.5bn, although several deals are yet to be concluded.

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