NEWS: The Sunday Column

Paul Schmidt-Troschke's Sunday column on all things football and the World Cup. 

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Transcript

SPEAKER_00 0:29

Hello and welcome to this week's World Cup etc. Sunday column with me, Paul Schmutroschke. Some Chinese football fans might have gotten cold feet by now, since FIFA only now signed a deal for its broadcasting rights with China Media Group, the same company which already licensed the 2022 World Cup television rights. But there is much more to the story, not only the coincidental overlap in dates regarding US President Donald Trump's China visit, and one can only speculate why it took FIFA so long to sell Chinese TV rights for the biggest sports tournament ever. Incidentally, the tournament is less than a month out, and Indian football fans still wait for a national media company to enable them to watch the event. Both countries, of course, make up more than a third of the world's population, and even though football is not the dominating national sport, there are tens, if not hundreds of millions of fans in both countries following not only their national team, but national and international clubs as well. According to FIFA, only China is home to approximately 200 million football fans. But despite that number, which must be taken with a grain of salt, of course, the recently signed deal with China Media Group only amounted to 60 million US dollars instead of the 300 million US dollars initially demanded by FIFA. Just for the fun of it, here is a little calculation game. FIFA only must sell 1,800 tickets out of their most expensive category in the World Cup final, priced at over $30,000 apiece, to reach the income made from Chinese TV rights. I think that shows how both numbers are completely out of proportion. But there are several reasons for why China Media Group could negotiate the price to a fifth of what FIFA was asking for. First and foremost, because China did not qualify for the tournament, neither did India, by the way. The second reason is also straightforward, since the time difference of up to 15 hours to all the 16 different host cities is a blow to all Chinese footballers. Important to note is that the broadcast deal does not only include the TV rights for the upcoming FIFA Men's World Cup, but for the following tournament held in Morocco, Spain and Portugal in 2030 as well, and the FIFA Women's World Cups in 2027 and 2031 additionally. Albeit that the licensing prices for these events are not public yet. China Media Group certainly negotiated a bundle prize with discounts for multiple commitments made years in advance. One topic which heavily influences everything economical right now is of course the ongoing and under international law illegal war waged by Israel and the US on Iran, with the Strait of Hormuz being effectively closed for months now, taking a heavy toll on the world economy. And especially media companies are extremely sensitive to economic downturns since one of the first cost-cutting measures among all companies usually concern advertisement spending, which is the main revenue stream for the industry. Thus, broadcast deals are valued against the expected advertising income and profit, and the war is putting so much pressure on companies that they do exactly that, saving costs on ad spending. Lastly, the analysis gets much more interesting and speculative, I must admit. Since the technology company, Lenovo, for example, is one of the eight high-profile sponsors of FIFA, with two other Chinese firms financing the organization as well. Dependency on that revenue coming from Chinese firms might have been used as leverage in the contract negotiations. And FIFA's recent close proximity to the US government might have turned into a disadvantage as well, with the Trump administration's state visit to China being described as everything else but a success. President of the People's Republic of China, Xi Jinping, publicly and in the presence of Donald Trump described the United States as a declining superpower, a show of strength never seen and heard before between a US and a Chinese president. What in the past had been usual business deals are now turning into matters of global geopolitics, especially regarding the two biggest rising powers being India and China. The latest bid for Indian TV rights for the FIFA 2026 World Cup came from a Disney Reliance joint venture with an offer over just 20 million US dollars. I think that the reason for why FIFA did not yet close the deal is more than obvious. So that's it from us for today.

SPEAKER_04 5:09

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SPEAKER_03 5:27

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SPEAKER_00 5:34

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