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The World Cup means business…literally.

The Economics of Soccer

By Christopher Kyak

“Some people believe football is a matter of life and death. I’m very disappointed with that attitude. I can assure you it is much, much more important than that.” – Bill Shankly, famed British Football Manager.

I have been asked by The Unqualified Economist to write a couple of articles about the World Cup.  Instead of giving you the in depth coverage that you can find on a number of sites, I will give you a series of stories, facts, and some terminology to follow the bizarre endearing British announcers. And maybe even a drinking game, or two…or five.

Play on the pitch has become big business since the first World Cup in 1930. There are two types of the game played; the World or International Football, playing for ones home country, and Club, getting paid to play for a team in a league around the world, such as the English Premier League.

Players do not get paid for playing for their home country, but the country’s soccer federation receives money for making it to different stages of the World Cup. This year the combined payout is $420 million (US). The winning country taking home an estimated $30 million and runner-up getting $24 million. Each of the 32 teams that made it to the final tournament receives $1 million for training and travel expenses, besides what they raised themselves.

On top of that, a team exiting after the group portion gets $8 million. Also, this year marks the first time FIFA, the governing body of soccer for the world, is paying clubs for players to play in the World Cup; 26 million Euros to domestic clubs, (basically 1000 Euros per player per day), to compensate in case of injury. This is due to the amount spent to buy players in the sport which can be in excess of $100 million, like Real Madrid purchasing Cristiano Ronaldo’s big $$$ contract from Manchester United. (This is also on top of the money spent on salary for the player.)

All of this money is in addition to what the host country of South Africa hopes to make in revenue from all the visiting supporters, some of which could be there up to a month if their team makes it to the final game of the tournament.

I look forward to writing more on a sport that I love and hopefully I’ve provided you with some insight  into the sport, and if not…drinking games to come.


10 Responses

  1. So, of that 30 million dollars the winning team gets how much of it goes to who?

    • I believe it is up the winning countries Soccer Federation, some of the players will be compensated, unless they are deemed amateurs (college players basically) then the rest would probably go the federation it self for administrative costs but mainly to go into the fund to continue the growth of soccer (football) in that country.

      • Is there anyway in your opinion that this could be more competitive or is it already there for you?

  2. It seems like a dicey situation paying clubs for people playing. On the one hand if everything goes smoothly the pocket the cash. However, should their superstar be injured, it doesn’t seem the the money they are getting will make up for what would potentially be lost. In fact, the better the player, the worse off they are. (It would be a god deal if someone how a scrubby player made a team somehow).

    • That is just the minimum payment for a player, I suspect superstars will deem more than lesser players. Also if a team makes it far into the tournament the compensation could also come out of prize money. Although I see both sides of the argument in this.

  3. WOW
    Something to battle over

  4. Where does that $420 come from? What do players and fans think about the money change this year?

    • The money comes from television, internet and radio broadcasting rights and advertising for the most part. Remember this is broadcast around the world and every country has a different network covering it. According to this article in the NY Times $2.15 billion has been raised from broadcast rights alone. http://www.nytimes.com/2010/05/24/business/media/24rights.html?pagewanted=all

      As a fan, I am in favor of the money being it helps improve the associations and federations that send the teams from each country. But I’m not rooting for the USA to win so they get money, I’m rooting so we have bragging rights.

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