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The World Cup Is Not Running Over


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THE WORLD CUP IS NOT RUNNING OVER

If you live on this planet, you can't escape the hype and hoopla surrounding the World Cup. And the fever that afflicts the rest of the world during soccer's championship season is beginning to burn across America. In Chicago on June 15, some 225,000 lined Michigan Avenue for a pageantry-filled parade two days before the elaborate opening-game ceremonies at Soldier Field. The next day, the U.S.-Switzerland game on abc drew such a surprisingly strong audience that network executive heads snapped to attention.

Yet all but drowned out by the roar of the crowd is the rising chant of businesses crying foul. Take Hyatt Regency Dallas Managing Director James W. Howard. With only 1,000 rooms booked of the 10,000 ordered held by World Cup usa, Howard grumbles: "They did not live up to their fair share of the deal."

Overpriced tickets and uninspiring matchups--plus the apathy of Joe Sixpack still talking about the drama of the Stanley Cup, the slam dunk of the nba finals, and the threat of a baseball strike--make it all but certain that the economic impact of the games on host cities will fall short of the $4 billion projected by Cup organizers.

"World Cup, in the long run, is going to be good for business," calculates Richard DeCusati, the president of Boston-based Citywide Reservation Services Inc. "But it definitely has been blown out of proportion."

TURBULENT. It was a hard sell from the outset. To force-feed the game to an American public that has stubbornly refused to accept it, organizers reserved two-thirds of the 3.2 million tickets for U.S. sales--limiting the number of big-spending tourists coming to the States. Moreover, says New York-based sports marketing consultant Brandon Steiner: "They didn't get out and tie in with the fans who get emotional over this stuff. So you have upper-level managers taking other managers to watch a sport no one understands, in June, when everyone is going on vacation."

And while U.S. organizers get generally high marks for the staging of the 52-game tournament, their promotional efforts were partially undone by an unwieldy organizational structure and a sometimes politically turbulent international governing body. Intent on duplicating Peter Ueberroth's feat of turning a profit with the 1984 Olympic Games in Los Angeles, the U.S. organizing committee often resorted to hardball tactics--imposing 20% surcharges on hotel rooms and tickets purchased by travel agents, for instance--that eventually made some packages too expensive to market. "A lot of [other] tour operators are very unhappy with them," says Paul Lam, owner of Kings Way Travel in San Jose, Calif., who sold over 10,000 trips.

U.S. organizers made turning a profit a key part of their 1987 bid to the Federation Internationale de Football Assn., the sport's governing body. The Americans pledged to generate at least $20 million in profits to promote soccer in the U.S. and to create a new fifa-sanctioned proleague after the games. The problem was that fifa controlled most of the key assets, especially the $275 million the Cup generated from U.S. and foreign-tv rights. In addition, fifa got the $220 million paid by such official sponsors as McDonald's, Coca-Cola, and MasterCard.

"It became a situation where we had to go out and create a business in a hurry," says World Cup organizing committee Chairman Alan I. Rothenberg. U.S. organizers got all the revenues from ticket sales, and after a difficult negotiation with fifa, they won the rights to share in the merchandise royalties. fifa also allowed them to sign up a lesser class of sponsors, such as Sprint Corp. and Sun Microsystems Inc., identified as "marketing partners."

ELUSIVE CATCH. But it didn't take long for soccer politics and the conflict inherent in the organizational structure of World Cup '94 to come into play. Soccer great Pele, who was a roving goodwill ambassador for FIFA and had been counted on to promote the U.S. tournament, had a falling out with FIFA chairman and fellow Brazilian Joao Havelange and was banned from official Cup events. The tiff was settled earlier this year, but Pele, who appeared worldwide as MasterCard International Inc.'s official spokesman, has made few U.S. appearances. The delicate balance between FIFA-awarded sponsors and those granted by the U.S. committee also broke down: Both Sprint and MasterCard claimed they secured the rights to use the World Cup logo on their plastic cards. A U.S. court ruled earlier this year in favor of MasterCard.

Because U.S. organizers never had control over all the Cup sponsors, FIFA-arranged sponsors such as Coca-Cola Co. and MasterCard saved most of their ad budgets for overseas promotions. Rothenberg was unable to get McDonald's Corp., another FIFA sponsor, to join a Cup-organized soccer caravan through the country. The organizing committee was also miffed, say insiders, when the hamburger chain chose to promote the movie The Flintstones until just days before the opening game. McDonald's, which denies any tiff with organizers, says it is spending millions more than its $15 million sponsorship fee to promote the games worldwide. But, says Robert G. Solomon, president of Dakin Inc. in Woodland Hills, Calif., "what was missing all along was the kind of marketing you could have gotten from a giant like McDonald's." Dakin, which won the sole license to make plush-toy World Cup souvenirs, now expects to take in far less than he did from the 1984 L.A. Olympics.

Rothenberg might have gotten a boost from marketing master Walt Disney Co., but the entertainment behemoth bowed out of the opening and closing ceremonies because of disagreements over the show. And selling the games was made even more difficult when Capital Cities/ABC Inc., which has the U.S. free-tv rights, decided against any telecasts in prime time.

Still, organizers maintain that all but 6 of the 52 games are sellouts. The numbers, however, are deceiving. Tickets for some games, such as Italy vs. Ireland, were white-hot. But many others, scooped up early, came flooding back on the market, with ticket brokers unable to peddle them. A Cup spokesman concedes that more than 100,000 tickets came back to the Cup organizers themselves. Some are being turned back by corporate sponsors, which were given as many as 10,000 apiece, because they couldn't find takers. "We had to guesstimate demand six months ago," says Jim Latham, World Cup project manager at General Motors Corp., which will not say how many tickets it turned back.

In May, Cup organizers dropped their 100,000 tickets on the market, cutting prices for many still in circulation. Tickets for games such as the Belgium-Morocco match in Orlando dipped $15 below their face value, while others hovered near their printed price. "The whole deal was like trying to catch a minnow in a bucket with your bare hands," says James P. Graham, co-chair of Dallas' host committee.

LOST RICHES. What's really slipping away seems to be soccer loot. Orlando officials now expect to get about half the $104 million Cup organizers had predicted for them, while Dallas is looking at barely one quarter of the $266 million projected. And that's before subtraction of such expenses as added security and, in the case of Dallas, $150,000 to house the homeless in apartments. With the lost revenues has been a loss of patience among some officials. "They nickled and dimed us to death," says Dallas city councilman Chris Luna. "I'm thoroughly convinced that we will end up suing them when all this is over," says Luna.

The larger question, however, is what will be the state of U.S. soccer when the games are over. Rothenberg's dream of a pro soccer league is moving ahead haltingly--seven cities have gathered pledges for 5,000 season tickets, less than the 10,000 league organizers initially requested but enough to win initial franchises. League play, with 12 teams and a contract from ESPN to televise some of the games, is scheduled to begin in April, 1995.

Things could brighten in a hurry, say organizers, if a superstar on the Pele level emerges to rivet America's attention. Better yet, a strong showing by the long-shot American team could galvanize the country, much as the U.S. hockey team did in the 1980 Winter Olympics. Sure, it could happen. Just don't bet your nfl season tickets.

SHIN KICKS

SPONSOR SNAGS

-- MasterCard sues Sprint and organizing committee, saying it--not Sprint--has the rights to use the Cup logo on its plastic card. Court decides in favor of MasterCard.

-- Organizers consider banning beer at stadiums to help avert violence but relent when Anheuser-Busch objects.

PROMOTIONAL PROBLEMS

-- Pele, the legendary soccer star, clashes with soccer's top official and makes few U.S. appearances.

-- Major sponsors such as Coke and McDonald's spend most of their money overseas; Disney and organizers butt heads.

-- Bureaucratic snags delay shipping of banners for cities and approval of billboards.

TICKET TROUBLE

-- Red tape delays the shipping of thousands of high-priced ticket packages for weeks.

-- Thousands of tickets, sold to soccer federations overseas and to U.S.-based sponsors, are returned for lack of interest and put back on the market.

DATA: BUSINESS WEEKRonald Grover in Los Angeles, with Carl Desens in New York and bureau reports


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