Russian TV Says ‘Nyet’ to FIFA’s World Cup Cash DemandsBy and
Networks refusing to pay record $120 million for soccer rights
Host nation contract usually signed years before event begins
Russia is investing 639 billion rubles ($11 billion) to prepare to host the 2018 World Cup, but if local TV networks can’t reach a deal for rights, the country’s residents might never see a game.
Just 14 months ahead of the tournament, soccer’s governing body FIFA is still looking for a broadcaster to carry the games in the host country. State-run TV channels have refused to meet FIFA’s target price of $120 million, more than three times what the country’s TV companies paid to air the previous World Cup. The standoff also means the local TV rights for the 2017 Confederation Cup, an eight-team tune-up event that starts in three months, haven’t been sold.
“If FIFA is waiting for someone from the government to come out with a bag of money and pay them, it might be a while before there’s a deal,” Petr Makarenko, the head of Moscow-based sports marketing agency Telesport, which provided market analysis for the Russian channels for the FIFA negotiations. “It’s not unusual for prices to go up for each tournament, but not by 200 percent.”
FIFA has already rejected a joint bid from Channel 1, VGTRK and Match TV, the trio of state-controlled channels that broadcast last year’s European soccer championship, Channel 1’s producer Alexander Fayfman told Tass news service in February.
Talks are ongoing, FIFA said in a statement.
A local TV deal is usually in place years before the tournament. FIFA needs a network that can promote the games in Russia and provide some of the infrastructure needed to beam the event to billions of fans around the world. The contract with Brazilian broadcaster Globo was signed eight years before the country hosted the 2014 event.
The broadcasters’ ad revenue for the Confederation Cup is equivalent to about 20 percent of the sales for the World Cup, Makarenko said. "With each day, the channels are losing potential advertising revenue," he said.
Both sides have strong incentives to come to agreement. FIFA wants to show off a lively and enthusiastic host population in its global broadcasts. Russia, which won the right to host under a cloud of suspicion, wants to promote its ability to put on world-class events and spur national pride. President Vladimir Putin faces election three months before the tournament begins.
Sponsors, local and global, have also been slow to embrace the Russia World Cup. FIFA has signed just one new top-level partner, China’s Wanda Group, since the previous tournament, and Moscow’s Alfa-Bank is the only regional World Cup sponsor, the lowest category available.
A year ahead of the 2014 competition, almost all the agreements had been signed, with most confirmed more than three years before the event kicked off.
These deals are an early test for FIFA’s new president Gianni Infantino, who campaigned on a pledge of $5 million to each of soccer’s 211 national federations. Failure to deliver may harm his re-election hopes in 2019. FIFA has projected $5.5 billion from the Russia event, $700 million more than it did in Brazil.
A purge of almost all of FIFA’s management by Infantino -- including the former heads of broadcasting and sponsorship -- might also explain the sales challenges. Swede Niclas Ericson had been leading the sales talks with Russia until leaving at the end of 2016.
Tina Kandelaki, general producer at Match TV, part of the triumvirate that’s expressed interest in buying World Cup rights, lamented the delays, saying television companies wouldn’t be able to justify FIFA’s price tag.
“Pricing needs to be directly linked to what level of revenue and how much profit will be made from the broadcast,” she said.