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World Cup winning
June/July 2010

The World Cup so far:

Who’s winning and losing?

Which products, services and brands are so far the World Cup winners — and which are the losers?

With the blowing of vuvuzelas and waving of our flag we turned the FIFA World Cup into OUR World Cup. Sure, we’re grateful that FIFA helped with the preparations — even if they stuffed up the invitations — and for providing the entertainment (teams and matches). But in the end, it is our party.

And did we not carry this message forward with yellow shirts, SA flags and a united, purposeful, soccer supporting groundswell of we love our country, our team and our World Cup! The SA people and the unifying power of the World Cup — preceded by the hosting of two important rugby matches in Soweto — are therefore clear winners as legacies of the World Cup.

It is a World Cup hosted by an African nation, in African tradition — not by self-proclaimed Africans with foreign accents. Sepp Blatter can ask the Michaelangelo Hotel to provide as many African theme bathrooms as he’d like, but he will never be an African. And therefore FIFA got so many things wrong.

They never realised that we are an independent-minded crowd, embracing the right to speak out and act out enshrined in our Constitution. We don’t like bullies and we’re not scared of them. We seek causes to rebel against and toyi-toying is our biggest mass participation activity (how about someone inventing a marketable product for it?).

We’re a cynical lot not easily fooled by nice-sounding slogans and one-time photo-opportunities, punting the philanthropy of the world’s richest sporting body, reportedly selling the marketing and television rights for our event for $3bn, 30% higher than in 2006 in Germany, which makes this FIFA’s biggest money-spinning event ever.

We’d like to see how much of the $120m in the FIFA Goal programme fund to distribute to poorer associations for playing fields, training centres and other infrastructure will go towards their 20 Centres for 2010 campaign. It was announced with great fanfare at the Preliminary Draw in December 2007 that “by the end of the first FIFA World Cup on African soil, the campaign aims to raise $10m to finance the construction of the 20 Football for Hope centres across Africa — see FIFA’s website www.fifa.com.

At the start of the World Cup, only one — the Khayelitsha Football for Hope Centre — had been opened (during the Final Draw in December last year) on a pitch prepared and provided by the City of Cape Town at a cost of more than R900 000. It is not known how much FIFA contributed.

By the end of the World Cup there will be two centres. During the last week of the World Cup a Football for Hope Festival 2010 will be held in Alexandra, with teams of boys and girls aged 15-18 from 32 countries competing in a tournament to showcase and promote best practice in the field of Social Development through Football, according to FIFA, who set aside $4-5m to construct a stadium, artificial turf and media centre, as well as host the tournament. After the tournament the pitch and buildings will become the Alexandra Football for Hope Centre.

During the past six years the disillusionment with FIFA have grown as the revelations about the bribery, influence-peddling and other dicey dealings began surfacing in international newspaper articles, internet blogs, books (notably Foul! The secret world of Fifa: Bribes, vote rigging and ticket scandals, by FIFA’s bête noir Andrew Jennings) and finally, in court cases.

First, the US court case where Judge Loretta A Preska said that FIFA’s dealings with Mastercard and Visa constituted the opposite of fair play when the football body controversially dropped Mastercard in favour of Visa after 16 years in a sponsorship deal worth $180m. FIFA paid the US fine, but president Sepp Blatter announced that FIFA parted company with its director of marketing and TV, Jérôme Valcke, and three others officials in the division”. A few months later Valcke re-emerged on SA soil as FIFA general secretary, and during the following few months grew in stature. Jennings, who has been banned from FIFA press conferences, but never sued by the football body because, according to him, evidence will have to be presented in a court case, obtained documents that suggests that Valcke might have some information that Blatter does not want to be made public. (see www.transparencyinsport.org).

The next court case was in 2008 in Zug, Switzerland, where both FIFA and the bankrupt ISL Sports Marketing had their head offices. Horst Dassler, ambitious son of adidas founder Adi Dassler, founded the International Sports Culture and Leisure (ISL) marketing company in 1983 and thereby set in motion the billion dollar/euro adidas sport sponsorship deals with the IOC, FIFA and other sports bodies.

For more than twenty years ISL became FIFA’s exclusive marketing arm. According to journalist Jens Wernich (see Further Reading on p20) Mr Dassler has founded a so called sports political department which was not only responsible for selling adidas shoes — its responsibility was to manage elections in international bodies; to manage and decide Olympic and other big bidding processes as well.

According to Andrew Jennings (in Player and Referee, see Further Reading), the brown envelopes first appeared at the FIFA congress in 1974 where it ensured the election of new president Joao Havelange. The cash was provided by Horst Dassler of the adidas sportswear company, who was pioneering buying and selling sports marketing rights. Dassler and Havelange installed a corruption bonanza unparalleled in world sport.

During the 2008 fraud case about the missing $75m ISL owed to FIFA (an investigation FIFA tried to stop) allegations were made about $100m in bribes paid to top FIFA officials. Dassler’s former right hand man and FIFA bagman Jean-Marie Weber and two other former ISL executives were fined. The three judges ruled that FIFA knew more than they told investigators, that their behaviour was not always in good faith. They were ordered to pay costs amounting to 117 000 Swiss Francs.

According to journalists in the know, this court case is only the first in several episodes of judicial investigations that will reveal further bribery (and worse) relating to lucrative FIFA contracts, involving its top officials.

Which could, in a way, explain why Europeans were not over keen to believe FIFA when they assured them its safe to go to SA and there is no Plan B. Coupled with the fact that MATCH — with its partner Infront Sport, headed by Sepp Blatter’s nephew Philippe Blatter, operating out of the ISL offices — hugely inflated accommodation, ticket and travel prices, putting the World Cup package they tried to sell well beyond the reach of ordinary citizens.

As we all know, after MATCH returned the 450 000 rooms, many B&B’s, hotels and private home owners managed to attract visitors with reasonable prices advertised on the internet. But, others remained empty.

Affect on trade

It will only be after the party is over and the bills added up that we will know for sure how many visitors came and how much was spent.

More worrying, we’ll know what the World Cup did to the budgets of people who are going to have to buy sporting goods for their kids and themselves once the hangover of the World Cup lifts. What did it do to the retailers stocking goods from sugar to shoes that nobody bought. The owners of restaurants where no patrons came.

Will they be able to afford a new pair of running shoes, a cricket bat, hockey stick or rugby boot? Will they buy new sleeping bags for the family when they go camping?

Or will the benefits far outweigh these costs: will the wealth generated by workers getting tips at the restaurants close to match venues or where teams are staying; taxi drivers using every opportunity to ferry visitors; street vendors selling flags, mirror socks etc. and, most importantly, new jobs created by manufacturers, importers and retailers involved in supplying World Cup goods, put enough money back into the kitty to sustain the spending?

At the time of writing it is too early to judge the confident predictions of Grant-Thornton (the company who did market research on behalf of FIFA) that about 373 000 foreigners would spend about R4.9bn during the event. It is also too early to know if they were right to predict that the event would contribute R93bn to the economy.

We can, however, predict a few winners.

Winners

Masincedane Sport, who gave us the vuvuzela, as well as the other FIFA Official licensees supplying World Cup branded vuvuzelas, will feel as if they had won the Lotto. As anybody could see (and hear) this became an essential fan accessory, enthusiastically blown as much by tone deaf visitors as fans. Sainsbury quickly sold out their first order of 40 000 and predicted that they would sell 75 000 England branded vuvuzelas by mid-July.

Flag manufacturers are probably contemplating early retirement in a luxurious resort… once they find time to think about anything but the delivery of the next batch of flags.

If you are selling or supplying Bafana Bafana replica or supporter shirts (or yellow T-shirts, for that matter) you’ll be enjoying a bonanza Xmas in July.

In the first quarter of 2010 adidas had sold more than 6.5m replica jerseys worldwide — more than double the 3m sold in 2006, with supporter shirts for Bafana Bafana, Germany, Mexico, and Argentina as the best sellers, selling more than 1m shirts each (in SA that would include sales to corporates), adidas said at their FIFA World Cup Media Day in Germany, shortly after the start of the World Cup.

Adidas expects that its sales of soccer products would top €1.5bn for the year. That is 15% more than their previous sales record of €1.3bn in 2008, and 25% more than sales during the last FIFA World Cup in 2006 (€1.2bn).

Despite the fact that international goalkeepers and strikers had been complaining bitterly about the flight of the Jabulani ball (as in every World Cup during the past decade), adidas sold more than 13m Jabulani match balls worldwide. In addition, adidas provides the match balls for all important FIFA tournaments and leagues worldwide, including for all UEFA competitions, the Africa Cup of Nations and major league soccer in the US.

But, it is not only adidas that benefits from World Cup sales.

According to The NPD Group Consumer Tracking Service, the football footwear and apparel market grew 13% in the year before the 2006 FIFA World Cup in the Big 5 countries (France, Germany, Italy, Spain and UK) to an estimated value of €1.7bn. The biggest market was in England, with retail sales of €200m.

If (and at the time of writing it was a definite IF) England reached the quarter-finals, spending on England shirts in the UK would increase by £200m… and £360m if they reach the final, a report by the Centre for Retail Research estimated. And if by a flook England should win the World Cup, total retail sales (including in pubs and restaurants) would increase by £692m to £2.01bn, they predicted.

Which rubbishes the notion that an event like the World Cup is about the game.

Market share

Umbro, a Nike subsidiary, supplies the England shirts. At its investor conference earlier this year, Nike stated that during the previous year it achieved an estimated annual income of over $1.7bn from football for the Nike brand alone, and that Umbro added another estimated $0.2bn.

The global football market is valued at $10.9bn by the NPD Group, with the US market valued at $900m, Brazil $535m, Great Britain $800m.

Surveys conducted by the NPD Group and Sportscan placed adidas’ global soccer market share of football boots at about 34% at the end of 2008, making them the market leader. NPD figures for 2009, however, showed that Nike was the market leader for football boots in the UK, Spain and Italy, while adidas remained ahead in Germany and France.

Back to the local market

It is not possible to tell whether Nike or adidas is the leading soccer boot seller in SA as none of the local offices have to divulge figures — their sales are reported as part of a region in the global companies’ annual reports. But, according to sources, Nike could be nosing ahead. With these two major brands selling boots at lower price points, it became very difficult for any other boot brand to compete in the soccer boot market.

The high level exposure the Bafana Bafana shirts enjoyed after the inception of Football Friday, however, led to high level scrutiny — especially from our ever-vigilant trade unions. COSATU complained about what they termed excessive mark-ups on locally manufactured Bafana Bafana jerseys. According to Andre Kriel, SA Clothing and Textile Workers’ Union (SACTWU) general secretary, a replica jersey was manufactured for R100-R150 in a COSATU-affiliated factory in Ladysmith, the wholesale price from adidas was R331 (55-66% mark-up), and it retailed for R599 (45% mark-up).

But, countered adidas SA public relations manager Zobuzwe Ngobese: “Replica jerseys are expensive across the world and a comparison with other replica jerseys will show that most of them are about R100 more expensive than Bafana Bafana shirts. I know that there is the argument that the SA market is different to the international markets, and that is why we offer the R349 (retail price) option.” They also produced a R199 option.

COSATU and the OC also said that they will “work together on a post-World Cup commemorative T-shirt and other goods entirely made in SA to celebrate a successful World Cup”. As an official FIFA sponsor, adidas will be producing commemorative T-shirts with small images of the jerseys of all the participating countries, and T-shirts commemorating the semi-final, the final and the World Cup winners, says Ngobese.

The fact that the Bafana Bafana supporters’ shirts supplied by Teamplay Trading and sold in discount chains for about R100 are certainly not Made in SA, seemed to have escaped SACTWU’s vigilant gaze.

COSATU Western Cape, however, got it wrong that Zakumi and other Official Licensed Product for the World Cup were made in sweatshops in China when they threatened to march on FIFA offices.

Creating jobs

There are about 67 500 South Africans employed in the manufacturing and distribution of Official Licensed Products (OLP) for the 2010 FIFA World Cup, and an additional 1 500–2 000 people are employed in the Global Brands on-site programme (selling merchandise around stadiums, Fan Fests etc), responded Paul Zacks, Global Brands SA CEO.

He said that 38 of the official licensees are from SA-registered companies — many of them also use other SA sub-contractors to help them manufacture. Therefore, there are at least more than 90 SA companies directly or indirectly involved with the manufacturing of OLP, which accounts for 128 different licensed products and categories.

This resulted in employment for more than 70 000 South Africans — without taking into account people employed to sell the products, e.g. the extra 800-2 000 people Sneakers aims to employ to sell to the hospitality industries.

Zacks also said that an audit by independent verifying company Intertek (www.intertek.com) found that allegations that the Chinese factory manufacturing the plastic Zakumi desk figurine was a sweat shop using child labour, was false. The license for manufacturing this figurine as a FIFA OLP, which was suspended pending the outcome of the investigation, has been reinstated — although it might be too late for the licensee to derive benefits from sales.

Following a meeting with the 2010 FIFA World Cup Organising Committee COSATU adopted a much more reconciliatory approach and did not repeat their earlier threats to march on FIFA offices. They issued a joint statement, urging all South Africans to get behind the World Cup and promote local procurement.

They also expressed concern that fake World Cup merchandise worth more than R88m have been seized since November 2009, which also contributes to job losses.

Zacks appealed to anyone seeing fake World Cup goods to call 078 923 6776 to report them — all genuine licensed products have the OLP logo and hologram to guarantee authenticity.

If the zeal with which counterfeit goods World Cup goods have so far been seized and the perpetrators caught and sentenced become a future trend, it would mean a wonderful World Cup legacy for the sports industry.

Further reading

To read some more about FIFA, their contracts and the money they like to make:

  • FIFA’s reputation in tatters. Rob Hughes in the Sunday Times, December 17, 2006. Click here

  • IN the wake of the ISL collapse, by Jens Weinreich. Click here

  • Player and Referee: Conflicting interests and the 2010 FIFA World Cup. Documenting dicey deals around the 2010 FIFA World Cup inside and outside SA, published in 2010 by the Institute for Security Studies in Cape Town. See www.iss.co.za.

  • Sneaker Wars. The enemy brothers who founded adidas and Puma and the family fued that forever changed the business of sport. Barbara Smit. Ecco/Harper Collins. 2008.

  • Foul!: The Secret World of FIFA: Bribes, Vote Rigging and Ticket Scandals By Andrew Jennings. Collins Sports. 2000.

  • For regular updates on the world according to FIFA: www.transparencyinsport.org.


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