Valuing the FIFA World Cup – What a Difference a Decade Makes
USA and Portugal may have pulled a draw during their Group G World Cup match this past Sunday, but ESPN was a big winner with 18.2 million viewers, setting an all-time viewership record. With those high numbers following the 2014 FIFA World Cup, many companies gain enormous value through their affiliation with the event.
In fact, CONSOR provided valuation for a FIFA/World Cup client over the past decade in forecasting potential licensing rights for the 2006, 2010 World Cups, as well as the 2014 World Cup in Brazil. At the time, CONSOR looked at historical figures from the 2002 World Cup, such as royalty rates, fee structures, current economic situations, and comparable events – Olympics, NFL Super Bowl, MLB World Series, NHL Stanley Cup, etc. We also took into consideration that Brazil has a large market potential for licensed products, since Brazil and surrounding countries have a large population base that are deeply enthusiastic about soccer.
While our valuations take into account definable and statistical information, projections don’t always foresee the impact of future technological and communication innovations. When we originally prepared our FIFA World Cup licensing valuation, there weren’t such social media platforms as Facebook, Twitter, Instagram or YouTube that have come into daily use. And there weren’t 1.75 billion smartphone users that can download applications, as there are now. The term “app” wasn’t in use.
Who can FIFA and their affiliated brands target? From those 1.75 billion smartphone users, over 18 million have downloaded the 2014 FIFA World Cup app since June 1, 2014, and more than 22 million total downloads since its launch in December 2013, are some of the potential consumers. Within the app, not only can you keep up to date on the soccer matches, you can see:
- standings presented by Johnson & Johnson
- adidas awards
- Man of the Match presented by Budweiser
- Hyundai Young Player Award
- destinations presented by Emirates
- statistics presented by Castrol Edge
- social media activity presented by adidas
- and all the app games – Castrol’s Predictor Challenge, McDonald’s FIFA World Cup Fantasy, Panini Online Sticker Album, adidas Golden Ball Predictor, Hyundai Young Player Predictor
With fans spending an average of 54 minutes on the app consuming live, editorial and social content, the app itself adds so much more value than could have been predicted a decade ago. These app users are all potential buyers of licensed products. Then you add in the 33 million FIFA Facebook page followers, and those on Twitter, Instagram, YouTube…it all adds value for the affiliated brands.
Recently, Nielsen Scarborough reported that 54% of World Cup fans in the U.S. say they plan to support affiliated brands, which they estimated represent $88 billion in auto spending alone. Even from 2010, we have already seen a 43% increase marketing spend during soccer telecasts.
What is the lesson to be learned here when trying to value your intellectual property assets? Valuations should be updated on a continual basis, because you never know what innovations may change the equation.