Club World Cup: FIFA Hires US Firm For $1 Billion Sponsorship Deal
FIFA has turned to an American financial advisory firm to jump-start its efforts to secure the $1 billion it will require to successfully launch its inaugural 24-team Club World Cup next year.
Hiring the firm, the Raine Group, which has experience in closing deals in the sports sector, suggests that a tender process begun by FIFA in December has failed to secure a backer capable of meeting the organization’s requirements to finance the 2021 Club World Cup, which was awarded to China last year.
Much of the money is needed to secure the participation of the top European clubs, which are seeking privileged status and would essentially become joint owners of the event.
Last month, leaders from a group of elite European clubs, including Liverpool, Juventus and Barcelona, traveled to FIFA’s headquarters in Zurich. According to people familiar with their plans and a document summarizing their meeting obtained by The New York Times, they discussed the creation of a joint venture between FIFA and the European Club Association, a status that would elevate their interests above participating teams from soccer’s five other regional confederations.
The talks centered on financial incentives, and the possibility of including as many as 12 European teams, four more than the current format, which caps European involvement at eight.
Reaching agreement for the tournament has been a fraught process. The project has fractured the relationship between FIFA’s president, Gianni Infantino, and the head of European soccer, Aleksander Ceferin, and faced opposition from the sport’s biggest clubs and leagues.
FIFA wants its new tournament to eventually have a stature similar to the World Cup’s, an aspiration that would threaten the status of UEFA’s Champions League, which is currently the world’s richest club championship.
Attempts by FIFA to close an agreement for the tournament in 2018 with a group led by the Japanese conglomerate SoftBank foundered when Infantino failed to get the support of the FIFA Council. At the time, several members of the FIFA board — led by Ceferin — complained of not being told enough information about the project.
A FIFA analysis, reported by The Times in 2018, concluded the organization needed to raise $650 million to $1 billion for the tournament to be viable.
For Infantino, the stakes are high. As well as stoking tension with Ceferin, the discussions around new club arrangements — which would prioritize Europe’s involvement over clubs from the rest of the world — have also led to a breakdown in relations between Infantino and Alejandro Domínguez, the leader of the sport in South America and a longtime Infantino ally.
Domínguez, annoyed at being sidelined when South American teams were among a group that met with Infantino, signed an agreement to work on joint projects with UEFA’s Ceferin earlier this month. A few days later, FIFA scrapped a FIFA Council meeting set to be hosted by Domínguez in Asunción, Paraguay, where his organization, CONMEBOL, is based.
FIFA largely blamed costs for scrapping the event, but Domínguez reacted with fury, demanding, in a letter to FIFA, a detailed breakdown on how much FIFA spent to host similar meetings recently in India, Rwanda and China.
After finally bowing to the creation of the tournament, UEFA has so far stymied FIFA’s efforts to secure the participation of the continent’s top teams for the inaugural event next year. It has demanded the field should include winners of its second-tier Europa League competition, while FIFA wants only the continent’s best teams.
The clubs are taking advantage of the tensions. As well as talking to FIFA about the quadrennial World Cup, Europe’s biggest teams have also met with the American billionaire Stephen M. Ross, who is seeking to get them to commit more formally to an annual preseason tournament. Ross’s group, RSE Ventures, has held talks with both UEFA and FIFA about securing their backing for an annual event in which participating clubs could secure about $10 million per tournament and an equity stake, provided they commit to several editions of the competition.
FIFA hopes the new revenue stream from an expanded Club World Cup will allow it to invest more in developing the game around the world. But the financial demands of the top teams could make that difficult: Those teams want a model similar to the Champions League, where more than 90 percent of the income is paid out in prize money.
Because of the early opposition to its project, FIFA has found itself in a hurry to get the financing it requires. Some groups that showed initial interest in the event, like Suning Holdings Group, which is based in China, owns the Italian team Inter Milan and is one of the biggest Chinese investors in soccer, declined to make an offer after complaining that there was a lack of detail in FIFA’s tender request.
By hiring Raine to manage the process, FIFA is enlisting an organization well versed in securing deals for sports entities, and one with a presence in China. Led by the banker Joe Ravitch, the firm helped the English soccer champion Manchester City sell a stake worth $500 million to the American investment group Silver Lake Partners in November. And City’s Premier League rival Chelsea has directed any parties interested in acquiring the club from its Russian owner, Roman Abramovich, toward Ravitch.