The Almighty FIFA and Brazil’s Great Concessions

Photo credit: https://www.flickr.com/photos/felipequintanilha/

By: Anna Haslinsky on July 28, 2014

Every four years, people across the globe are glued to the television over the world’s single largest sporting event, the Fédération Internationale de Football Association’s (FIFA) World Cup.[i] This summer, excitement reached new heights when an unprecedented 24.7 million Americans tuned in to watch the United States and Portugal match, while only eighteen million watched the 2014 NBA finals.[ii]

Despite all the positive attention, critics question whether hosting the World Cup is worth the multi-billion dollar investment and extensive accommodations FIFA requires from host nations. Now that the 2014 World Cup has come to an end, Brazilians might be wondering if they got the return on the investment they were looking for.

In order to win the bid to host this coveted worldwide event, host countries must go to great lengths to meet FIFA’s demands. This process is partly why many sports and economics commentators are so critical of FIFA.

In the years leading up to this year’s World Cup, FIFA received bad press for requiring host countries to engage in wasteful and costly construction, violating human rights with ghastly working conditions for laborers, and allegedly accepting bribes.

Yet, FIFA remains impressively powerful. At FIFA’s request, the Brazilian government agreed to spend 11.3 billion dollars in preparation, to change laws to meet FIFA’s demands, and to provide extensive tax breaks to FIFA and entities involved in hosting the event.[iii]

While host countries are purported to receive billions of dollars and great public relations in return, there are concerns that host countries must go to great and costly lengths to change their national laws to accommodate a non-governmental organization for a transient event.[iv]

Not the First Time, Not the Last

Brazil 2014 was not the first time FIFA made costly demands of a host country to change its legal system. When South Africa hosted the 2010 World Cup, South African officials “install[ed] 56 courts in the nine cities hosting World Cup games.”[v]

In order to prevent South Africa’s high crime rate from disrupting the games, the courts were designed to quickly address any legal matter related to World Cup events, ranging from trademark issues to thefts and violence. On one hand, the courts brought swift justice previously nonexistent in South Africa. Cases were taken care of “in the time it takes to play a soccer match” or the same day as the alleged crime.[vi] On the other hand, these improvements reportedly cost South Africa six million dollars.[vii]

In anticipation of the 2014 World Cup, FIFA required Brazil to enact new legislation and change pre-existing laws. In 2003, Brazil enacted a statute that prohibited the sale in, and entry of alcohol into, stadiums during soccer matches to address the ongoing problem of spectator violence. However, as Jerome Valcke, FIFA’s General Secretary, stated,

“[a]lcoholic drinks are part of the FIFA World Cup, so we’re going to have them. Excuse me if I sound a bit arrogant but that’s something we won’t negotiate. . . the fact that we have the right to sell beer has to be a part of the law.”[viii]

Although politically unpopular, FIFA made it a priority to lift the ban as a result of Budweiser’s 22 million dollars in sponsorship to serve beer at the event.[ix]

Other legislative requests included immigration and customs reform, and suspension of a law providing reduced-rate sporting event tickets for students and the elderly.[x] Reportedly, FIFA feared that the ticket price reduction would impact revenues.[xi]

However, FIFA is a non-profit, tax-exempt association under Swiss law, and is entitled to 450 million dollars of tax breaks in Brazil; and FIFA is expected to generate upwards of four billion dollars in revenue from the event.[xii] It is not uncommon for governments to bend the rules to attract businesses, but critics suggest FIFA demands are incomparable.

Asking the Hard Question: Why?

Although many of these legal changes are temporary, how exactly does a non-governmental body with a questionable reputation gain such leverage over Brazil, and given the breadth of the demands, why would Brazil agree to these requirements?[xiii]

First, Brazil was contractually bound. When a country makes a bid to host the World Cup, it must make “government guarantees” regarding security and infrastructure that the host country must live up to upon selection.[xiv] Thus, assuming many of these requests arose from Brazil’s government guarantees, the laws passed to accommodate FIFA were likely contractual obligations from Brazil’s original bid for the World Cup.[xv]

Second, even if the specific details of the laws were not part of the initial government guarantees, Brazil must have felt obligated to meet FIFA’s demands. As excitement spread in advance of the event, Brazil encountered significant challenges. Brazilian and international commentators doubted Brazil would be ready to host the World Cup in time and criticized the costly infrastructure changes; ultimately, many Brazilians violently protested the event.[xvi]

It can only be assumed that Brazil, a country that is likely trying to shed its status as developing, had something to prove by hosting a successful World Cup.[xvii] Ultimately, the bid came at a great cost and one can only hope that Brazil gained the return FIFA promised.

[i] See About FIFA: FIFA World Cup, Fédération Internationale de Football Association,http://www.fifa.com/aboutfifa/worldcup/ (last visited July 12, 2014) [hereinafter FIFA] (stating FIFA World Cup is “biggest single-event sporting competition”).

[ii] See Christopher Harris, 7 Most Revealing Facts about World Cup TV Viewing Numbers, World Soccer Talk (July 7, 2014), http://worldsoccertalk.com/2014/07/07/7-most-revealing-facts-about-world-cup-tv-viewing-numbers/ (discussing numbers of viewers of 2014 World Cup). This number is even more impressive because it does not account for public viewing events and World Cup games are broadcast during the day, rather than at traditional “primetime” viewing hours. See id.

[iii] See Sarah M. Kazadi, Protests Linger, Excitement High as World Cup Begins in Brazil, CBS Sports (June 12, 2014, 7:49 PM), http://www.cbssports.com/world-cup/eye-on-world-cup/24586494/protests-linger-excitement-high-as-world-cup-begins-in-brazil (discussing funds spent by Brazil).

[iv] See Germany Fed. Ministry of the Interior, Review by the Federal Government on the 2006 FIFA World Cup, 3 (Aug. 2006), available athttp://wm2006.deutschland.de/EN/Content/SharedDocs/Downloads/world-cup-review,property=publicationFile.pdf (calling World Cup “huge PR event for Germany”).

[v] See Mike Pesca, South Africa’s World Cup Court: Sudden Justice, NPR.org (June 22, 2010, 3:00 PM), http://www.npr.org/templates/story/story.php?storyId=128012634 (discussing changes to legal system for South Africa World Cup).

[vi] See id. (praising South Africa’s World Cup Court system’s speed).

[vii] See id. (noting government spending on World Cup Courts).

[viii] See Brazil World Cup Beer Law Signed by President Rousseff, BBC News (June 6, 2012),http://www.bbc.com/news/world-latin-america-18348012 (discussing changes in law).

[ix] See Daniel De Saulles, How FIFA is Changing Brazil’s Constitution for the World Cup, Lawyer2B (June 7, 2014), http://l2b.thelawyer.com/home/insight/how-fifa-is-changing-brazils-constitution-for-the-world-cup/3020589.article (explaining why alcohol ban was lifted).

[x] See Patricie Barricelli, Contentions Issues of the Brazilian World Cup Law, LexisNexis Legal Newsroom: Int’l Law (June 30, 2013), http://www.lexisnexis.com/legalnewsroom/international-law/b/international-law-blog/archive/2013/07/30/contentious-issues-of-the-brazilian-world-cup-law.aspx (analyzing Brazil’s World Cup Law).

[xi] See Brazil Senate Approves Controversial World Cup Law, BBC News (May 10, 2012),http://www.bbc.com/news/world-latin-america-18017540 (discussing FIFA’s reasons for changes). Apparently FIFA agreed to compromise and sell a certain number of discounted tickets. See id.

[xii] See John Sinnott, A Fair World Cup Deal for Brazil?, CNN (July 24, 2013),http://edition.cnn.com/2013/06/24/sport/football/brazil-protests-fifa-tax/ (addressing issues with tax exemption). Critics claim FIFA’s demands “go far beyond” the usual government accommodations to attract business so FIFA should be obligated to pay taxes and follow pre-existing laws in host countries. See id. In response, FIFA claims no revenue comes from public funds and the economic benefit to Brazil is an estimated $28 billion in income. See id.

[xiii] See Patricie Barricelli, Contentions Issues of the Brazilian World Cup Law, LexisNexis Legal Newsroom: Int’l Law (June 30, 2013), http://www.lexisnexis.com/legalnewsroom/international-law/b/international-law-blog/archive/2013/07/30/contentious-issues-of-the-brazilian-world-cup-law.aspx (criticizing FIFA’s power over host countries).

[xiv] See Daniel De Saulles, How FIFA is Changing Brazil’s Constitution for the World Cup, Lawyer2B (June 7, 2014), http://l2b.thelawyer.com/home/insight/how-fifa-is-changing-brazils-constitution-for-the-world-cup/3020589.article (discussing government guarantees). A BBC investigative reporter exposed FIFA’s “Bidding Agreement” as a “binding and irrevocable offer” containing obligations of the host country’s Local Organising Committee and government guarantees that must conform with FIFA’s template agreement. See FIFA Bidding Agreement Regarding the Submission of Bids for the Right to Host the 2018 FIFA World Cup or 2022 FIFA World Cup, Transparency in Sport (last visited July 12, 2014), available athttp://www.transparencyinsport.org/The_documents_that_FIFA_does_not_want_fans_to_read/PDF-documents/%2811%29FIFA-Bidding-agreement.pdf (exposing FIFA’s template bidding agreement).

[xv] See Brazil Bid Inspection Report for the 2014 FIFA World Cup, FIFA (Oct. 30, 2007), available athttp://pt.fifa.com/mm/document/affederation/mission/62/24/78/inspectionreport_e_24841.pdf(detailing Brazil’s progress in preparation for FIFA World Cup).

[xvi] See John Sinnott, A Fair World Cup Deal for Brazil?, CNN (July 24, 2013),http://edition.cnn.com/2013/06/24/sport/football/brazil-protests-fifa-tax/ (discussing problems with hosting World Cup in Brazil).

[xvii] See Anne Applebaum, Brazil Defies Stereotypes of “Developing” Nations, Wash. Post (May 30, 2013), available at http://www.washingtonpost.com/opinions/anne-applebaum-brazil-defies-stereotypes-of-developing-nations/2013/05/30/95a237b2-c93f-11e2-9245-773c0123c027_story.html (discussing Brazil’s status as developing nation).