Best Country to Host FIFA World Cup 2018: United Kingdom

(A Comparison from International Business Perspective)

Best Country to Host FIFA World Cup 2018: United Kingdom
(A Comparison from International Business Perspective)




Prepared By

Arafat Islam 111 0247 030
Mohammad Sadlil Amin 111 0746 030
Aminul Habib 111 0977 530
Md. Kamrul Hasan 112 0994 030
Sowad-Bin-Alam 112 0002 030
Talha Yeasin Antor 111 0082 030


INB355, Section 2
Summer 2014


Prepared For
Kashfah Khan Chowdhury
Lecturer, Dept of Marketing & INB
School of Business
North South University, Bangladesh
August 18, 2014





Acknowledgement

First of all we would like to thank Almighty Allah. Without His bless we would not be able to
complete this paper. Then in this earth we deeply thank our course instructor, Kashfah Khan
Chowdhury for her continuous support, precise instructions and motivation. Each and every
confusion we faced, she removed that with her deliberate lectures. Thanks to all of those people
who were directly and indirectly involved with this paper.












3

Table of Contents

Introduction

4
History of Hosting: Controversies from the beginning ...

5
Comparison from Political Perspective.

6-8
Comparison from Economic Perspective.

9-12
Official comparison taken from bid evaluation report of FIFA.. 12-16
Comparison from Social Perspective.

16-17
Conclusion. 18
References..

19-20














4

Introduction

The Fdration Internationale de Football Association (FIFA English: International Federation of
Association Football) is the international governing body of association football, futsal and
beach soccer. FIFA is responsible for the organization of football's major international
tournaments, notably the World Cup which commenced in 1930 and the Women's World Cup
which commenced in 1991. The FIFA World Cup, often simply called the World Cup, is an
international association football competition contested by the senior men's national teams of the
members of FIFA. The championship has been awarded every four years since the inaugural
tournament in 1930, except in 1942 and 1946 when it was not held because of the Second World
War. The current champions are Germany, who won their fourth title at the 2014 tournament in
Brazil. The 2014 World Cup took place in Brazil. The next two World Cups will be hosted by
Russia in 2018 and Qatar in 2022. Both choices have been criticized in the media, Russia in light
of the 2014 Crimean crises and Qatar for allegations of vote-buying and poor working conditions
for foreign workers (Source: Wikipedia). The purpose of this paper is to select a country that
would be better than Russia to host FIFA world cup 2018 and critically compare and discuss
from the international business perspective. We have selected United Kingdom (UK) to be the
best alternative. We have taken three conditions under our consideration and those are: Political,
Economic and Social. In the following sections we have shown comparisons between Russia and
UK for these three conditions.


5

History of Hosting: Controversies from the beginning

Sixteen countries have served as FIFA World Cup hosts in the tournament's twenty editions
since the inaugural World Cup in 1930. The organization was at first awarded to countries at
meetings of FIFA's congress. The choice of location was highly controversial in the earliest
editions, given the three-week boat journey between South America and Europe, the two centers
of strength in football at the time. The decision to hold the first cup in Uruguay, for example, led
to only four European nations competing. The next two World Cups were both held in Europe.
The decision to hold the second of these, the 1938 FIFA World Cup, in France was controversial,
as the American countries had been led to understand that the World Cup would rotate between
the two continents. Both Argentina and Uruguay thus boycotted the tournament. The first edition
following World War II, held in Brazil in 1950, had three teams withdrawing due to either
financial problems or disagreements with the organization.
To avoid any future boycotts or controversy, FIFA began a pattern of alternation between the
Americas and Europe, which continued until the 2002 FIFA World Cup which took place in
Asia. The system evolved so that the host country is now chosen in a vote by FIFA's Executive
Committee. This is done under an exhaustive ballot system. The decision is currently made
roughly seven years in advance of the tournament, though the hosts for the 2022 edition were
chosen at the same time as those for the 2018 tournament.
Only Mexico, Italy, France, Germany (West Germany until shortly after the 1990 World Cup)
and Brazil have hosted the event on two occasions. Mexico City's Estadio Azteca and Rio de
J aneiro's Maracan are the only venues ever to have hosted two FIFA World Cup finals. Only the
2002 FIFA World Cup had more than one host, being split between J apan and South Korea.
However, FIFA still faces the controversies because of selecting Russia and Qatar despite of
Crimea issues and very hot summer condition respectively in those countries. On the other hand
FIFA had a choice to select UK for the host as they were the next most eligible candidate. In fact
we believe that in some cases, UK is far better than Russia and FIFA could eliminate all those
controversies by nominating UK to host the 2018 world cup.

6

Comparison from Political Perspective

Comparison Published by BBC:


Source: http://news.bbc.co.uk/sport2/hi/football/7856716.stm

A comparison published by BBC Sport (2010) clearly suggests that the cons are greater and have
far reaching effects if Russia is to host FIFA world cup 2018. Here, the security condition in
Russia is one of the main reasons for what we believe England would be better than Russia while
it is the case for hosting the earths biggest show. It is imprudent to leave the hosting
responsibility to such a country which is still in a political turmoil situation (i.e. with Crimea,
Ukraine). Recent shooting down of MH17 over Ukraine has strengthened this argument. In fact
British Deputy Prime Minister Nick Clegg has joined calls for Russia to be stripped of the World
Cup in 2018 following the shooting down of flight MH17 over Ukraine. As stated by Clegg
(2014), You cant have this the beautiful game marred by the ugly aggression of Russia
on the Russian Ukrainian border, not only would Vladimir Putin exploit it, I think it would make
the rest of the world look so weak and so insincere about our protestations about Vladimir
Putins behavior if were not prepared to pull the plug. Clegg also added that, He cant
constantly, you know, push the patience of the international community beyond breaking point,

7

destabilize a neighboring country, protect these armed separatists in the east of Ukraine and still
have the privilege and honor of receiving all the accolades in 2018 for being the host nation of
the World Cup. Certainly his words clarifies that the present political situations of Russia have
made them a riskier host for the world cup where a plenty of air travels will be required to travel
between the venues and hotels. Our statement can be verified by the statement of Peter Beuth,
interior minister of the German state of Hesse. He said, If Putin doesnt actively cooperate on
clearing up the plane crash, the soccer World Cup in Russia in 2018 is unimaginable. Michael
Fuchs, a senior leader in Angela Merkel's Christian Democrats party agreed, saying, FIFA
football association should think about whether Moscow is an appropriate host if it cant even
guarantee safe airways. However, this is not the first time Russia is hearing it. This comes just
days after six players of the Donetsk soccer team refused to leave France after a match and board
a plane back to Ukraine. In fact the calls echo similar sentiments earlier this year to move or
boycott the Sochi Winter Olympics after Moscow passed a controversial anti-gay law.
On the other hand, United Kingdom certainly bears lesser
political risk than Russia. According to A.M. Best
Company Inc. (2013), The United Kingdom (UK) is a
CRT-1 country with very low levels of risk across all
three categories. Despite its strong risk profile, the UK
was hit particularly hard by the global financial turmoil,
partially due to its sizeable financial sector. The economy
has continued to recover slowly with growth between 0-
2% and an expected 0.7% in 2013. Forecasted growth
should be between 1-2% going forward driven by
marginally higher employment, lower inflation, improved
demand and easing concerns over the euro zone.
[Picture 1: UK CRT-1 Rating by A.M.Best Company Inc.]



8



[Picture 2: CRT Rating (by region). Published by: A.M.Best Company Inc., 2013]

The region wise country risk tier indicates that Russia is a country which falls under the higher
risk zone having two borders of two very high risk countries- Ukraine and Belarus. On the other
hand UK falls under the very low risk zone for every condition. So under these conditions it
would be a sensible decision to make UK the host of FIFA world cup 2018.





9

Comparison from Economic Perspective

An economic value comparison presented below would reveal how enriched, experienced and
successful as well as economically benefitted UK is in the sports sector comparing to Russia.
Economic Value of UK in sports sector
National value of sport
Sports contribution to the English economy reached 20.3 billion in 2010, 1.9% of the England
total. This placed sport up in the top 15 industry sectors in England above motor vehicles,
telecoms services, legal services, accounting, publishing, advertising and the utilities.
Employment
Sport employment remains a crucial component of the economy. The number of people with
sport-related jobs in 2010 is estimated at over 400,000 thats 2.3% of all employment in
England.
Wider benefits

The estimated economic value of sport-related volunteering is 2.7 billion. The annual value of
health benefits from people taking part in sport is estimated at 11.2 billion.

Economic Value of Russia in sports sector
While in the UK, football is part of life for majority of the population due to the unrivalled
accessibility to their local clubs and football clubs seem to gain increased exposure and revenue
due to the passionate supporters, in Russia, ice hockey is their national sport due to the harsh
climate and access to many indoor facilities during winter time. As a result, football isn't that
popular amongst general population.

10

National value of sports in Russia:
Russia is a very big country having different cultures and sports event but their main game is ice
hockey. Football section is still not that improved so the field condition employment on this
section is not that much secured as UK. They have the capability to arrange a football
tournament but they have little experience in this sector unlike UK.
Main issues
Russia Football League is 7
th
in the financial standing of major football leagues within
Europe, behind the popular Premier League, Bundesliga and La Liga.
890 million (Euro) revenues were generated by the Russian football league in the 2012-
13 seasons.
It is nearly, 1.1 billion less than the popular football leagues.

This comparison indicates that although Russia has the desired infrastructures and co-
ordinations, there football is not that much vivacious as it is in UK. If we think about the fame
factor as well as the receptiveness that may generate from the people (beside the economic
factor), certainly it cannot be expected that Russia could generate that much enthusiasm at it
could be done by the British people.
According to Nation Master Comparison, UK earns on average $30.14 million and ranked 7
th



worldwide by tourist arrivals. On the other hand Russia earned $23.68 million and ranked 11
th

which is 27% lesser than UK. These figures indicate that tourists prefer UK better over Russia
and UK is ready to take the challenge to accommodate the huge number of tourists who will be
coming to witness the world cup games.


11

Other economic particulars: (Russia UK respectively)









Table 1: Russia - UK comparison (source: www.nationmaster.com)
These comparisons are clearly placing UK on top of Russia. In United Kingdom GDP is 21%
more than Russia, a very favorable country to produce goods and merchandises. GDP per capita
in UK is 2 times higher than Russia where Gross National Income is $1.48 trillion (6 times more
than Russia). Inflation rate is only 2.8% (82% lesser than Russia) where purchasing power parity
in UK is $35,152.70 (2 times more than Russia). This suggests that people in UK has more

12

purchasing capability than the people of Russia. It is a good sign for the investors and the
business people who visit and invest to the host countries for sports related products (i.e. t-shirt,
jersey, merchandiser etc.). Then again economic freedom, human development index and
technology index clearly signifies that UK would be the best country to host FIFA world cup
2018 over Russia in any time.

Official comparison taken from bid evaluation report of FIFA

Table 2: Bidding Status Overview

The following table has been taken from the Bid Evaluation Report that has been done by FIFA.
Here comparison between 9 countries (Holland and Belgium is considered as one) has been
presented and the data are fully official. Here we can see that both Russia and England has bid
for 2018 FIFA world cup only. The following table also shows the FIFA requirements along with
the comparisons so that whether a country meet the requirements or not can also be understood.
[Table 3] Here it can be observed that both UK and Russia are able to fulfill FIFA requirements
although in some cases UK condition is better than Russia. For example, the projection of
sellable tickets in UK is greater in number than Russia. UK has approximately 256,000 more
value. It suggests more business for FIFA in UK. The stadiums that would be required are more
in UK over Russia. However, Russia is dependent on the uncertain situation of new constructions
for the stadiums. We can bring to a close that FIFA should not take that risk as we have seen the
cases for Brazil (2014) recently.

13



Table 3: Overview of Key Information


14




Table 4: Overview of Operational Risk




15





Table 5: Overview of Legal Risk



16

Table 4 and Table 5 show the operational risk and legal risk among the bidders. Operational risk
in UK is low in every sector except Stadium operations and Accommodation (Medium risk for
both cases). On the other hand High risk is present in Russia in Transportation sector: Airline
and International connections. As previously stated, Russia is such a big country that Air
transport has become obvious and only way to go to distant stadiums and it wont be a wise step
to put every player in a state of risk. However, Medium risk is also present in the cases of:
stadium construction, stadium operations, and accommodations or even in ground transport.
On the other hand if we consider the legal risk, UK scores low in every department. Considering
these two risk factors, UK is considered to be the best country to host FIFA world cup 2018 over
Russia.

Comparison from Social Perspective
British Football Culture: Stronger than Russia
Football culture is part of the entire British nation regardless of Age or gender. This makes the
world cup one of the most celebrated events in England. The defining concept of football in
Britain is the passion the fans have for the game; this is often seen during the banter and chants
at live matches. Growing up in Britain, children realize pretty quickly just how important
football is, especially boys. From football trials at schools to talking to classmates about the
weekend's fixtures, football is a huge part of British culture.
The world cup is a special part of this society. Football has created many domestic rivalries in
Britain with fans of local teams creating genuine rivalries with fans that support opposing teams.
The world cup however is the one time where the entire British nation comes together to get
behind their boys in white. There is no way that Russian can beat Britishs enthusiasm about
football. Football craziness is in their blood and the madness gets boost up by the elevated
performance of the British clubs. Heated competition in the world cup is part and parcel of what
makes it such a passionate event. Football culture is truly imbedded in the heart of England. This
can be proved by the fans statements mentioned below:


17

"Football has always been a big part of my life, from watching the game with my Dad when I
was a kid to going down the local pub to watch the premier league finals. I support Fullam and
they have such a great fan base and I am really proud to be part of it."
"I remember every time Arsenal played Tottenham, the Tottenham supporters always gave us
loads of grief and there was loads of banter, but during the world cup at south Africa, everyone
just forgot all about that and cheered the boys on."
"The World Cup back in 2010 was so epic; me and load of my mates went to watch the England
qualifiers there. Was one of the best holidays I have ever had."
There is a distinctive difference between the football culture in Britain and the rest of the world.
Many people believe this is to do with the fans in Britain, whilst others see it as a wider issue to
do with the history of Britain itself. Either way, the World Cup promises to bring vibrant
atmosphere in every part of the England.
According to Happy Planet Index, UK scores 47.9 (Ranked 41
st
) which is 39% more than Russia.
So theoretically, the British are happier than Russian and will be more welcoming for the world
cup 2018. In 2014 for Brazil, we have seen that people are protesting against the organization of
FIFA world cup for various unsatisfactory reasons. In this case British people are expected to be
more hospitable.
Social Face: David Beckham

Socially David Beckham is very popular face in UK. He will be the person here like a cherry in
the cake. Socially he is very active. His presence in the world cup event in UK would make it
even more successful and popular.

18

Conclusion
The game of Football is the most popular sport in the world. Across the globe, millions of fans
enjoy this game and when it comes to the world cup, the enthusiasms double. FIFA as a non
government organization should try to deliver the spirit of this game without any controversies
and back words. Recently the protest incidents of Brazil world cup 2014 have raised questions
against the efficiency of FIFA and the controversies of bribery of Qatar assisted the controversy
to gain mass. In this paper our main objective is to bringing up the best possible nation to host
the FIFA world cup 2018 apart from Russia. Considering the 3 major factor environments of
international business, we have come up with the best country and that is United Kingdom. The 3
environments which are taken into consideration are: Political, Economic and Social. Politically
UK is sounder than Russia. Current political turmoil between Russia and Ukraine has raised the
questions for security. In this case UK is safer in any time with lower political risk. However, the
lacking of adequate infrastructure has also made Russia unpopular to us and vice versa has made
UK popular to us. UK has all the required structures and they need minimum level of renovation
cost. Economically UK is better to host this world event as purchasing power parity, human
development index, gross net income per capita as well as technology index is better than Russia
with lower level of inflation rate. These make us to choose UK as the best country to host.
Socially football is more popular sports here in UK than Russia with more popular clubs those
are recognized globally. Football contributes to the national income and in fact football posses
legacy value here. So in any situation UK would be considered as the best country to host FIFA
world cup 2018 by us.


19

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20

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