Market vs FIFA vs South Africa

FIFA likes to paint itself as this cuddly, lovable, not-for-profit, we-are-the-world, capitalism-is-evil trans-national organisation.  In reality FIFA has a monopoly on the global game that would make Bill Gates proud.  It is commercially astute and clinically ruthless in the way it protects its brand and sells its product.  Like most rotten monopolies FIFA is ultimately a regulated monopoly, with buy-in and kickbacks from and to the various national football “governing” bodies.

Hey, did you ever stop to think why government needs to govern sport?  If you think about it you’ll quickly see that government governing sport is as ridiculous as government governing which restaurants you go to, or which movie you watch, or which hotel you book into for the weekend.

Sport is recreation and wellness at a non-professional level and entertainment at a professional level.  There’s a lot of money in professional sport, and governments know that there is commercial power in national sporting brands.  Governments may be rotten but they’re not always as stupid as you think.

Where there is money, so there the state will gravitate.  Why else do you think the gold market is one of the most tightly regulated markets on the planet?  The same goes for banking and other lucrative sectors of the economy.

Sport is just another area where the state likes to get its grubby paws on the loot.  It’s as simple as that, and FIFA is the UN of sporting regulation, acting as overseer-in-chief of the global game in the same way the UN is overseer-in-chief of hot air, both within the atmosphere and within snooze-fest plenary sessions.

The World Cup is great for FIFA, and great for it’s ‘preferred’ ‘partners’… not so great for everyone else.  If you want a clue as to whether host countries make money out of the World Cup, just look at who is charged with organising it – government.  The fact government needed to subsidise the event is the simplest and only clue you need to know that the World Cup will not make SA money.  And if it doesn’t make SA money it doesn’t boost GDP.  Period.

Part of FIFA’s UN-style control is its control of ticketing for the tournament.  In all its omnipotent benevolence FIFA decides, in classic Euro-statist style, to fix the prices of tickets well below market rates so that all can afford to go.  Sounds honourable right?  Maybe, but that’s assuming FIFA should have legitimate right to set ticket prices.  After all, it’s South Africa who needs to fill seats and recoup costs after plunging tens of billions of rands of taxpayers’ loot into these beasts.  More than this however, FIFA, after offering cheap tickets, bans the resale of those tickets in secondary markets.

After ‘winning’ a ticket in a lottery, people are then banned from entering into free exchange with others for that ticket.  No matter that in trading their ticket to someone else for a much higher price people are actually BETTER OFF than before, while the geezer who spent R40k on a final ticket is also BETTER OFF.  This is the nature of trade – both parties benefit.

As with all market regulation, the market ignores the rules and trades on regardless – thankfully.  In South Africa tickets for the final are being sold in secondary markets for R40-50k and rising.  This past weekend I was told of some bright young bucks making themselves millions by mass-buying tickets at a premium to the FIFA price and selling them on for profit.  Think of all the wealthy Spanish (are there any left), Germans and Dutch who would pay big money to see their team make history at Soccer City in Johannesburg on 11 July.  Think of all the South African ticket holders, not particularly passionate either way about any of those teams, who would be willing to facilitate the trade.  BOTH BECOME BETTER OFF.

FIFA is a microcosm of Euro-state regulation.  It thinks that by regulating the market it creates a clean and wholesome and egalitarian image for the beautiful game.  Instead, like all market regulation, it pushes the real market underground, making it even more grubby and insidious and unwholesome when in reality it is pure, mutually beneficial trading.  Meanwhile, despite FIFA’s best efforts, tens of thousands of tickets will sell at their true market value, maximising satisfaction of all parties involved in the trade.  Unfortunately, those revenues won’t go to the source of where they’re needed – to start paying for the billions spent on the stadiums these beautiful games are being played in.

FIFA may be a commercial vampire squid, but South Africa’s negotiators, starry-eyed by Sepp Blater’s schmoozing, failed to secure the deal they needed for this event to make even remote economic sense.

The market will eventually beat FIFA, but, in the world of global football, FIFA definitely beats host nations.