Monday, May 3, 2010

The World Cup for Everybody

After months of long and drawn-out negotiations with FIFA, it seems that Singapore's two telcos have finally secured the rights to broadcast all of the 2010 football World Cup matches. Although the final terms are unclear - it is not yet actually certain that a deal has indeed even been reached - everyone can rest assured that it will have cost Starhub and Singtel far more than the SGD 15 million that they paid for the 2006 World Cup as FIFA were reportedly initially asking for upwards of SGD 40 million. While the fact that seemingly all 64 World Cup matches will be shown in Singapore is undoubtedly good news for football fans here, who else stands to profit?

By all accounts, it seem that the two telcos will not make money directly from the event. Early reports suggest that the fact that the negotiations took so long and that the final decision was made so close to the opening match means that traditional big sponsors will not be advertising on TV but will rather look at alternative mediums, like online advertising campaigns. The imminent pull-out of large traditional sponsors, coupled with the small domestic market clearly signals that neither Starhub nor Singtel stand to re-coup the large sum dished out for the broadcast rights. However, while direct revenues from the event may not justify the telcos' decision, it is thanks to that decision that they have managed to avoid losing a lot of goodwill which may have costed them dearly in the future.

Beyond the two telcos, there are several other sectors of the Singapore economy that stand to be affected by the decision to purchase the rights for what is largely regarded as the largest sporting event in the world. Bars, restaurants, sports retailers, private football pitches for hire and many other industries were surely hoping that the Starhub, Singtel and FIFA would come to an agreement sooner rather than later. Had Starhub and Singtel failed to secure the rights to the World Cup, the above-mentioned businesses would have been severely affected by failing to reach the increased revenues that they will have budgeted for the World Cup period.

The case of football-mad Singapore's telcos almost failing to secure the rights to such an important event serves a wonderful example that helps to prove the point about the importance of long-term strategic decision making as well as about the inter-connectedness of the economy.

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