Fox and Others Will Feel Pain of U.S. Absence at World Cup

The United States might not be good enough to win soccer’s World Cup, but as long as it shows up at the quadrennial tournament the domestic audience is sure to swell with casual fans rooting for an upset.

That fruitful combination — American pride and a potentially massive captive audience — has delighted major companies that hitched their brands to the United States broadcast of the World Cup over the past 30 years. They eagerly signed up again for next summer’s tournament, to be held in Russia, expecting another surge in soccer fandom.

Now they are lowering their expectations. The summer of 2018 has lost a star attraction.

The United States men’s soccer team crashed out ingloriously on Tuesday night, losing to Trinidad and Tobago, 2-1, and failing to qualify for the event for the first time since 1986. Players, coaches and fans were distraught. Corporate sponsors were left calculating how many people in the immensely valuable United States market would consequently tune out next summer.

“Once you say there is a disappointment from a fan perspective there is a ripple effect from that, and the impact is felt beyond fandom and into the sports business world,” Dan Donnelly, managing director of Publicis Media Sports, said.

The World Cup is an unusual event for corporate sponsors. When they sign deals, they generally don’t know who will be competing. Coca-Cola, for instance, signed a 16-year extension of its agreement with FIFA, soccer’s global governing body, in 2005, a deal that takes it through the 2022 World Cup. Coca-Cola signed that extension without even knowing where the 2018 and 2022 World Cups would take place, much less which teams would participate.

In 2011, Fox paid more than $400 million for the English-language broadcast rights in the United States for the 2018 and 2022 World Cups — four times as much as ESPN had paid to broadcast the 2010 and 2014 Cups. Verizon and Volkswagen signed up to sponsor Fox’s halftime and postgame shows.

A portion of the audiences for those shows was lost Tuesday night when the United States bowed out. Even a riveting tournament next summer — which will include most of the world’s top soccer powers, including Brazil, Germany and Argentina — will not attract the same number of casual viewers who would follow the American team.

Stefan Szymanski, co-author of “Soccernomics” and a University of Michigan professor, said that the financial impact on World Cup broadcasters in the United States — Fox and Telemundo — would be the largest. But, in an email message, he cautioned that “this is all a bit tricky,” and that the American-less World Cup would still draw strong viewership.

Brian Wieser, an analyst at Pivotal Research Group, agreed. Press reports indicating a $10 million to $20 million negative impact on “the current English-language rights holder Fox ‘feels’ right in this context,” he wrote in a research note, “and represents a negligible amount for Fox.”

ESPN broadcast all 64 World Cup games from Brazil in 2014, averaging 4.6 million viewers. Games not featuring the United States averaged just 3.9 million viewers. The four American games — against Ghana, Portugal, Germany and Belgium — accounted for almost 20 percent of ESPN’s total World Cup viewers.

Telemundo, which paid $600 million for the American Spanish-language rights to the 2018 and 2022 World Cups, will also be negatively impacted, though not nearly as much. In 2014, the four United States matches accounted for about 9 percent of Univision’s total World Cup audience. Fortunately for Telemundo, Mexico advanced to play in Russia.

Fox and Telemundo were always expected to have lower viewership numbers than ESPN and Univision. Most games from Russia will be broadcast in the middle of the night or in the early morning in the United States — which was known at the time of bidding and could be accounted for. Missing out on a minimum of three matches for the United States was nearly unthinkable.

“Last night’s World Cup qualifying results do not change Fox Sports’ passion for the world’s biggest sporting event,” the company said in a statement. “While the U.S. was eliminated, the biggest stars in the world from Lionel Messi to Cristiano Ronaldo stamped their tickets to Russia on the same day, and will battle teams ranging from Mexico to England that have massive fan bases in America.”

Bruce Lefkowitz, a Fox Networks executive who handles advertising, said last month that about 75 percent of the “marquee” sponsorship deals for the World Cup had been sold, suggesting Fox could be somewhat insulated from the impact of the United States missing out. But without the United States, Fox may not be able to meet its ratings guarantees it gave advertisers. Efforts to use the World Cup telecasts to promote other Fox programming will also be diminished.

Coca-Cola, Visa and Adidas are official FIFA partners, while Budweiser and McDonald’s are World Cup sponsors. According to The Telegraph, it costs $25 million to $50 million annually to be a FIFA partner, and $10 million to $25 million to be a major World Cup sponsor.

The United States “is not necessarily a growth market, so all these brands are fighting for share,” said Gibbs Haljun, a managing director at GroupM, explaining why the United States missing out is not fatal to these companies. He also pointed out that the next two men’s World Cups, in Russia and Qatar, aren’t in markets that companies are desperate to get into, as they were with the Beijing Olympics or the Brazil World Cup.

Budweiser and Verizon said their strategy had not changed, while Coca-Cola, Visa and McDonald’s emphasized the global nature of the World Cup as the reason they became FIFA partners.

A number of apparel companies use the World Cup as well. Adidas is a FIFA partner, while Nike sponsors the United States team.

In its 2015 financial statement — which encompassed the 2014 World Cup and its run-up — the United States Soccer Federation reported almost $102 million in revenue, compared with $76.5 million the year before. Most of that increase was from national team game revenue, sponsorship and licensing, directly related to participation in the World Cup.

National team expenses were also much higher, but Craig Depken, a professor at the University of North Carolina, Charlotte, cautioned that the World Cup was still a huge net positive financially for U.S. Soccer. “They are essentially a nonprofit, and nonprofits tend to spend whatever they have.”

Donna Shalala, a member of the U.S. Soccer board of directors, tweeted that the result against Trinidad and Tobago was “unacceptable.”

“For us in U.S. Soccer more than a wake up call,” she continued. “Time for a revolution. Need a long term plan that is smart.”