Sunday, June 6, 2010

Paper Describes 'Fifa's Great SA Rip-Off'

It appears that some media outlets have tumbled to the notion that Fifa, soccer's international ruling body, is not a philanthropic organization.

And some of the media are ticked.

Specifically one City Press, a Sunday newspaper which has published a scathing report on tax breaks Fifa will get during the World Cup, as well as a variety of other advantages the country agreed to give Fifa -- presumably before Fifa boss Sepp Blatter and the lads agreed to do such a forward-looking thing as award the World Cup to Africa.

The deals could lead to the staging of the event costing South Africa's government hundreds of thousands of dollars in tax revenue, the newspaper suggests. Oh, and one unnamed government official is quoted as saying, "Fifa are a bunch of thugs. Not even the UN expects you sign away your tax base. These mafiosos do."

The crux of the problem, the newspaper suggests, is that the South African government agreed to a "tax bubble" around almost all things "2010 World Cup," which "exempts Fifa, its subsidiaries and foreign football associations from paying income tax, customs duties and value added tax (VAT)."

As the newspaper not-so-daintily put it: "For the next five weeks get used to Sepp Blatter being your president and (actual president) Jacob Zuma sitting on the bench as a bit player whose government is legally bound to perform the international football federation's every bidding."

The Johannesburg Times, a more cautious newspaper, has picked up the story, crediting the City Press, but leading with the idea that the World Cup was never supposed to be about making money.

It uses a quote from the South Africa Revenue Service (SARS) up front, but only in part.

According to the City Press, SARS spokesman Adrian Lackay said, "From the perspective of what we spent as a country and from what the country stands to make in terms of revenue and profits it is almost negligible.

"Our approach to the World Cup is that it was never going to be a revenue-raising exercise. Certainly it would be wrong to view the World Cup contributor in itself.

"The concessions we had to give to Fifa are simply too demanding and overwhelming for us to have material monetary benefits."

However, the national press association quotes Lackay as saying, "It's a once-in-a-lifetime opportunity, and there's a cost that comes with that" -- and that is the quote The Times uses.

The Times does a good job of summing up what Fifa has been guaranteed:

"A supportive financial environment by waiving customs duties, taxes and levies on the import and export of goods belonging to the Fifa delegation, its commercial affiliates, broadcast rights holders, media and spectators;

"Unconditional visas to foreign visitors and anybody in any way associated with Fifa;

"The unrestricted import and export of all foreign currencies into and from South Africa;

"Free work permits to delegates, media and merchandise partners;

"Ownership of all media, marketing and intellectual property;

"And that Fifa cannot be sued for claims arising from the staging of the tournament."


Oh, and just FYI ... the City Press misspelled the SARS spokesman's name.It is Lackay, not Lackey. So take that into account if you want to evaluate your sources.

Still, it is good to have one angry media source out there, even if not every particular of what it has reported is correct.

The reality of this is ... that Fifa probably gets many (most? all?) of the same concessions from other host countries. "You should consider yourself lucky that we are coming to your home" is the guiding principle behind the awarding of berths. And if you are not living in a wealthy country, you probably shouldn't be staging the World Cup.

Anyway, who is getting rich of this World Cup? Not the South African government. That seems clear. Not unless you want to consider potential long-term (and probably unmeasurable) benefits such as all that presumably positive publicity SA will get over the next month -- which will want us all, people and companies, to go there and spend money. In the future.

Not sure that always works out.
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