Record World Cup Numbers Game for FIFA, Brazil

The 2014 World Cup is the most valuable, lucrative and expensive in FIFA history. Record numbers include a $35 million prize to the winning team's federation, $4 billion commercial revenue for FIFA and a $14 billion bill for Brazil. With three million tickets available to buy, the 64-match tournament is almost sold out. "The financial success — we have it, it is done," FIFA Secretary General Jerome Valcke has said. "The ticket sales success is there, we have never sold so many tickets."

 

FIFA's satisfaction is not shared across Brazil. Taxpayers are picking up the biggest bill, with the country of 200 million people running up costs several times more than FIFA to stage the world's most-watched sports event. The $14 billion total is the predicted spending on building and renovating 12 stadiums, upgrading federal, state and city infrastructure, plus security plans to welcome the 32 teams and around 600,000 expected visitors. The spending fueled unrest in Brazil, especially during the Confederations Cup last June, among those wanting better schools, hospitals and less government corruption. "When Brazil bid for the World Cup they had the budget to do so," Valcke said. FIFA forecasts it will spend $2 billion on the 2014 tournament, including the local organizing committee costs.Still, much of that bypasses Brazil. Even if the host nation does earn the winner's check on July 13, the remaining $323 million in FIFA's prize fund goes to the other 31 nations. The federations also share $48 million from FIFA to prepare for the tournament, and $70 million goes to (mostly European) clubs whose players are selected.

 

The $35 million first prize is less than one per cent of the governing body's revenue banked directly from its marquee event over a four-year commercial cycle. Broadcasters and sponsors pay most of FIFA's $4 billion income. European television networks have paid the majority of the nearly $1.7 billion, so far, in rights fees to FIFA, according to the past three years of financial reports. Six top-tier partners — Adidas, Coca-Cola, Emirates, Hyundai, Sony, Visa — pay a combined $177.125 million annually. That totals $708.5 million over four years. Eight second-tier sponsors — Budweiser, Castrol, Continental, Johnson & Johnson, McDonald's, Moy Park, Oi, Yingli — collectively pay $524 million. About $120 million has been earned from Brazilian 'national sponsors,' according to the 2011-13 financial reports. FIFA also gets hundreds of millions from fans buying match tickets, plus agencies securing the rights to sell corporate hospitality seats, and licensed merchandise. (AP)

 

Modi Effect: Rupee Best Performing Asia-Pacific Currency

Boosted by capital inflows and euphoria around the incoming government, rupee's surge to 11-month high levels has made it the best performing currency in the Asia-Pacific region against the US dollar so far in 2014. With a gain of about 5.3 per cent since the start of this year, rupee has sprinted ahead of its other Asia-Pacific peers, including Indonesia's rupiah and New Zealand dollar, in terms of year-to-date rise, shows an analysis of various currencies vis-a-vis the Greenback. The rupee, which closed at 58.52 levels against the US dollar on the last trading day on Friday, 23rd May, has incidentally seen a lion's share of 5.3 per cent gain in the past one month. The Indian currency stood at Rs 61.8 level per US dollar at the start of 2014 and has recorded a gain of 327 paise in less than six months, partly helped by robust foreign fund inflows. This marks a major turnaround since August last year when rupee touched its life-time low of 68.80.

 

"...positive sentiments out of the election results enabled us to upgrade our FII flows estimates by $5 billion to $20 billion, implying an overall BOP (balance of payment) surplus of $29 billion. We expect the USD/INR range to be 57-61 in FY2015," said Indranil Pan, Chief Economist of Kotak Mahindra Bank, in a report. Under the leadership of its prime ministerial candidate Narendra Modi, BJP has recorded an unprecedented victory in the recently held Lok Sabha elections and the Gujarat strongman was sworn in as Prime Minister on Monday, 26th May. The highest-ever tally in the Lok Sabha elections has helped BJP secure a majority on its own, thus raising hopes of big-bang reforms to revive the economy. (Agency)

 

RBI Eases Gold Import Rules

The Reserve Bank of India has liberalised gold import rules with immediate effect, by allowing seven more trading houses to procure the precious metal in order to boost trade.  According to officials, the move could surge gold imports by India from its current levels. In 2013, India imposed a record high duty of 10 per cent on overseas purchase of gold, in order to check the ballooning trade deficit.  The decision to ease the restrictions allows more than 20 segments, including jewellers, bullion dealers, and banks and trade bodies, to import the precious metal. 

 

Banks are now allowed to provide gold loans to domestic jewellery makers. This practice was stopped last year. The new guidelines will also increase legal monthly imports by 10-15 tonnes from the current 20 tonnes. According to an analyst, gold metal loans are of great significance as they are expected to release the cost pressures. India's Prime Minister Narendra Modi has also indicated his willingness to ease the curbs. The plan to ease the restrictions is ready for the new BJP government to take up.

 

China and Russia Sign $400 bn Gas Deal

Russian President Vladimir Putin on Wednesday, May 21st, oversaw a vast gas deal with China said to be worth $400 billion as the Ukraine crisis threatens Russian energy exports to Europe and his country faces Western sanctions. The gargantuan 30-year deal finally came to fruition after a decade of negotiations. It represents a turn to the east by Moscow at a moment when its geopolitical assertiveness, particularly the takeover of Crimea, has seen it heavily criticised by the West. The signing in Shanghai was witnessed by Putin and Chinese President Xi Jinping, said Chinese energy giant CNPC, the country's largest oil and gas producer and a party to the contract.

 

"This is another major milestone achievement in China-Russia strategic energy cooperation," CNPC said in a statement. Russia has been seeking more Asian markets, and its gas supplies to Europe via Ukraine are currently under threat because of unpaid bills by Kiev. European Commission chief Jose Manuel Barroso told Putin in a letter Wednesday it was "imperative" that negotiations over payments by Ukraine continued, and that supplies were maintained during the talks.

For its part, China is constantly seeking resources to power the growth of its economy, the world's second largest. But China and Russia had for more than a decade been unable to agree on a price for the gas. CNPC did not announce pricing information on the deal. Russian media reports cited Alexei Miller, the chief of Russia's energy giant Gazprom, as saying the gas deal was worth $400 billion over its full term. It was the firm's biggest-ever single agreement, he said, adding, "Such a contract has never been signed with any other company." Moscow's relations with the United States and European Union have plunged to a post-Cold War low in recent months over Russia's annexation of Crimea and Western accusations it is fomenting unrest in eastern Ukraine. (AFP)

 

AstraZeneca Rejects Pfizer's 'Final' Bid

AstraZeneca has rejected a revised £69 billion ($116 billion) bid from Pfizer, saying the US company's "final" offer is inadequate and would present significant risks for shareholders. Investors in AstraZeneca have had a distinctly mixed reaction to the news, which may put more pressure on the board of the Anglo-Swedish company to deliver better returns. The US predator has said that the £55 per share bid is "final" and that it would not go hostile. Aberdeen Asset Management, which holds a 2.5 percent share, said that Pfizer "could do better" on price.

 

Meanwhile, Jupiter Fund Management, a top 30 shareholder in AstraZeneca, said they were "disappointed" by the UK-listed pharmaceutical company's management's refusal to engage with Pfizer. After a months-long courtship of the smaller UK company, Pfizer came back with a £53.50 per share bid on Friday, 16th May, before raising it again to £55 per share late Sunday night. However, the AstraZeneca board has said it would need an offer of closer to £59 per share to come to the table with the US giant. The latest Pfizer bid is around 45 percent cash to 55 percent shares in the merged company - a substantial hike in the 33 percent cash offered earlier in the month. Pfizer needs to keep AstraZeneca worth around 20 percent of the combined company to get the "tax inversion" which was one of the key drivers behind the deal. The most recent offer would give AstraZeneca shareholders 26 percent of the merged company, indicating that there is a small window for a higher cash component.

 

Advertising Giants Abandon $35 bn Merger Plan

It would have been the biggest advertising company the world has ever seen. But now Omnicom Group and Publicis Groupe have called off their merger, citing "difficulties in completing the transaction within a reasonable timeframe." Neither company will pay a termination fee as they go their separate ways. A Twitter message from Omnicom's corporate account on Thursday night, 8th May stated, "We concluded the challenges and risks related to corporate culture, complexity and time outweighed the potential benefits of the merger."

 

Few mergers have been announced with such fanfare -- and at so high a price -- only to be scuttled along the way. The combined company would have been valued at roughly $35 billion. Most advertising agencies around the world are owned by one of four holding companies. Omnicom and Publicis are two of them; the other two are WPP and Interpublic. Omnicom and Publicis announced a plan for what they called a "merger of equals" last July and said the pact would benefit clients like PepsiCo, AT&T and Nissan (on the Omnicom side) and Coca-Cola, Verizon and General Motors (on the Publicis side). Back then, the companies said the deal was "expected to close in the fourth quarter of 2013 or the first quarter of 2014." In February, however, Omnicom chief executive John Wren told analysts that "this transaction is highly complex and is taking longer than we originally expected." (Agency)