Later this month, the 2002 World Cup kicks off in South Korea and Japan -- the first time that two countries have jointly hosted an event of this magnitude. The economic impact and cost of this event runs over $1 billion every four years in any case, and the logistics of staging the World Cup in two distinct nations raises both unprecedented hopes and fears.

Both Japan and Korea have spent a combined $8 billion on new stadiums and related infrastructure, and are launching major promotional campaigns to bring tourists to their countries. In any event, the business of soccer in the next few years is somewhat tied to the success of this event in three broad areas: (a) the business and political success of FIFA and the World Cup itself; (b) the fiscal and emotional health of Major League Soccer; and (c) the sustained growth professional, amateur, and grass roots soccer in America.

The business and political success of FIFA and the World Cup itself

The international governing body -- FIFA -- received over $1.04 billion for the global broadcast rights for the 2002 World Cup, far exceeding the $344 million paid by the International Television Consortium for the 1990, 1994, and 1998 events combined. Soccer conglomerate Kirch won the bid, and also pledged to pay $1.2 billion for the 2006 World Cup in Germany. While Kirch suffered major economic problems after Sept. 11, it is reported to have paid FIFA $718 million to date, with another $64 million guaranteed by bankers, and payable after the event.

International skepticism stems from FIFA using projected income from the 2006 World Cup to shore up its short-term finances after the collapse of licensing and merchandising conglomerate ISL. While FIFA declared a profit of approximately $44 million last year, experts suggest that it could have suffered a $51 million-$80 million loss without the "television fee mortgage."

This has caused major concern in the international soccer community. African Football President Issa Hayatou is challenging incumbent Sepp Blatter for the FIFA presidency, accusing his rival of "abuse of power," and campaigning intensely before the May 29 election in Seoul.

Corporately, the World Cup continues to court and soothe its "blue chip" sponsors. Adidas, Coca-Cola, Gillette, McDonald's, Phillips, and MasterCard all paid approximately $14.4 million to be among the 15 first tier sponsors. Each has embarked upon an aggressive promotional campaign. MasterCard will have approximately three million credit cards bearing World Cup marks for the event, compared to 1.5 million affinity cards available during the 1998 World Cup in France. FIFA is vigorously protecting its marketing properties, bringing over 500 lawsuits in 51 countries against companies infringing on its trademark. FIFA has also launched a scathing attack on companies such as Nike and Pepsi, branding them "parasites, with illegal activities threatening the interest" of soccer worldwide.

However, a recent London Guardian article suggests that 75 percent of soccer fans are "blissfully unaware" of major World Cup sponsors, and each company is increasing its promotion and marketing budget to maximize its investment over the next two months.

Closer to home, the Kirch Group has sold the Latin American television rights for the 2002 and 2006 games for over $860 million. The rights were sold to TV Globo for Brazil, and DirecTV for Argentina, Chile, Columbia, Mexico, Uruguay, and Venezuela. The deals are among the largest television contracts in the history of international soccer. Also, Univision is planning to cover 375 hours of live World Cup coverage in the United States, even though games will be played between 2 a.m. and 5 a.m. New York time.

The fiscal and emotional health of Major League Soccer

The future of Major League Soccer is keenly tied to the next two World Cups. This January, the core MLS investor group paid approximately $40 million to acquire the domestic rights for the next two Men's World Cups and the 2003 Women's World Cup, believing that international soccer and MLS are key to the grass roots development of the sport in this country. The sponsorship inventory will potentially bring in approximately $20 million in revenues, and Anheuser-Busch became the first company to buy advertising in the U.S., signing a deal worth approximately $4 million in February. All 64 games of this year's tournament will be televised on ABC, ESPN, or ESPN2. While time is short for 2002 ad sales, MLS commissioner Don Garber notes that the "overwhelming percentage" of revenue will come from the 2006 event.

The investment company -- Soccer United Marketing -- is a "spin-off" from the core MLS ownership. Owned primarily by investor-operator Philip Anschutz (along with Japanese advertising giant Dentsu), the link remains strong with the existing MLS ownership structure. The core MLS investment group has pledged to continue funding through 2006, even though estimates of league losses approach $300 million over the past six seasons.

The Anschutz Group is operating five of the 10 MLS franchises this year, as well as serving as an equity partner in the San Jose franchise -- a situation "unprecedented in United States professional sports." Commissioner Garber believes that the injection of over $100 million in capital should provide "economic credibility" while seeking long-term expansion to over 20 teams.

In 2001, regular-season attendance averaged nearly 15,000 per game, the highest since the league's debut in 1996. The league will also play 85 percent of its matches on weekends and holidays this year, attempting to boost attendance and viewership. MLS still operates under a single entity system, validated by the courts over the last two years. As a result, individual player salaries do not exceed $268,000, and the average salary last year was $95,555.

The league continues to aggressively market its product. Major corporate sponsors such as Budweiser, Kellogg's, Pepsi, Yahoo!, and others have been with the league since its 1996 inception. Additionally, the marketing power of the Anschutz Entertainment Group is brought to the table. The teams are working closely with United Artists, an Anschutz entity responsible for 6,000 movie screens in 561 United States theaters, for example.

Predictably, the key to the future remains the development of "soccer-specific" stadiums. Columbus is the only MLS team playing in a new soccer-specific stadium -- and the only one making money last year according to commissioner Garber. In February, the Los Angeles Galaxy broke ground on its new 27,000-seat, $120 million facility in Carson, Calif. The New York/New Jersey MetroStars are close to a substantial public/private partnership for a new multi-purpose entertainment facility in Harrison, N.J. Plans continue in Chicago, Washington, Dallas, and Denver. Expansion groups in Milwaukee, Winston-Salem, and Sacramento continue to seek franchises, obviously dependent on their respective stadium processes.

The sustained growth of professional, amateur, and grass roots soccer in America

United States sports entities continue to seek the international soccer tie-in. The NFL and FC Barcelona recently inked a marketing partnership involving broadcasting, sponsorship, licensing, and NFL Europe promotional synergies. FC Barcelona will also play two games in NFL stadiums in the United States.

While international soccer promotion remains important, the cultivation of the American grass roots spectator/participant is the key to soccer growth at all levels. Last year, over 7.9 million fans attended various soccer games around the United States, providing a solid base from which to build. Reaching the broadest possible demographic continues to be important as well.

The WUSA began its second season last month with a new national PAX TV deal and high hopes and expectations for its eight franchises. The Major Indoor Soccer League ends its playoffs this week, planning to eventually become a 21-team league with strong local ownership and television participation.

MLS itself continues to focus on the Hispanic fan. The MetroStars say about 44 percent of their fans are Hispanic, and commissioner Garber notes that Hispanics are the fastest growing and biggest minority group, exceeding 35 million people.

As has been the case over the past 20 years, the "next generation" remains critical for the business future of soccer. According to the National Sporting Goods Manufacturing Association, roughly 14 million kids play soccer in the U.S. (compared to about three million youngsters playing Little League baseball) -- a statistic not lost on the United States Soccer Foundation and others. The Sports Participation Research Study suggests that there has been a 19.3 percent increase in soccer participation since 1990, compared to a 3.4 increase in basketball, 0.6 percent increase in baseball, and a 14.7 decrease in touch football.

While soccer executives across America brace for continued uncertain economic times, the blueprint created by Major League Soccer, WUSA, Major Indoor Soccer League, and United States Soccer Foundation continues to make business sense. The momentum of the 2002 World Cup and the strong business foundation for the 2006 German event should have a profound effect on this vision as well.