The Global Economics of Sport

Is business in the way of sport — or does sport harm the economy?

June 9, 2002

Is business in the way of sport — or does sport harm the economy?

With its 204 member countries, world soccer’s governing body, FIFA, has more members than the United Nations. But besides being a force for good in the world — as FIFA President Sepp Blatter is fond of claiming — the game has become big business. Names like Beckham, Zidane and Ronaldo are known from Manchester to Mozambique. Our Globalist Factsheet explains.

What does host Korea have to gain?

The 2002 soccer World Cup is expected to provide a stimulus of $6.9 billion to the South Korean economy — and spur the creation of 350,000 jobs.

(International Herald Tribune)

What about co-host Japan?

Japan expects to enjoy a total economic stimulus of $23.8 billion, with construction costs accounting for half of that figure.

(Dentsu, Inc.)

Who stands to lose out?

“It’s a threat to marital bliss.”

(Renee Ho, Singaporean hotelier, June 2002)

Anyone else?

Soccer-related absenteeism and decreased productivity are expected to cost the British economy $4.7 billion in lost output — or around 0.3% of GDP — if England goes on to play the entire tournament and win the 2002 World Cup.

(Barclays)

Is there an upside for the British economy?

If the team is eliminated after just two weeks of play in the first round, losses are expected to amount to just $1.8 billion.

(Barclays)

How will the rest of Europe fare?

Soccer enthusiasm could cause the ten largest European economies to lose 0.3% to 0.75% of second-quarter GDP. That amounts to a total shortfall of up to $8.1 billion in economic output.

(Center for Economics and Business Research)

Why does productivity suffer?

“We have to go drinking in Ireland, and no one is going to come back [to work] after the match.”

(Irish soccer fan, June 2002)

And what are most corporations doing about the expected absenteeism?

IBM will give its 4,200 Dublin-based employees time off to watch Ireland’s World Cup matches.

(Financial Times)

How much do companies spend on advertising?

Adidas will spend around $35 million on team sponsorship and direct promotions over the four-week duration of World Cup — $15 million more than Coca-Cola spends on advertising in the UK over a year.

(The Guardian)

Why are advertisers drawn to the Cup?

The 32 nations competing in this year’s soccer World Cup account for 84% of world GDP — with Canada the only G7 nation absent.

(Financial Times)

So, is broadcasting the Cup big business?

In 1996, the German media group Kirch paid over 950 million euros ($890 million) to secure European broadcasting rights for the 2002 and 2006 soccer World Cups.

(Associated Press)

Are there any dark clouds on the soccer horizon?

For one, Kirch is now bankrupt. So is FIFA’s own sports marketing company, ISL, which ran up losses of over $100 million. That’s not to mention a bribery scandal that has tainted the reputation of FIFA president Sepp Blatter.

(The Globalist)

Besides bragging rights — what is up for grabs?

Since 1966, stock markets of developed countries that have won the soccer World Cup have outperformed global indices by 9% on average during the lucky year.

(Goldman Sachs)