The Economics of the World Cup

The 2010 World Cup is here, and although not much of a big deal in the ol’ USA, it’s quite a big one in, well, every other country in the world. And for good reason: it’s exciting! And fun! But if kicking a soccerball around doesn’t excite the American imagination, there’s another reason the World Cup probably should: $$$. Yep, in the world of money, the World Cup may as well be the Super-World-Series-Stanley-Bowl-Championships of sport.

So who are the big winners? First up, television. With a month-long worldwide audience, the World Cup is number one when it comes to viewership. And, viewership =’s expensive advertisements. Coca-Cola, Adidas, Sony, Visa, Emirates and Hyundai alone are all paying between $96 million and $176 million in advertising dollars, each. And that’s just the top of a very large totem pole.

Coming in at a respectable number two? Retail. In particular, World Cup jerseys (as well as headbands, water bottles, etc.). This year’s World Cup is projected to rake in a nice, cool $2.69 billion in retail alone.

The third big winner: local business. As it turns out, it’s good business to host the largest international sporting event in your backyard. Germany, who hosted the 2006 World Cup came away with $300 million in added local economy stimulus. And South Africa, home to this year’s Cup, is expected to double that, with a projected local earnings of $620 million. Not bad.

Now, of course, costs must be included too. While World Cup profits have increased over the years, so too have the costs. Stadiums and infrastructure don’t come for free, after all. And for this month-long series, South Africa has offered up close to $6 billion. Yikes!

Nonetheless, building up your country’s infrastructure isn’t the worst investment of money, and, plus, the host of the World Cup always comes out ahead all the same.

(Source: Mint.com)

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