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Friday, July 11, 2014, 09:24

Playing for profit

By ALFRED ROMANN in Hong Kong / Asia Weekly
Playing for profit
Argentina’s Lionel Messi vies with Belgium’s Eden Hazard during a quarter-final match between Argentina and Belgium at the 2014 FIFA World Cup on July 5. (AFP)

Almost every one of the more than 100 ardent football fans gathered in a bar in Hong Kong’s busy nightlife area of Wan Chai on July 5 were clad in the sky blue and white of Argentina’s national team, but only about half were Argentines.

The other half hailed from dozens of different countries and included a strong contingent of avid Hong Kong football fans keen to soak in the magic of superstar striker Lionel Messi.

The atmosphere was electric for most of the match against Belgium, which Argentina won 1-0 to earn a spot in the semi-finals of the 2014 FIFA World Cup.

“I have loved the Argentina national football team since 1990, when I was 11,” says Stanley Cheng, who has watched every game of this tournament so far. “(The match times) are a problem, at least for some people, but the hardcore fans would watch it anyway. I know some of my friends will be taking the next day off.”

As the World Cup is being held in Brazil, game times are unfortunately late in the evening or early in the morning for Asian fans. The final this Sunday between Argentina and Germany will be broadcast at 4 am or 5 am in most of the Asia-Pacific region.

Still, the fans are coming out of the woodwork around the world and not least in Asia Pacific, represented in this year’s tournament by South Korea, Japan and Australia.

Despite the popularity of the sport, the global appeal of the tournament and the huge fan base, the business and economic impact of the tournament is but a blip.

Some bars will do brisk business for a few evenings, television viewership might climb and a couple of regional brands — most notably Hyundai and Sony — will get some exposure from advertising but businesses are not likely to see any meaningful benefits.

And yet, the numbers are huge.

Some 250 million people play football regularly in 200 countries around the world. The FIFA World Cup, held every four years, may be the only truly global single-sport competition in existence with participants hailing from five continents.

“All men watch football and though there are some issues with ‘match fixing’ (in football) the passion of South Americans make this Cup great,” says Adia Yang, a graduate student in Singapore who has gone out to watch most games.

This level of fanaticism translates into massive viewing numbers. FIFA expects that more than 3.2 billion people around the world will have watched at least a minute of the competition by the time the final whistle blows on Sunday.

“We believe the overall audience figures from the 2014 FIFA World Cup will show again that the World Cup is the most popular single sporting event on the planet,” Niclas Ericson, director of FIFA TV, said last month.

And yet, for all the popularity of the game and the tournament, the economic impact is negligible. Host Brazil will, of course, benefit from new or refurbished stadiums and some improved infrastructure by the time all is said and done.

The country is also certainly due to benefit from the 3.2 million football tourists throughout the 32 days of the event. But even in Brazil, the benefits are tiny when put in the context of the economy.

In a study it has been doing every four years since the 1998 World Cup in France, investment bank Goldman Sachs not only makes predictions for who the winner will be, but also considers the impact on various areas of the economy. And this impact is limited on economies and business.

Interestingly, winning the World Cup lifts stock markets for a brief period.

“Looking at history, there is a clear pattern of outperformance by the winning team in the weeks after the World Cup final,” noted Goldman Sachs. “On average, the victor outperforms the global market by 3.5 percent in the first month.”

None of the Asia-Pacific teams were anywhere near winning the tournament this year so this particular benefit is moot.

Even for host Brazil, the tournament will have little lasting impact in most rated sectors, said ratings agency Moody’s in a note. Sectors like food and beverage, lodging, car rentals, TV broadcasting and advertising were expecting a revenue boost but this was likely to be temporary.

Barbara Mattos, a vice-president and senior analyst at Moody’s, says that it is hoped hosting the World Cup will help lift Brazil out of economic slowdown, “but the associated economic activity ultimately pales before the country’s $2.2 trillion economy, the usual levels of investment spending and the annual revenues of most companies”.

“The 32-day event will provide short-lived sales increases that are unlikely to materially affect earnings and disruptions associated with traffic, crowding and lost work days will take a toll on business,” she adds.

That’s not to say that some Asia-Pacific companies, large and small, will not see a spike in business.

In Seoul, the city organized viewing events for the South Korean team’s official fan club, the Red Devils, in front of the downtown palace of Gyeongbokgung.

Although South Korea did not make it past the qualifying round in this World Cup, thousands of fans arrived to the area to watch the team’s three matches.

At Sam Ryan’s Sports Bar & Grill in Seoul, business during the World Cup has been brisk. People filed in for all games and business has been better than expected, according to one employee.

South Korean automakers Hyundai and Kia are long-term sponsors of the tournament and now FIFA Partners, the highest level of sponsorship which includes just six companies.

The sister automakers signed a deal with FIFA in 1999 to sponsor 13 FIFA competitions, including the 2002 event held jointly between South Korea and Japan. The companies plan to continue partnering with FIFA until 2022.

“Hyundai sees football sponsorship as a core element of its marketing strategy,” says the company. The goal is to connect “between global customers and its brand by supporting sports culture”.

Japan’s Sony takes a similar view. Sony is also a FIFA Partner. The company sponsored the Global Stadium website and app that allowed fans around the world to follow games in real time and then check out highlights.

“The partnership also allows all of our businesses — electronics, games, movies and music — to globally associate with the emotion and excitement of football,” says the company.

While the focus is typically on the last rounds of the event, the World Cup is a much longer and more diverse affair. Some 203 national teams competed in 820 qualifying matches over three years to make it to Brazil, where only 32 teams made the cut.

All in all, this is big business.

Companies spend as much as $50 million per year to be partners. The other four partners of the tournament are Adidas, Coca-Cola, Visa and airline Emirates.

In 2013 alone, FIFA earned $404 million from marketing rights associated with this World Cup, a little shy of a third of its annual revenue.

Japan’s national football league, the J-League, has grown faster than the real economy since 2010. Both attendance and revenue have increased in the national league. For the current tournament, games were shown on massive screens in stadiums.

It is difficult to put a number on the benefits that partners receive beyond massive global exposure.

China and India, the two largest countries in the world by population, are typically sidelined. India is not very interested in the sport in general. China made it into the final rounds of the 2010 Cup but not this year.

And yet, Chinese are avid fans. Bars and restaurants showing the games do brisk business, but that is a short-lived benefit.

For most fans, the World Cup is less of an opportunity to spend and more of a chance to bond with peers with similar tastes.

“I watch it because it is once every four years and it is a conversation starter, so I can have something to talk about with my friends — and because of Messi,” says Rocky Zhang, a football fan in Beijing.

 
 
 
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