FIFA World Cup 2018: The economics of football; who invests money, who makes money, and how much

By: | Published: June 15, 2018 4:46 PM

FIFA World Cup 2018: Every four years, for almost a month, the entire world is gripped with excitement -- and numerous nail-biting and adrenaline pumping moments  -- when the biggest sporting carnival takes place: The FIFA World Cup. And there's some economics involved.

FIFA World Cup 2018: The economics of football; who invests money, who makes money, and how muchThe FIFA World Cup 2018 has cost Russia billions of dollars to host the game, and FIFA is going to take home millions of dollars as profit.

FIFA World Cup 2018: Every four years, for almost a month, the entire world is gripped with excitement — and numerous nail-biting and adrenaline pumping moments  — when the biggest sporting carnival takes place: The FIFA World Cup. And while the football fans around the world would not be more thrilled to lose their sleep over watching their favourite teams score the winning goal, there would be many who had, by then, invested a lot of money and made a lot of money in the tournament that kick-started last night in Moscow.

To begin with, there is Russia, there is FIFA, and there are advertisers. The FIFA World Cup 2018 has cost Russia billions of dollars to host the game, and FIFA is going to take home millions of dollars as profit, Associated Press reported. Russia has spent $11.6 billion on projects for the tournament and the economic impact of the tournament could boost country’s GDP by $26-$30 billion by 2023.

On the other hand, FIFA is expected to make $6 billion in revenue this year. Even as the marquee tournament is overwhelmingly the main source of FIFA income, the $6 billion figure is conservative as it comes amid the federal investigations of bribery that rocked FIFA. Meanwhile, companies around the world are expected to boost advertising spend by $2.4 billion, despite the absence of the United States and China.

Banks are predicting winners. UBS says it will be Germany, Goldman Sachs says it will be Brazil and DBS gives a too close to call prediction between the two.

Football and Asia — how they stack up together!

DBS says that not only are the Asian footballing nations poorly ranked, they have by and large become worse over the past two decades including China that made a huge investment bet. “High ranking in football is the playground of middle-and upper-income economies,” DBS research said.

But some investments bore some fruits. After President Xi Jinping announced that “Football Dream” must be included in his “Chinese Dream” in 2013, more radical reforms and aggressive investment plans have been put in place. The world ranking of the national team has improved to 75 in 2018 from 92 in 2013. South Korea and Japan are the most successful teams in Asia and India is far behind.

And while somebody is definitely making money, hosting the World Cup didn’t lift the economy of South Korea and Japan out of the doldrums of sluggish growth and deflation, DBS said in a research report. But benefits in certain sectors such as tourism cannot be ruled out.

Singapore dollar and the Thai baht were the only Asian currencies that appreciated during every World Cup after the 1985 Plaza Accord, and the Indian Rupee alternated between appreciation and depreciation with each World Cup since 1978.

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