Germany is UBS’s favourite for the Cup, with their ranking, their draw, and their past performances all factoring into its computation.
With ten days to go till the football World Cup (WC) kicks off in Russia, eyes everywhere—from investors to astronauts alike—will be glued to screens, watching one of the greatest sporting extravaganzas. Even as global investment and financial firms take a call on the likely winner, UBS’s world cup 2018 report focuses on the economic gains for Russia from hosting and names who the financial services company expects to walk away with the Cup.
Germany is UBS’s favourite for the Cup, with their ranking, their draw, and their past performances all factoring into its computation. To control for randomness and the odd upset seen in the sport, the simulation was run 10,000 times—Germany emerged the winner 24% of the time, the most number of times among all competing nations.
The gains for Russia, one would think, would come from the infrastructure that gets created around the event and the international recognition from hosting the WC successfully. However, UBS believes that the huge spend on stadia and other dedicated infrastructure may not have commensurate long-term gains. In Brazil, a multi-million dollar stadium constructed for the 2014 WC is now being used for hosting wedding receptions and other social events, because the crowds that local football matches attract are not large enough to pay for its upkeep.
UBS believes the same will happen with the Russian investment since domestic football quality is not a huge draw. Given the tensions between Russia and Western nations—against a backdrop of sanctions and continued geopolitical unrest—a positive showing with the international sporting event will help improve the country’s image. However, with a combative Vladimir Putin having secured his presidency till 2024 at least—in a highly dubious election—and with no credible political opponent in sight, the West may not change its stance even then.
Therefore, despite prudent economic policies followed so far and a satisfactory economic performance over the past few years—one that helped Russian credit be declared investment-worthy in February two years after being declared ‘junk’—Russia is unlikely to score a big win, or any win, from hosting the WC.