The economics behind the World Cup - New York News

The economics behind the World Cup

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By: Herb Scribner, Deseret News

It's time for the 2014 FIFA World Cup. Fans are celebrating, countries are watching and players are competing.

But what's the economics behind it? What is the World Cup's relationship with economics?

Well, economics cannot predict the World Cup winner, according to The Washington Post. Regular club teams - like Real Madrid, Barcelona or Paris Saint-Germain - put a lot of money into their clubs, which leads to victories and winning seasons. But for the World Cup, the Post noted, it's a very different scenario.

“In this regard, the World Cup is a refreshing contrast to club competition, where successful teams often depend on wealthy owners, and to the Olympics, where national income can often be used to forecast medal counts,” wrote Max Ehrenfreund for the Post.

No matter how much researchers try to look at economic reasons for a team to be successful at the World Cup, soccer is nowhere close to being predicted by a country's economic situation, Ehrenfreund wrote.

“For now, soccer remains a game of luck - and of good players making their own luck, and in turn, of good programs creating good players,” Ehrenfreund wrote. “That depends on facilities, infrastructure and, of course, on less tangible factors like tradition and know-how.”

The Economist did its best to predict the winner of the World Cup, though, in an interactive chart.

“Football fans tend to view their teams through rose-tinted glasses, not cold, hard stats,” The Economist reported. “Our ‘probability circle' ... shows the chances that a team will win the tournament, at each stage. Brazil is the favourite by a wide margin. But there are a few surprises.”

The chart gives host country Brazil a 21 percent chance to reach the final, while Spain, Netherlands and Germany also rank high.

But while hosting might give you a competitive advantage, it might not help you economically. In fact, it's actually better to win a World Cup than it is to host one, wrote Tim Harcourt for BRW, an Australian business website.

There is an economic improvement for countries that host the World Cup as tourists flock in and those countries get some exposure. But it doesn't measure up to the winners, BRW reported.

"On average, the victor outperforms the global market by 3.5 percent in the first month before tailing off," BRW reported. "For the host nation outperformance is 2.7 percent, but it tails off too and can even underperform in three months."


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Copyright 2013 Deseret Digital Media, Inc.

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