Why World Cup goals have a big net effect on business

[CHIMO]

Picture the scene: England are playing Brazil in the semi-final of this year's World Cup. The match has gone to a penalty shoot-out. The score is tied at 4-4 as Frank Lampard steps up to take the kick that could break a 44-year hoodoo. All over the country, football fans hide heads in hands, unable to watch – as do the marketing men from the companies selling beer, replica football shirts, flat-screen TVs and even garden gnomes dressed in the England kit.

As events in South Africa this week will show, the notion that football is just a game is as old-fashioned as lace-up balls and bandy legged wingers. It is both a big business and a subject for serious academic research. Finance directors see it is as a moneymaking opportunity. Macroeconomists will study whether the competition will be a shot in the arm for South Africa's growth prospects or the sort of financial burden that dogged Montreal for decades after the 1976 Olympics.

And while England versus Germany or Brazil versus Argentina is the sort of head-to-head contest that excites the fans, the contest between the City's top economists and the statisticians to assess which sides will do well this year is just as keen. Fresh from outperforming the bookies in predicting the outcome of the Eurovision Song Contest, the statisticians who compete on the Kaggle website are confident they can see off anything that Goldman Sachs, JP Morgan or UBS throw at them.

Since the first World Cup in 1930, only seven countries – Brazil, Italy, Germany, Uruguay, Argentina, France and England – have lifted the trophy. But recent research has shown that globalisation could help to make tournaments more open. A former World Bank economist, Branko Milanovic, looked at the impact of labour mobility on football. His conclusion was that the influx of African players into the Premiership made the English domestic game less open, since the concentration of overseas talent at the big, rich clubs made it much harder for a small club to win the title than it was in the 1960s and early 1970s, when there were strict restrictions on foreign players.

http://www.guardian.co.uk/business/2010/jun/06/world-cup-goals-business

Such complicated questions. And more questions.

The market is much easier. It goes up or down. Or it doesn't.

[applegrove]

1. Apparently the women who would usually cook and sell food to stadium goers have

been banned by the sponsors of the world cup. That stinks.