FIFA says the World Cup contributes US$40.9 billion to GDP; Goldman Sachs: The host country’s actual benefits are weak
Ahead of Sunday night's kick-off between Spain and Argentina, the outcome is clear: Football's greatest prize is more than just a sporting event; it's an economic behemoth with geopolitical overtones. The economic impact of the World Cup has good reason: No other sporting event – not even the Olympics, Tour de France or Wimbledon – can match its global reach. Sunday's finale is expected to draw at least 10 times the crowd of the Super Bowl. According to FIFA, at the last World Cup in Qatar in 2022, more than half of the world's population - about 5 billion people - were estimated to have watched at least some of the games. As the event expands this year, total participation is expected to be even higher. Large-scale sports and cultural events can be important cash cows, with ripple effects across the wider economy. Taylor Swift's 2024 Age Tour is said to have boosted quarterly GDP in the UK and Singapore, while a Beyoncé concert has been accused of boosting inflation in Sweden. But the impact isn't always clear-cut. Analysts using data from the 1982 World Cup found that the positive impact on the host country's economic output was only weak. The long-term impact is almost nil, too: while activity gets a boost in the short term, much of the spending tends to just be diverted away from other activities, and any boom during the final period is often followed by a slump. While some local bars sold out as Scots fans flocked to Boston, the positive impact was offset by economic weakness elsewhere, as consumers cut back on spending amid rising prices related to the Iran war, preliminary analysis from the Fed showed. Regular tourists also avoid host cities because of expected congestion and sky-high prices. However, there are also intangible benefits. Goldman Sachs analysts pointed out that many fans are willing to pay high prices to see their country win. That kind of national pride, happiness and cultural weight is huge and difficult to quantify in the GDP ledger. Obviously, the commercial circuit derived from the World Cup is huge. The major official sponsors made a lot of money, and the aviation, catering, hotel and retail industries of the 48 participating countries also saw a surge in revenue. But the significance of the World Cup is not just about economic gains, but also about the ownership and competition of soft power. Look no further than FIFA’s official sponsors. Each is in the spotlight: Qatar Airways and Saudi Aramco are among the top "partners" - believed to have paid up to $200 million for the privilege - underscoring the dominance of fossil fuels in driving global output and the influence energy-rich Gulf states seek. Represent the established forces of Western capitalism, while fast-growing emerging economies are represented by South Korean automaker Hyundai Kia and Chinese technology companies Under it, a group of "sponsors" and business "supporters" range from cryptocurrency exchanges to technology companies and banks. Not all sounds so compatible with elite sport - especially "fast food restaurant sponsors" , or official snack sponsor Frito-Lay (better known as Walkers in the UK).