World Cup a boon for some business, a bust for others

By Sascha Meyer Jun 9, 2006, 14:23 GMT

A supporters shows his ticket in front of the FIFA World Cup stadium Munich before the opening group A match of the 2006 FIFA World Cup between Germany and Costa Rica in Munich, Friday 09 June 2006. EPA/ALEXANDER RÜSCHE

Berlin - Big companies that paid big sums for the right to sponsor the football World Cup in Germany are not the only ones trying to cash in.

Building centres are offering lawn mowers with a 'World Cup discount.' Banks are promoting 'goalgetter bonuses.' Pizza delivery services go 'G-g-o-o-a-a-l-l' when you order a special topping.

There are hopes that the tournament, expected to bring a million more potential customers into the country, will be a shot in the arm for retailers, who have suffered for years from anaemic consumer spending.

Experts do not anticipate a broad-based boost to the German economy, however. But certain sectors will directly benefit, while others have reason to worry.

Thanks to huge marketing campaigns, cash registers in sporting goods stores have been jingling for several weeks already.

Adidas, the German sporting goods company, has sold more than 15 million 'Teamgeist' (team spirit) footballs, the official ball of the tournament, and more than a million German national squad jerseys.

Adidas expects that sales of products having to do with football will increase 30 percent to 1.2 billion euros this year.

Puma, a rival German sporting goods company, is also optimistic. It sees a a 35-per cent jump in total sales, to 2.4 billion euros, but lower profits due to 'the biggest advertising campaign in the company's history.'

Many companies are counting on delayed benefits from the world's biggest sporting event.

'Whoever says the World Cup sells cars has calculated incorrectly,' said Karl-Heinz Engels, head of German operations for the South Korean carmaker Hyundai.

Though it is an official World Cup sponsor, the company expects slower growth in Germany this year. But Engels said that in the long run Hyundai's involvement would be immensely important in raising the company's profile and awareness of its car models.

For some companies, the World Cup is a springboard to introduce new products. It is no coincidence that Germany's big mobile phone operators kicked off trials of mobile phone TV just before the start of the tournament.

The consumer electronics industry is hoping that the World Cup, televised around the globe, will bring the long awaited breakthrough for high-definition television. Flat-screen TV manufacturers such as Loewe and Philips are already reporting increased sales of more than 10 per cent.

With the help of the World Cup, soft drink giant Coca-Cola aims to put its canned drinks back on German store shelves - in special, more slender cans featuring pictures of the players on Germany's national football team. Sales of canned drinks plummeted in Germany after deposits were levied on them several years ago.

Businesses in many big German cities are gearing up for four extraordinary weeks in which the country's restrictive store-closing hours will be eased in many places.

It remains to be seen, however, whether people will shop in droves late in the evening and on Sundays.

Germany's retail trade federation said that simply keeping stores open would not not boost sales, and suggested holding festivals in shopping districts.

It is also unclear how much the hotel industry will benefit from the World Cup. FIFA, the world governing body of football, cancelled on short notice several thousand rooms it had reserved.

The move was not only a blow to hotels in Berlin. In Hanover, which is also a match venue, many rooms are said to be still available.

Nevertheless, Germany's minister of economics and technology, Michael Glos, says he is confident the World Cup will boost the economy. But economists expect the impact to be limited in view of Germany's huge GDP.

The Association of German Chambers of Commerce and Industry (DIHK) forecasts World Cup-related GDP growth to be 0.33 percent in 2006. The German Institute of Economic Research, on the other hand, expects no significant boost to the economy directly due to the World Cup.

A few economic sectors will likely come out losers. According to a DIHK survey, they include travel agencies and the movie industry.

And there is one sure winner, namely FIFA. Its proceeds from the sale of exclusive broadcast and sponsorship rights is expected to total some 1.8 billion euros. Most of the money will be redistributed among the various national football associations.

FIFA's financial future looks bright, too. Looking ahead to the 2010 World Cup in South Africa, FIFA General Secretary Urs Linsi said: 'There'll be a considerable increase.'