Events such as the Fifa World Cup Qatar 2022 have an immense impact on the economy. There are some people looking for the most unusual ways to relate sporting events to the results of the economy. That is why today we will talk about the World Cup, the stock market and the economy.
The truth is that you do not have to look for convoluted correlations (no matter how funny the statistics are) to see the relationships between economy and football. We just need to understand that the World Cup is big business and behind it there are companies that benefit.
In the same way, countries benefit from the publicity and tourism that a World Cup provokes. This is part of the controversy that has been unleashed by the most recent elections of the World Cup venues.
Needless to say, football is spectacle and entertainment, apart from sport, and thanks to them many businesses move. That is why today we will analyze the World Cup and its relationship with the stock market and the world economy.
Without further ado, let’s get started.
Table of Contents.
These types of relationships can be fun if taken as a joke or to entertain us, but they can be dangerous for those who believe in them. Like someone who gambles his life savings on a bet, because he dreamed of a particular lottery number.
The existence of correlations between variables does not imply causality. And since it does not imply causation, we cannot professionally recommend that these numbers be considered in any responsible financial decision.
We warn because our words seek to sincerely the role of the investor as a person who studies the market. Knowledge of the assets to be acquired and the risks is essential to be a good investor. Or at least be an investor who knows and knows how to take responsibility.
Investments are not a lottery, nor are they a work of dreams and statistical correlations. Investments and their results are the product of human decisions and the changing environment.
A company with 100 years of operation can fall out of favor overnight if the regulatory environment or the market changes. Therefore, reading the ups and downs of stock price charts can help us understand the irrationality of the human being. But these graphs are not going to help us understand the future of a company.
We need to understand this to enjoy and laugh at the crazy correlations that some have found between the world and the economy. If we don’t take their follies very seriously, we can have fun. Later we will see the real correlations between the World Cup, the stock market and the economy.
LPL Research, in a wonderful marketing exercise, published its World Cup-onomics 2022 report. In this exercise of analysis and marketing, they have caught the attention of many news agencies.
Some of them have predicted that the number of hat-tricks (three goals by the same player in a game) during a World Cup is correlated with the yield on U.S. Treasuries. A correlation as unusual as incredible but that has allowed him to capture the attention of the public.
However, when we detail their report and their warnings, we find that they recommend not using it as financial advice. In addition, they point out very accurately, that “past behaviors do not imply future results.” Undoubtedly a clause that his legal advice department recommended before the possible demands that his readers who took him seriously.
But there are other very interesting correlations such as “the value of the template of a national team” with respect to the “number of previous appearances of the selection in World Cups”.
A high-level team will have its players competing and playing in the best leagues in the world. Therefore, the “value” of each of these players is high and therefore their performance is all the more so. This performance of high-level players is a guarantee of qualifications for the World Cup.
The question is which was first, the chicken or the egg? First appeared the players in the leagues of the world or first was the appearance of their teams in World Cups. It would be something very interesting to study.
The truth is that this result shows a correlation between good remuneration and high performance, nothing that surprises us really.
From sportswear, credit card franchises, tourism, and accommodation industry, through balls, televisions and streaming services. There are countless sectors that benefit from the World Cup.
Some TV manufacturers have seen their sales increase significantly. Live streaming services (satellite TV and streaming) have seen their subscriptions on the rise, and with them customers and probably their shares.
Likewise, companies such as Visa and Mastercard see their position as efficient means of payment strengthened internationally. But visa also captures the visibility of being a sponsor of the World Cup.
Needless to say, the industry of implements and sportswear is skyrocketing. And it is that children in these seasons only want to imitate their sports stars.
A very special place is occupied by the tourism industry, so hit by the pandemic, that it was able to market a variety of products in classified countries. Tour packages to visit Qatar and enjoy watching your team win (or lose). No doubt the World Cup raised many companies, but also left in Qatar planted an immense infrastructure. No doubt. Fifa World Cup represents an opportunity for the economy and companies listed on the stock exchange.
There were other correlations brought to light by LPL Research’s “World Cup-onomics 2022” study. It showed that a country’s stock market returns increase with his team’s World Cup victory. This correlation finds its exception in France, which after having won had to do with a bear market due to the bursting of the dot-com bubble.
They are certainly interesting references that can show that the economy is stimulated by a positive environment after the victory in a World Cup. However, this positive attitude is not above market crises.
Additionally, the same LPL Research team does not suggest taking these findings very seriously. LPL Research recommends not considering these “findings” as investment advice. Remember that the explanations can be very varied and rather a good economic environment can lead a country to go to a World Cup, and not the opposite.
However, we cannot deny how entertaining it is to enjoy these curiosities of football and finance. But let’s move on to another very interesting topic, the Qatar World Cup and the controversial situations around its headquarters as a World Cup.
Sports have always been fertile grounds for the encounter between different countries and cultures. In the same way, the FIFA World Cup Qatar 2022 brings with it the first Arab country to host a World Cup.
Additionally, Qatar is a country that has never qualified for a World Cup which put for many in doubt the suitability of the aforementioned country to host such an event. This aroused numerous suspicions which led to an investigation into the awarding of host status to Qatar. However, the FIFA commission that investigated the case found no evidence of corruption.
However, several journalistic investigations have published evidence of bribes made by Qatar to members of FIFA’s executive committee. For its part, the New York prosecutor’s office discovered that some payments were made through entities in the United States and currently has 17 defendants in the bribery case.
The situation is far from being solved and for now the investigations continue in this regard.
In addition, other journalistic investigations reveal unusual payments to the federations of Argentina and Brazil for friendly matches. These payments are 4 times above the usual payments for a friendly match. The researchers conclude that this was a way to influence the voting of the federations in the selection of the World Cup venue.
The controversy is served. What do you think? Should we give new countries the opportunity to host the World Cups? Was there corruption or not?
The World Cup is a spectacle that has financial values and human values. Brands are strengthened with their presence in the World Cup and we hope that the human values of the teams and the countries also know how to do it.
The World Cup is an opportunity for the sporting meeting between countries, but it is also a cultural meeting. The opportunity to change the world’s perception of our own identity is key to being able to integrate.
Perhaps that is why countries such as Russia and Qatar have struggled to make a place for themselves in the organization of the World Cup. But a World Cup is capable of showing the best and the worst of yourself. Just as it exposes your strengths, it is impossible to hide weaknesses forever. That is why the organization of a World Cup is also a golden opportunity for isolated countries to connect with the world.
Thanks to this exchange we can see a better understanding and positive changes in all societies that connect.
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