World Cup and how businesses profit from it

 

The World Cup is almost upon us and billions of people all over the world are looking forward to watching the games. It is a sport that is not very popular here in North America, but during the World Cup it is up there with the NFL, NBA, NHL (in Canada) and MLB. Companies, both local small businesses and large multinational corporations invest in the World Cup and expect to make sizeable profits from it.

Merchandise sales including t-shirts, hats, soccer balls, etc…, earn brands like Nike, Adidas (official soccer ball maker) and other apparel companies will make millions of dollars or more on the sales of officially licensed team gear. Nike is usually very strong with sponsoring the team uniforms which costs them a lot of money for each individual nation, but that money comes back and then some when the fans of those respective teams buy their soccer shirts.

For Adidas, being the official soccer ball maker not only allows them to sell that ball worldwide but it also garners a huge amount of brand equity and recognition. This helps fuel sales of all soccer related gear that they make and allows them to charge more for some products as well. The same strategy is employed by other official sponsors that are not directly soccer related like Visa, Coca-Cola and Sony, among others. Many of them offer special edition World Cup products that they sell for a limited time which can boost sales on top of the recognition boost they see due to the sponsorship.

Flag makers and the stores and street corner vendors that sell them see a bigger boost from events like the World Cup, Euro Cup and Olympics than any other events that take place. The quantities of flags sold during the World Cup can be higher than the rest of the year for that store. Luckily for them, the World Cup, Euro Cup and Olympics don’t happen all in the same year so most years have some big flag selling event for them.

The participating countries’ soccer associations earn royalties from sales of all this team merchandise which is supposed to go back in to the development of the team and sport for that country. Although in some countries there is corruption which reduces the amount of money actually going back in to soccer, countries realize that by investing in it they earn respect, recognition and can earn money in other ways. Host nations (South Africa this year) have a better chance to make a profit from the World Cup than the Olympics and therefore, there is usually less internal debate when a country is thinking about becoming a host for it. 

The World Cup is a major global economic shot in the arm and this only adds to the excitement of the event because now many people can be cheering because their country is performing well and because their business is too.