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Thursday, 30 May, 2002, 07:30 GMT 08:30 UK
The elusive World Cup jackpot
Jeju stadium, South Korea
New stadiums have boosted Korea's economy

The World Cup is a four-yearly celebration of the planet's best-loved game, showcasing displays of footballing skill which, at their best, transcend national rivalries and spill over into art.


One of England's key games, against Argentina, is due to start at 12.30pm. I don't think there'll be very much work done that afternoon.

Douglas McWilliams, CEBR chief executive
It is also, of course, a no-holds-barred frenzy of corporate hustling as businesses jostle for a piece of the multi-billion dollar advertising and marketing opportunities on offer.

But this time round, the awkward east-west time lag between Europe and World Cup hosts Japan and South Korea means that Western firms will miss out on the off-pitch commercial jackpot.

Most brewers and broadcasters accept that this year's early morning match screenings rule out a repeat of the sales bonanza generated by the 1998 World Cup, held in France.

Ads industry downcast

"This is the first time that the World Cup has gone so far east" says Adam Bishop, head of television buying at British media planning agency Starcom Motive.

"What does this mean for (commercial broadcasters)? Are they going to get as much money as last time? No they're not."

Mr Bishop said that while the World Cup should help generate positive growth in television advertising revenues in the summer months, sales for the year as a whole are likely to be flat.

But internet sites, radio stations and evening newspapers, seen as vital media outlets for office workers wishing to catch up on early morning games, may get an unexpected advertising boost.

Eyes on the ball

Meanwhile, the distraction of World Cup games is expected to cut worker productivity, especially on the two weekdays when the England team is scheduled to play.

The Centre for Economics and Business Research, a London-based think-tank, has calculated that the World Cup and two extra public holidays in June could cut the UK's economic output by 3bn in the second quarter.

"One of England's key games, against Argentina, is due to start at 12.30pm," points out CEBR chief executive Douglas McWilliams.

"I don't think there'll be very much work done that afternoon."

500m flutter

In fact, the only sector likely to reap substantial benefits is the betting industry, with British gamblers expected to punt up to 500m on the competition.

This would provide a welcome boost to betting shop chain William Hill, which is due to float on the London Stock Exchange next month despite a generally unfavourable climate for new share issues.

But the going is unlikely to be uniformly smooth for City investors.

London share prices have fallen lower on six of the last eight occasions when England have been forced out of the tournament.

With pundits predicting an England elimination at the hands of France on the weekend of 15 and 16 June, stock market traders may be well advised to limit their exposure the following Monday.

World Cup boom

There's no such mood of caution in the far east, where the 2002 World Cup has already set the tills ringing.

Coincidentally or not, key indicators suggest that economic activity in South Korea and Japan has picked up sharply in the run-up to the tournament.

South Korea: Plenty to cheer about

"The French economy grew by 3.3% in 1998, and a significant element of that was attributed to France's World Cup victory," says Dr Bill Gerrard, a football finance expert at Leeds University Business School.

"Sporting occasions like these are huge commercial events, and they bring tremendous benefits to the host countries."

Last week, official figures showed that Japan's long-stagnant economy grew by 0.6% during the first three months of the year.

In Korea, figures out earlier this month showed a bullish 5.7% expansion over the same period, drawing a line under the recession that gripped the country in the wake of the 1997-98 emerging markets crisis.

Cash injection

One factor underlying this upturn is a sharp increase in public spending on new football stadiums and improved transport links.

The two countries have spent billions of dollars on new facilities, fuelling a construction sector boom.

Ulsan Munsu stadium, South Korea
One of South Korea's 10 new stadiums
Thousands of football-mad tourists are expected to generate another cash windfall, with up to 100,000 visiting Chinese fans expected to watch their home side's opening games.

And the region's media sector has also done well, with Korean advertising revenues up 17% at nearly $1.2bn during the first three months of the year, according to market researchers AC Nielsen.

White elephants

Analysts warn, however, that Japan and South Korea's World Cup mini-boom could give way to a serious hangover.

The money spent on building new facilities has given both economies some welcome stimulus, but this has come at a cost.

"The main issue with projects like this is that they crowd out other kinds of economic development," said Chris Gratton, Director of the Sports Industry Research Centre at Sheffield Hallam University.

Questions are also being asked about the long-term future of the twenty new football stadiums that the two World Cup hosts have built between them.

According to Mr Gratton, the decision to hold the tournament in two countries has resulted in a wasteful duplication of facilities.

"It seems to be very inefficient. Neither country has a well-developed football league, so what's going to happen to these stadiums in the next ten years?" he said.

The World Cup hosts could find no better illustration of the pitfalls of sports ground finance than the botched revamp of London's Wembley stadium, launched on a wave of optimism after the 1996 European Championships.

See also:

27 May 02 | Business
14 May 02 | Business
08 Apr 02 | Business
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