Soccer or Shocker Economics!

During an economics class, a student was asked, “Why is Cristiano Ronaldo paid very high in comparison to a civil or private serviceman”? This question stunned that particular student along with the whole class.  The answer to the question was the shorter span of earning as a sportsman. Besides that, the sportsman carries the huge pressure of the representation of the people of the country and also carries the name of the country along. Let’s say, in a way, because the burden taken is higher, the returns are higher. This is the Football World Cup season and to the expectation of many people, the world cup economy is definitely interesting to deal with.

The general expectation during the world cup is that the investment opportunities increase. For an instance, the expectations during the Brazil World Cup is that investments would be R$ 29.60 billion whereas operating and visitors’ expenses would be R$ 1.18 billion and R$ 5.94 billion respectively. The national production of goods and services which would ultimately escalate the consumption also would be R$ 112.79 billion. In the period of four years from 2010 to 2014, there would be job creation for 3.63 million people per year where the income would portray the statistics of R$ 63.48 billion. As discussed earlier, because the earning of the players are high, their willingness and ability to pay is also higher, thus the consumption increases the most. Besides that, the civil constructions and business services escalate in the economy which not only creates jobs but also increases the velocity of money in the economy. Food & Beverage and Tourism & Hospitality are checked to their heights and the positive results further increase the capital formation in the economy along with the publicity of the uniqueness of the socio-cultural food and beverages. This is the age of information and the related technologies. And one cannot ignore the cost associated with the information during these fests.

Taking on the flip side of the world cup economy, here are few discussions. The World Cup of 2006 in Germany is a big success to remember where Germany earned 155 million Euros as revenue. But that did not mean any significant to the large economy like Germany. Maennig (2007) has written that the gross income from the foreign tourists in 2006 was only 0.06 percent of the GDP of Germany. Also, Robert Baade and Victor Matheson (2004) have showed that USA has rather shown decline in incomes during 1994 when they hosted the World Cup. Matheson (2008) has portrayed that the number of visitors in South Korea during the World Cup was identical to the number of foreign visitors during the same period at non World Cup time.

On top of the above mentioned facts, recent news of humanitarian violation in World Cup stadium in Qatar add up social cost to the economies. The Soccer economy is Shocker Economics!


Note: This article was published in the Perspectives of The Himalayan Times on 22nd June, 2014.