World Cup 2006 Economics

Team Italia have been crowned World Cup 2006 champions and the biggest party in Germany since the Wall fell is over. After a month of partying with and playing host to the world, the nation of Germany must face a long economic morning after. So who won and lost the long-term World Cup 2006?

Pre-tournament the outlook was rosy on and off the field. As JÃ?¼rgen Klinsmann whipped his methodical machine into playing form, Ã?¯Ã?¿Ã?½4.6 billion (approximately US $5.75 billion) worth of infrastructural development molded the German nation into a slick guest house with all the amenities. Adidas-Salomon predicted a whopping Ã?¯Ã?¿Ã?½1.2 billion in soccer gear sales for the year, with 15 million World Cup 2006 replica footballs to be sold. A much publicized study based on German Chamber of Commerce and Deutsche Postbank forecasted a bump to the German economy of Ã?¯Ã?¿Ã?½10 billion (approximately US $12.5 billion), a number representing 0.5% of the economy’s total domestic performance. The study also said that World Cup 2006 could help create 10,000 to 20,000 permanent jobs.

Now that the last penalty kick has been taken, predictions can be blown away and we sift through statistics. The most damning economic statistic from World Cup 2006? Despite visits from an incredible two million tourists (full-on double the expected number) spending Ã?¯Ã?¿Ã?½600 million (approximately US $766 million), the country’s Institute for Economic Research has new data showing that German economic growth will be approximately 0.25%, half the expected amount. Since Germany’s economic growth was predicted to be 1.6% this year, the overestimation of World Cup 2006 income is bound to haunt German politicos for a while.

Essentially apologizing for poor immediate short-term results German Minister of the Economy Michael Glos wrote in the business daily Handelsblatt that 50,000 jobs had been created and only half were temporary, slightly more than planned. However, the best results he saw were that World Cup 2006 “[marked] an enormous gain in Germany’s image.”

This intangible benefit so often touted to cities hosting major sports events should ultimately work in the German economy’s favor in future. German hospitality got high marks from all media corners throughout World Cup 2006, and World Cup 2006 visitors were well happy as well. According to German tourism association DZT, a massive ninety percent of foreign visitors polled said they would recommend Germany as a holiday destination.

In the microeconomic sphere, the big winner was official sponsor Adidas. Adidas-Salomon had doled out approximately US $56.5 million for exclusive marketing rights from Fifa. Going into World Cup 2006, Adidas reported a 37% rise in sales in first quarter 2006. The firm ultimately reported sales of US $1.5 billion during World Cup 2006, an increase of 30%. The firm reported sales of 15 million replica footballs, dead on with their pre-tournament estimate, and way way up from the six million sold during World Cup 2002.

Adidas’ success belied other problems, however. While Adidas reportedly sold 1.7 million Team Germany football shirts alone, but the German clothing industry still shows remarkable decline.

The retail sector was a winner in general, with early official figures showing shopkeepers seeing some �¯�¿�½2 billion (approximately US $2.5 billion) during World Cup 2006. German Railways bore their significant increase in customers to 15 million, and Lufthansa reported 200,000 extra passengers carried during the tournament.

Flag sales saw mind-boggling sales during the tourney, with one department store reporting a 1000% increase in sales. Durex Condoms spokesman Andr�© Schmincke was happy to report to German news outlet tagesschau.de that his firm reported a 30% rise (hee hee) in sales during World Cup 2006.

Interestingly enough, the world’s oldest profession itself was among the biggest losers at World Cup 2006. Munich chief of police Wilhem Schmidbauer was quoted in tagesschau.de as calling World Cup 2006 a “bust” for brothels and private operators. “The fans were more interested in hanging out âÂ?¦ and drinking beer than going to prostitutes,” he claimed.

Finally, the single biggest loser of World Cup 2006 aside from Zinadine “Le BÃ?©lier Incroyable” Zidane, has got to be Goleo and his doomed creators at Altenkunstadt-based Nici.

Anybody remember Goleo? Designed by the Jim Henson Company, Goleo was named the official German World Cup 2006 mascot. Just one problem: Nobody wanted anything to do with the miserable lion. After having “won” mascot rights for almost US $33 million, toy manufacturer Nici filed for bankruptcy directly blamed on lack of Goleo sales on May 16, twenty-four days before World Cup 2006 kicked off. One week later, Nici founder Ottmar Pfaff was arrested for defrauding the company.

Perhaps Pfaff should have headbutted his way out of it instead.