Global Economics

The World Cup Scores Big for Companies


Herbert Hainer's home team has been eliminated from World Cup contention, but it's a safe bet that the former minor league soccer player will get over it. As chief executive officer of German sportswear-maker Adidas (ADDYY), Hainer is already one of the tournament's big winners. Sales of balls, team jerseys, and football "boots" have boosted Adidas' soccer-related revenue by 30% vs. 2005, to $1.8 billion. "For Adidas the World Cup could hardly have been better," Hainer told reporters in Berlin.

Hainer isn't the only happy guy in Germany these days. The tournament, which concludes July 9 with the final between France and Italy, may go down in history as the Woodstock of World Cups—a month of peace, love, and soccer that was good for the German economy and good for sponsors such as MasterCard, Coca-Cola (KO), Hyundai Motors, Yahoo!, (YHOO)and McDonald's(MCD).

Never mind that the German national team was eliminated in a semifinal match against Italy on July 4. (Germany will play Portugal for third place on July 8 in Stuttgart.) Coach Jürgen Klinsmann confounded critics in Germany's football establishment who turned up their noses at his unorthodox methods, including hiring an American—Tempe (Ariz.)-based fitness trainer Mark Verstegen—to get the team in shape. Klinsmann, who makes his home in Los Angeles, went from zero to hero after the young German team outran highly favored Argentina in a quarterfinal match June 30.

HIGHLY ORGANIZED. Now Klinsmann is being hailed as an example to the whole nation of how fresh thinking can bring results. "He has no fear of soccer league lobbyists," the national daily Die Welt said in a front page editorial that could be read as a critique of German politicians. "He counters bureaucracy and crippling routine with modern corporate leadership and new training technology." Are you listening, Berlin?

Give some credit to the bureaucrats, though, at least those who organized the tournament. World Cup events drew 11 million visitors, compared to the 8 million that organizers expected, according to FIFA, the event's Zurich-based governing body.

The big numbers were good news for sponsors such as McDonald's, which invited children around the world to submit arts and crafts projects expressing their love for soccer. More than a million kids sent in entries, and the winning 1,400—mostly from Germany, but from 50 other countries as well—were allowed to escort players onto the field before each match. "We're very happy with the response," a McDonald's spokesperson says.

KEEP 'EM HAPPY. Despite the huge crowds, there was nary an untoward incident. You could say the Germans were German without being too German—they lived up to their reputation for being organized, but did so without killing the fun. To keep fans without tickets from becoming a drunken nuisance, for example, the host cities set up huge outdoor screens where people could watch the game and party.

The boulevards around the Brandenburg Gate in Berlin were jammed with revelers, while Frankfurt set up screens right in the middle of the Main River, which cuts through the city. Some 80,000 spectators watched France upset Brazil from bleachers on the banks of the Main on July 1, almost twice as many people as watched the game live in the Commerzbank(CRZBF) Stadium a few kilometers away.

The friendly spirit was great for business. True, German hotel bookings were a bit disappointing, rising just a tick above the usual summer level, according to tourism officials. Frankfurt and other cities erected tent cities in public parks where fans could roll out a sleeping bag for about $25 a night, including breakfast, a deal that may have dampened demand for more expensive lodging. And some shopkeepers whose stores are located away from the fan action complained that the World Cup actually drained away customers.

BUY THE SHOES. The total effect was positive, though. Unemployment in Germany fell more than expected in June, by 383,000 vs. a year earlier, to 4.4 million, or 10.5% of the workforce. The drop was mostly the result of a booming export economy but the World Cup helped. In one rough measure of how much money World Cup visitors pumped into the German economy, Dresdner Bank reported that foreigners withdrew more than $50 million from its cash machines during the event.

Quite a bit of that money, apparently, went to Adidas. The company, based in the Bavarian town of Herzogenaurach, sold some 15 million copies of the official World Cup ball worldwide, 3 million replicas of national team jerseys, and 1 million pairs of its Predator soccer shoe. Sales of those items were more than double what they were during the 2002 World Cup, according to Adidas. As the announcers say, G-O-A-L!


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