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MBA Students' View on the World Cup

Villanova Students give us the real scoop on what they think about the World Cup!

Fri Jul 9 2010

BusinessBecause
I interviewed five Villanova business students to gather their perspective on the 2010 World Cup. Read on to learn their individual views about who can reap the benefits of this massive sporting event, exactly how hard soccer players work in relation to how much they get paid, and a couple other cool business viewpoints! 

Trevor Hayward

Trevor is from Dublin in Ireland, 26 years old and worked in Operations before business school. 

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Which country are you rooting for in the World Cup?
I spent a lot of time in Amsterdam over the years, so at this point in the game, probably the Netherlands. I lived in Australia for 2 years so I would have supported Australia but they've since been knocked out.

In your opinion, who works harder for their buck - American football players or soccer players?
That's a tough call. I think they both work hard, and although each market is regulated to a certain degree, each player is valued by the market, therefore players are generally compensated for their worth, at least to the buyer. Does one work harder than the other I don't think is a fair comparison. An American football player is unlikely to be a good soccer player, and visa-versa, therefore I don't think they compare

How big do you think soccer will get in the United States? How big is the potential  market for this sport?
It seems that soccer in recent years has certainly gotten bigger, with more people playing it, although that's only my own opinion from anecdotal evidence. I don't see it ever becoming a major sport compared with American Football, Baseball, Hockey etc, but I think it will be a small market that will grow, just not exponentially.

Do you think the World Cup will bring lasting economic benefits to South Africa?
I believe it will. Studies have shown that major sporting events like the world cup and the Olympics can increase exports by up to 30%, and this is a lasting effect, not just a once off event in the year in which the event is held. Mega events like this allow countries to showcase what their country has to offer, not just in terms of tourism, but also in products and materials.

Obviously bars/pubs generate massive revenues from big sporting events, but are there any other businesses who could also benefit from the World Cup?
Events such as these, especially when a country gets quite far in the event, increases consumer spending. From an economic perspective, spending begets spending, with bars/pubs then having additional money to spend on other things, so not only are the bars/pubs benefiting, but all of their suppliers, employees, and pretty much all of their stakeholders benefit. In a depressed economy where consumer spending is down, an event such as this can have a dramatic effect and really change the economic tide.

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Leo Li

Leo was born in China but grew up in Texas and NY. He's currently working as an investment analyst while going to school part-time.

Which country are you rooting for in the World Cup?
U.S.A (until last week was U.S. and France, let's just stop there)

In your opinion, who works harder for their buck - American football players or soccer players?
There's only one football, and endurance is the key to the game here, not stopping every 5 second for a play and restart. World class soccer players always start when they were a kid, but to be a pro American football player you could start at any age (under 25)

How big do you think soccer will get in the United States? How big is the potential  market for this sport?
I think it's getting really big, I was shocked to see more than 34,000 people showed up for the Philadelphia Union's home game. There are a lot of fans here, it's just that the MLS skill level needs to improve before turning those fans back to domestic games vs. the EPL. 

Do you think the World Cup will bring lasting economic benefits to South Africa?
Definitely in the short term, but the long term benefits are going to be hard to measure. For instance, if 4-5 years down the road South Africa improves their standard of living and business environment, would it be attributed to the world cup? Partially for sure, but to what extend?

Obviously bars/pubs generate massive revenues from big sporting events, but are there any other businesses who could also benefit from the World Cup?
Well, obviously FIFA is the big winner here, also there are beverage companies (coke, and Pepsi), Sporting good companies (Nike and Adidas). broadcasting companies (ESPN) could be benefiting greatly from the sport 

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Jennifer Cross

Jennifer Cross is 30 years old and was a nationally ranked alpine ski racer before she became a finance consultant. 

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Which country are you rooting for in the World Cup?
I was rooting for the US, and given their ability to clinch incredible goals during the most crucial moments have given all US soccer fans a reason to cheer!  

In your opinion, who works harder for their buck - American football players or soccer players?
In my opinion, US soccer athletes clearly work harder for their paychecks than American football players.  Considering their average salaries alone, US soccer players take home, on average, $70,000 per year, while the average professional football player earns more than ten times that amount, at a staggering $770,000 per year.

How big do you think soccer will get in the United States? How big is the potential market for this sport?
The potential for growth of this sport in the US is huge. Already, the US has seen a significant increase in participation, from young children to adult leagues alike; much of this growth can be attributed to the 1994 World Cup, which was played the US for the first time. The market for US soccer will undoubtedly grow; its potential is unknown. 

Do you think the World Cup will bring lasting economic benefits to South Africa?
Given precedence that the World Cup brings worldwide recognition, it can be assumed that South Africa will enjoy the same economic benefits that the US has, as all eyes are on this emerging nation.  As it stands, the World Cup is expected to generate 21.3B Rand (equivalent to just over $2B), of which 12.7B Rand will be contributed to direct spending, and an estimated 159,000 new jobs will be created as a result. This contribution will impact South Africa incredibly, as unemployment has been extremely low for this emerging nation; adding jobs, and increasing tourism should enable significant growth for this South Africa.   

Obviously bars/pubs generate massive revenues from big sporting events, but are there any other businesses who could also benefit from the World Cup?
With sponsorships for the 2010 World Cup, Wal-Mart expects its sales to increase 1%-2%, for each nation that reaches the quarter finals, in which they have a store present. Similarly, Adidas expects to see an increase of almost $2M in sales, directly related to World Cup advertising. Marketing is an enormous aspect of World Cup soccer. Other businesses that may indirectly benefit from the World Cup will include local soccer clubs, clothing stores and retail shops that sell World Cup paraphernalia.

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Chris Mitrovich

Chris Mitrovich is from Staten Island, NY. He is 28 years old and works as the Vice President at an asset management firm.

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Which country are you rooting for in the World Cup? 
USA (unfortunately we are out!) 

In your opinion, who works harder for their buck - American football players or soccer players?
American football players. The physical toll on their bodies is incredible. They are at the most financial risk because their careers are short & contracts are not guaranteed. 

How big do you think soccer will get in the United States? How big is the potential  market for this sport? 
I do not think soccer will get too big in the US. It does not have broad appeal to the American sports fan.  For soccer to get big in the US they need to change the rules to increase scoring. Basketball, Football, Baseball, and Hockey have all adjusted the rules to promote more offense.  Americans will be into the World Cup every 4 years but I do not think soccer will attract main stream appeal. 

Do you think the World Cup will bring lasting economic benefits to South Africa? 
If South Africa can leverage the infrastructure put in place for the World Cup it can attract new opportunities such as a summer Olympics and other International sporting events.  Also, more people may be inclined to vacation to South Africa given the attention from the World Cup. 

Obviously bars/pubs generate massive revenues from big sporting events, but are there any other businesses who could also benefit from the World Cup? 
Apparel companies.  I have noticed a lot more soccer jerseys and t-shirts around the streets of New York City. 

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Patrick Demchko

Patrick Demchko grew up in Pearl River, NY but now lives in Philadelphia now. He was a technical marketing engineer before business school. 

Which country are you rooting for in the World Cup?
Of course, I root for the USA primarily. Their play this year was full of grit and heart, which I think endeared this particular team to the US public more than in previous years. I secondarily root for Ireland and the Ukraine because of my heritage but unfortunately neither qualified the WC this year

In your opinion, who works harder for their buck - American football players or soccer players?
This is a tough one as American football players, on an average basis; earn significantly more than US soccer players which clearly favors the soccer players working harder. However, because of the elite level you need to play at to even make an NFL roster tips the scales back in favor of football players as the NFL version of soccer is really the European leagues. 

How big do you think soccer will get in the United States? How big is the potential market for this sport?
The market is as large as it is for any other sport but, you need to find and market the mass appeal of your product. Frankly, to appeal to the American public, MLS would have to address the issue of talent first and formost. A less effective solution (but, much less costly) solution would be to exploit the exposure of the World Cup and create legitimate USA/MLS stars like Landon Donovan. Media exposure and promotion could help but, may not be long lasting. Lastly, MLS needs to identify more closely with the cities in which their teams are located. If you can watch a superior product elsewhere, playing to the local emotions of the sports viewing public could entice more people to take pride in their team, despite the conception they are inferior.

Do you think the World Cup will bring lasting economic benefits to South Africa?
Another tough call. To analyze this, I would have to understand the investment the country made into their stadiums and other needed infrastructure. This likely will be interesting for some tourists to visit for a few years but, for lasting impact, these stadiums would need to be put into continual use. If a city is not large enough, or significant infrastructure needs to be built specifically for the games, it can often be hard to sustain. 

Obviously bars/pubs generate massive revenues from big sporting events, but are there any other businesses who could also benefit from the World Cup?
First and foremost are the hotels. Having high cost, sold out rooms for well over a month has to give a great boost to the yearly figures. There could be some lasting impact for 2-3 years of this type as well. Restaurants, local artists, sculptors, local shops and tourist hot spots will all fare well and benefit from the tourist population influx. 

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