Sporting events and sponsors

Date published: Monday 19th October 2015 3:27

Brazil tourism

From the World Cup to the Olympics, sporting tournaments appeal to more than just the fans. Big brands love them as they can boost their bottom line and stock markets often benefit from the economic boost to shares provided by increased visitors and job creation.

This is why countries are often so keen to host a sports event such as a World Cup. Pubs can benefit greatly from a major tournament as fans will flock to watch their team on a big screen. However, there is a risk that pubs alienate their non-sporty customers and business could actually fall if people prefer to watch matches at home or if the host nation doesn’t do as expected.

British pubs were granted longer opening hours during England’s first match of the 2014 World Cup in Brazil, but enthusiasm soon waned after the team’s early exit, meaning landlords did not benefit from increased sales as much as they would have hoped.

Big brands can do well out of sponsoring a tournament. Companies pay large amounts to have their name associated with big events such as the World Cup and access billions of fans and TV viewers. But this can backfire. For example, although England went out early from the Brazil World Cup, companies such as Gillette had paid for expensive adverts featuring their players throughout the tournament.

One of the biggest benefits sponsors can get from a tournament is exclusivity. Alcohol companies can do well as rival drinks are often banned from around the grounds. Drinks companies have done well financially out of previous sporting tournaments. Guinness owner Diageo saw an increase of 9.8 per cent in its share prices when England won the Rugby World Cup in 2003 and when South Africa won in 2007, drinks brand and sponsor SABMiller saw its stock rise 7.5 per cent.

The biggest winners are often the tourism industry. There is always a risk that non-sport related parts of a country get neglected or that people are put off by poor organisation and don’t come back. After the Brazil World Cup, its tourist board reported more than 1 million visitors and an injection of $13.2billion to the economy. Australia and New Zealand experienced a similar affect during the Cricket World Cup in February 2015, generating $1.1billion in direct spending and the equivalent of 8,320 full time jobs, according to PricewaterhouseCoopers.

But sometimes this can be temporary, especially when it comes to jobs. More workers are often needed to build infrastructure and help run tournaments, but these jobs won’t necessarily be needed once an event is over. Brazil’s index of economic activity actually fell 1.5 per cent during the tournament as consumer spending and job creation fell.

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