There are some interesting points to take away regarding the financial impact of the World Cup, both on the host country and on large companies around the world that benefit from such a large sporting event that captures the interest of the entire world.

Companies and Countries that Benefit from the World Cup

Countries that participate in the World Cup see a greater economic impact than those that don’t qualify as their fans are more inclined to follow the event by holding parties and heading out to the bar. The economic impact is magnified when teams representing the larger nations and economies do well and progress throughout the tournament. If countries like the US, UK, and Brazil progress far in the tournament – and the latter two are two of the favorites – then the economic impact of the games is greater. Other favorites this year include Spain, Germany, France, Italy and Japan. In these countries the driving force behind the economic impact is consumer spending on items such as food, drinks, TV sets, sofas, memorabilia, mugs, etc.

Therefore, companies that benefit most from the World Cup can be found in manufacturing sub-sectors such as televisions, food and drinks, and furniture. Similar to the Super Bowl in the US, many fans want to watch the games on a big screen and provide plenty of snacks and beers for their friends. Large retailers like Wal-Mart, which have stores in 8 of the 32 qualifying nations, expect to see an uptick in sales as plenty of World Cup themed merchandise flies off the shelves. In fact, Wal-Mart expects sales to rise 1-2% in those countries whose teams reach the semi-finals. A company like Adidas, whose sneakers, footwear and soccer balls are a staple in the World Cup, expects to register sales of $1.8 billion from soccer related sales.

Can Losing in the World Cup affect a Country’ Stock Market?

The impact of the World Cup is not all fun and games. A study by Darmouth’s Tuck School of Business indicated that the “mood” of a country is affected by a loss in the World Cup to such a degree that following the loss, the local stock market in that country declines. On average, stock markets decline 0.39 percent after the national team loses in a World Cup game. Though, the same study concluded that there is a lack of evidence  showing that stock markets rise when a team win. It’s an interesting thesis and one that has statistical evidence.

This relationship is the closest in countries with the biggest public support for soccer such as England, France, Germany, Italy and Spain, the report said. In South American nations, the phenomenon is similar.

It’s also possible that some traders’ eyes are glued to the TV during important games, decreasing trading volumes. However, there hasn’t been a report to that effect, so that is simply speculation.

On Friday, we take a look at the impact of the World Cup on the host nation – South Africa, both in terms of its economy and currency.