The real win­ners of the World Cup

Financial Mirror (Cyprus) - - FRONT PAGE -

Foot­ball fans will tell you that only one team can win the World Cup. That may be true – on the pitch. But in a world of cor­po­rate spon­sor­ships and celebrity en­dorse­ments, the world of busi­ness and fi­nance to which read­ers will be par­tial, this sport­ing event is driv­ing up the stocks and prof­its of a wide num­ber of en­ter­prises.

As of­fi­cial cloth­ing and ball spon­sor, and cre­ator of the Brazuca ball de­signed es­pe­cially for the weather in Brazil, Adi­das is the ob­vi­ous name to men­tion here. It is the only com­pany al­lowed to use the words “World Cup” in its ads and to have its logo across sta­dium signs. Yet it is cer­tainly not the only win­ner. While Adi­das cham­pi­oned the Ar­gen­tinian player Lionel Messi, ri­val sports­wear firm Nike placed their sig­na­ture tick on the Jer­seys and feet of in­ter­na­tional stars. Nike has in­cluded eight play­ers in its an­i­mated ad­vert and mar­ket­ing ef­forts, in­clud­ing two Brazil­ians, sig­nif­i­cant be­cause the host coun­try will play a strong role in the com­pany’s an­tic­i­pated global growth.

Nike spent $876 mln on mar­ket­ing in the fourth quar­ter of 2013. Don Blair, Nike’s CFO, ex­plained that “de­mand cre­ation in­vest­ments be­hind the World Cup” ac­counted for the high spend­ing. In other words, Nike is con­fi­dent that the mil­lions it has spent on mar­ket­ing in con­nec­tion with the tour­na­ment will have a long-term pay off as view­ers and fans will pur­chase its goods. Spend­ing in the cur­rent quar­ter is ex­pected to be 30% higher than last year. On Fri­day, shares surged 3.23% and the trend may well con­tinue if sales fig­ures re­main high. This type of growth is im­pres­sive for a com­pany al­ready as large and dom­i­nant in the mar­ket as Nike.

Other multi-na­tional cor­po­ra­tions are also cash­ing in. Coca-Cola, McDon­alds and Visa, de­spite their prod­uct not be­ing sports re­lated, also made the strate­gic de­ci­sion to be­come of­fi­cial spon­sors of the tour­na­ment. They will be hop­ing that the mar­ket­ing value and brand aware­ness de­riv­ing from spon­sor­ship will give a short-term boost to sales and longer-term ben­e­fits to share­hold­ers.

In­deed, the sports-mar­ket­ing re­search firm, Repu­com, showed that over $4 bln was gen­er­ated glob­ally for spon­sors dur­ing the last World Cup in South Africa in 2010. Just this week, Visa con­firmed the spend-trend. The Visa Europe UK Ex­pen­di­ture In­dex re­vealed that Bri­tish con­sumer card spend­ing in June was up 0.6% from June 2013, as soc­cer fans spent more in su­per­mar­kets and pubs dur­ing the Cup.

We’ll know on Sun­day which team takes home the tro­phy, but for busi­ness spon­sors, the re­sults are al­ready clear. There is no doubt that such a glob­ally pop­u­lar tour­na­ment has sev­eral commercial win­ners. We’ll see in the com­ing months to what pre­cise ex­tent the firms’ sales, brand­ing, and shares will be boosted.

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