Geopolitics and the World Cup: Why It Matters for Business

The World Cup is the world’s most important sporting event other than the Olympics. As the US is hosting both over the course of three calendar years, considering the geopolitical – and economic – impact of global sport offers lessons and suggestions for US business.

• The global economic value of sport is estimated at $2.3 trillion.
• The World Cup is estimated to bring up to $6.4 billion in economic impact for the US, with additional sums for Canada and Mexico. This includes spending beyond host cities and for all types of industries (for instance, restaurant watch parties).
• The soft power impacts of the Cup are equally strong, both for host nations whose teams help build a national brand and for the US as foreign visitors have been welcomed here.
• For businesses and business leaders, global sporting events, including the forthcoming XXXIV Olympic Summer Games in Los Angeles, offer opportunities for positive associations with the events, success stories of athletes, and healthy lifestyles. 
• Host cities can use a successful hosting experience to bid for other types of events, such as conventions and headquarters placement.

Sport: A Globally Important Business

This Summer, more than 40,000,000 Americans reportedly watched Mexico play England in a sport not traditionally associated with the US – soccer. This was about double the number who watched the NBA Finals in June, the championship of a sport invented here which the US has traditionally dominated.

The figures, of themselves, may be an outlier, though soccer has grown rapidly in recent decades in the US. More broadly, sport is a globally important business, with a total “global sports economy” of approximately $2.3 trillion.¹ Sporting events such as the World Cup, while important markers for sports fans, constitute only a small part of the total overall, which includes purchases of sporting goods, associated travel to events, the value of teams in leagues ranging from the National Football League and Major League Baseball to the Indian Premier League (cricket) to the national soccer leagues in Europe, Latin America, and Africa.

World Cup economic impact

The World Cup has been hosted jointly several times before, beginning in 2002 with Japan and Korea; this year marked the first time three countries served as joint hosts, a practice that will be repeated in 2030 with Spain, Portugal, and Morocco.

This year, FIFA (Fédération Internationale de Football Association) estimated that 1.24 million international visitors would arrive in the US for the World Cup (of whom 724,000 were “incremental” visitors traveling solely for the Cup, with approximately $6.4 billion in spending, amounting to over $5000 per person (including the cost of tickets, though the highest spending is on accommodation).²

The economic effects are not limited to host cities but include other types of activities. For instance, in the UK, England having reached the quarterfinals was expected to generate up to 500,000,000 GBP ($669.5 billion) for the economy from additional spending.³ FIFA estimated total global economic impact at up to $40.2 billion and 824,000 jobs. Still, FIFA reports that 80% of US hotels noted that bookings fell short of projections earlier in the year; some spending was clearly done at the last-minute, and local visitors may have occupied more seats at matches.

Whether or not all expected beds in hotels were full, match attendance has generally been strong. Host cities face costs – notably extra security expenditures – but also reap benefits, not only from foreign visitors but including intangible benefits such as the name of the city being prominently and repeatedly displayed on the sideline during the match. This not only raises the reputation of the city as a “world city,” but improves its attractiveness in competing for national and global business for conventions and other events, using a successful World Cup hosting as proof the city can handle large events well and has the economic and business infrastructure necessary for large events. Host cities can also use these experiences in competing for headquarters placement decisions. Now, as the Cup concludes, planning shifts to the next World Cup and, for US business in particular, to the forthcoming Olympic Games.

Soft Power and Geopolitics

The World Cup is a global competition among national teams, this year expanded to 48 teams for the first time and representing a wide variety of countries (for instance, Curacao, Cabo Verde, Haiti, and Uzbekistan) in addition to traditional soccer powerhouses. In such an event, rightly or wrongly, and for better or worse, it can be hard to escape connections forming between the teams and the countries they represent. Doubtless the number of Americans who had heard of Cabo Verde jumped significantly as the team emerged into the knockout round, and most of them surely developed a positive association for the country and its plucky team. Similarly, the team from the Democratic Republic of Congo playing well helped define the country as more than simply a land of conflict undergoing an Ebola outbreak.

For those countries, the World Cup accumulated a type of “soft power.” Importantly, the process works in the other direction as well, a powerful reason some countries compete so strongly to host global and regional sporting events despite the cost. Videos of foreign visitors enjoying uniquely American foods and experiences, from hot dogs and local food traditions⁴ to the Scottish fans at a baseball game at Fenway Park before a match at Boston Stadium⁵ have a double impact in soft power: to show people in the home country a positive side of a visit to the US, including Americans’ kindness and welcome to visitors, and to show Americans that foreign visitors appreciate what is good about the US, offering an opportunity to counteract more negative narratives in the news (for instance, the impact of the conflict with Iran).

There is a wide and growing variety of international sporting events, ranging from soccer “friendlies” and National Football League games in foreign countries to competitions limited to a single sport such as Wimbledon or the US Open or global competitions such as the World Baseball Classic, the Basketball World Cup (each modeling itself to some degree on the success of soccer’s World Cup) The events are important in themselves for the future of the sport and for spreading its popularity to new markets – which eventually leads to new fans, new opportunities for marketing and broadcasting, and even new leagues in countries not normally associated with a sport, such as the Australian Baseball League. This growth in turn provides further growth for the sport (16 players who had played at one point in Australia started in Major League Baseball this year)⁶ as well new marketing opportunities for businesses.

More broadly, these sporting events are important for international relations, collective understanding between people over a shared passion for sport, and, ideally, better relations between nations. Cuba played in San Juan, Puerto Rico, at the World Baseball Classic this year – and Venezuela won the event, defeating the US in Miami only a few weeks after the US launched a military incursion into Venezuela. Yet afterwards, US stars congratulated the Venezuelan team: a baseball game did not become a proxy for international conflict.

Considerations for Business

How can businesses plan to capture the positive associations with global sporting events?

First is advertising and sponsorship, which generally seeks to associate a company with the event rather than with the host. While the sideline advertising at the Cup was truly international, featuring in particular Chinese and Latin American brands and European sponsors, US business was well represented, including some businesses with relatively limited international presence or brand awareness. These businesses either likely regarded the Cup as an opportunity to reach certain segments of a North American audience or an opportunity to showcase themselves on a global stage and build positive association with soccer.

Now, US businesses will likely take lessons from the Cup to build a marketing strategy, including possible advertising and sponsorship, for the 2028 Olympics. There, the focus for most sports is on particular athletes rather than countries (except for sports such as basketball, soccer, baseball/softball, and cricket (included for the first time since 1900)). But the Olympics offers a chance for US businesses to seek positive associations with a well-known international effort promoting peace and harmony (which was the theme of the opening ceremony at the Milan Cortina Olympic Winter Games in February) and with healthy lifestyles and inspiring stories of personal success. In so doing, they can also help reinforce the US brand – with which, particularly for companies well-defined as US companies, they are likely already associated.

Second, businesses in related industries can focus on associated spending (for instance, restaurants and hospitality) connected to the sport economy, both domestic and global. The US’ and Canada’s strong sporting and other physical infrastructure (particularly large stadiums that host teams from the National Football League and Canadian Football League) and the transportation links to get fans to and from venues easily was a strong point attracting the World Cup here; the effects ripple out to other businesses.

Third, global sporting events remind US business of the increasing importance of international business to many companies’ success. Companies should promote efforts to teach not only international business as a part of business education but international education and foreign languages as a key to success in business on a global scale. Otherwise, the US risks being at a disadvantage in global markets if international companies have a broader range of managers with international experience.

For premier international events, internal corporate leadership is likely to involve the CEO and the C-Suite. With over $2 billion in sponsorship⁷ already for the Los Angeles Olympic and Paralympic Games,⁸ it is not too early to have those conversations – and to learn from the experiences of peers deeply involved in a generally successful hosting of the World Cup with US partners in Canada and Mexico.