analysis
The economy is hoping for good business at the European Football Championship. But it is far from certain that the major event will help the ailing German economy. Is it ultimately a zero-sum game?
Full, spruced-up stadiums, boozy crowds at public viewings: Hundreds of thousands of people will be travelling to the European Football Championship. They want to eat and drink. Wear the right jersey. And at some point, sleep. Surely there must be a lot of money left over for hotels, restaurants and sporting goods manufacturers?
And it does. According to Timo Zimmermann, professor of sports management at the International School of Management (ISM) in Dortmund, this applies above all to the sports equipment manufacturers Adidas, Nike and Puma, who outfit the teams and bring the merchandising to the fans. The current DFB jersey alone, which was temporarily sold out, is now being sold for 100 euros.
The business with jerseys and merchandising items such as European Championship footballs is considered a billion-dollar business. However, it is unclear how much a major event such as the European Football Championship brings into the coffers of sports brands. This is because it is not separately disclosed in Adidas' annual report, for example.
Short-term boost for restaurateurs
The same applies to the income of restaurateurs and hoteliers and in retail. Many believe that there will be a short-term boost: beer, snacks, barbecue food – these will be bought more for the European Championship than usual. “Those who are already thinking about buying a new television and are also football fans are saying to themselves: we have the European Championship. We have the Summer Olympics in Paris. Why shouldn't we buy the television now instead of waiting until Christmas?” says Andreas Pohlmann from the Federal Institute of Sports Science in Bonn.
The trade association HDE expects that the European Championship will bring in extra sales of 3.8 billion euros for retailers. Others do not believe that the sporting event will lead to a special economic boom – but rather that it will partially displace people. If football fans populate a city, the usual city tourists may stay away.
Andreas Pohlmann also points out: “The euro can only be spent once. What a family spends on tickets to see a game cannot be spent on the cinema or other leisure activities. The money cannot be increased at will.”
International View as Economic factor
The whole thing could therefore prove to be a zero-sum game for a number of sectors. Potential investments, such as public investments in stadiums and infrastructure, would also be lacking elsewhere, says sports economist Zimmermann from the ISM.
On the other hand, he sees the European football association UEFA as the clear winner of the European Championship: “With a European Championship like this, they make around 2.4 billion in sales revenue, with a net profit of over a billion – from the sale of broadcasting and advertising rights, ticketing, hospitality.”
However, UEFA is based in Switzerland. The economic effects of sporting events such as the European Championship on the gross domestic product are hard to come by. But that doesn't mean that such events have no effect, says Sascha Schmidt from the WHU Otto Beisheim School of Management: “We saw that at the 2006 Summer Fairytale. That we positioned ourselves there as a cosmopolitan Germany, as a well-organized and hospitable country. This naturally leads to international prestige and can make Germany more attractive as a travel destination and position it as an economic center.”
He comes Change of mood?
The economic engine here is sputtering. Last year, the German economy shrank by 0.3 percent. This is one of the reasons why Germany is suffering from a kind of mental depression, says Marcel Fratzscher, head of the German Institute for Economic Research. The economist sees the European Championships in his own country as an effective remedy for this: “The hope is that we will hopefully soon see a change in mood in Germany. That people will become more optimistic again, that companies will look more positively towards the future and say yes, it is worth investing in Germany.”
Which could provide a lasting boost for the German economy. And that could then perhaps be a bit of a summer fairytale.
