[Qatar World Cup] ② '8.2% Chance' Must Break Through Round of 16 to Hit World Cup Boom Jackpot

Estimated Economic Effect of Korea-Japan World Cup at 26 Trillion Won
10.2 Trillion if Advancing to Round of 16 in South Africa
Special Demand Expected for Electronics and Food & Beverage Companies
6-Hour Time Difference Could Be a Variable
Main Matches Held at Night or Early Morning
Low Probability of Advancing to Round of 16
Private Consumption Effect Likely Limited

Models are showcasing a variety of cheering snacks at the Homeplus Mega Food Market Gangseo branch in Dunchon-dong, Seoul, on the 21st. Photo by Homeplus

[Asia Economy Reporter Seomideum] Another point of interest in the 2022 Qatar World Cup is the positive economic ripple effect it may have overall. The world’s anticipation for the World Cup, held once every four years, is not only due to interest in sports. The World Cup is a sports festival that can bring tangible and intangible economic benefits. This is why there is hope it will bring positive momentum to the economy, which has been stagnant due to COVID-19.

South Korea experienced a substantial 'World Cup boom' based on hosting the 2002 Korea-Japan World Cup and reaching the semifinals. According to the Ministry of Economy and Finance’s “2002 Economic White Paper” released on the 21st, the economic impact of hosting the World Cup is estimated at 26 trillion won. The economic effects include ▲4 trillion won generated by increased investment and consumption expenditures, ▲7.7 trillion won from national brand promotion, and ▲14.76 trillion won from enhanced corporate image, totaling 26.46 trillion won. In 2002, the Korean economy achieved a high annual growth rate of 7.4%.

The key variable determining the World Cup boom is the national team’s winning rate. During the 2010 South Africa World Cup, where Korea advanced to the round of 16, the estimated economic effect was 10.2 trillion won. The Korea Sports Promotion Foundation and Hanyang University’s Sports Industry & Marketing Center estimated the direct economic impact of the South Africa World Cup?including TV exports, product sales, corporate promotion and advertising expenses, and increased consumption from street cheering and after-parties?at 3.7 trillion won. The indirect economic effect, such as the national brand enhancement effect (3.6 trillion won) based on Korea’s matches broadcast live worldwide, was estimated at 6.4 trillion won.

The World Cup boom brings positive momentum to various industries. The combined market capitalization of nineteen companies benefiting from the World Cup?including FIFA official sponsors and chicken and beer companies?increased by 2.5 trillion won over three weeks around the South Africa World Cup. Since matches were held in the early evening, chicken and beer consumption rose significantly. Real private consumption in the second and third quarters of 2010 increased by 0.5% and 1.1%, respectively, compared to the previous quarter.

It also affects corporate exports. Hyundai and Kia Motors, official World Cup sponsors since 2002, reportedly gained tangible and intangible economic benefits of 6 trillion won in 2002, 10 trillion won in 2006, and 20 trillion won in 2010 through the World Cup. During the 2010 South Africa World Cup, it is analyzed that they achieved 8.6 trillion won in marketing effects solely from advertising on stadium billboards.

However, the outlook for economic effects related to this Qatar World Cup is not entirely bright. A variable is that South Korea is six hours behind Qatar. Most major matches will be held at night or early morning Korean time. According to a survey conducted by global communications company Amdocs and market research firm Dynata targeting 300 adults aged 18 to 76 in Korea, 185 respondents (62%) said, “It will be difficult to watch live broadcasts due to the time difference.”

The Korean national football team will play its first Group H match against Uruguay on the 24th at 10 p.m., and the second match against Ghana on the 28th at 10 p.m. The third match against Portugal will be held at midnight on the 3rd of next month. If Korea advances to the round of 16, the match is expected to be held at 4 a.m. on December 6 or 7.

Sports statistics specialist company Opta predicted Korea’s chance of advancing to the round of 16 among 32 countries at 8.2%, placing Korea third among the four teams in Group H. Google and LG Uplus’s sports community platform “Spoky” also predicted Korea’s defeat in the first match against Uruguay.

The fact that matches will be held at night Korean time and that the likelihood of advancing to the round of 16 is not high are factors negatively affecting expectations for the World Cup boom. Professor Park Seong-bae of Hanyang University’s Department of Sports Industry said, “The World Cup, originally held in June or July, is being held in November this year, creating a skeptical atmosphere about the effect of street cheering.” Considering the match times, it is also difficult for families or friends to enjoy the games together at restaurants. Although delivery restaurants may benefit, the effect on revitalizing private consumption is expected to be limited.

Regarding corporate marketing effects, cautious and optimistic views coexist. Professor Park said, “The FIFA image has been damaged by previous scandals, which could negatively affect sponsoring companies,” and added, “Qatar’s human rights issues are also a variable.” However, Professor Park also predicted, “Since this is a World Cup held in the Middle East, which may not host again soon, partner companies may use it as a foothold for entering the Middle Eastern market.”