World Cup safe from global crisis

Africa waited decades to host its first Soccer World Cup and when it comes, it’s during an unprecedented global economic crisis.

The recession has impacted every country, raising fears for the planet’s most watched sporting event, which kicks off a year from now on June 11.

Yet not even the worst crisis since the Great Depression seems likely to deter millions of fanatical football fans or big commercial sponsors.

Instead, the tournament is set to give South Africa a strong economic boost at its own time of need.

“We are quite lucky that it [the recession] has not touched Fifa, and in that regard it has not touched the World Cup,” said Thierry Weil, marketing manager for the sport’s governing body.

“Our partners are strong partners. They also have suffered under the crisis, but all are clearly behind Fifa and the World Cup.”

Major economies, including the United States and those in Europe and South America—home of the top football nations—have dived into recession.

Big, household name companies and sport sponsors have floundered, and tough times have forced other sports bodies, including motor racing’s Formula One, to scramble to counteract dwindling incomes.

South Africa has sunk into its first recession in nearly two decades.

While Africa’s biggest economy should be into recovery by next year, consumers and companies will still feel the pain of an unprecendented global contraction.

“There is a risk that the success could be hindered by the lack of tourist buying power,” said Colen Garrow, an economist with investment and financial services group Brait.

“But I think by then the global economy will have recovered somewhat. People may feel more confident to spend.”

Soccer also has a special weapon—millions of loyal fans whose passion for the sport will not diminish regardless of the economic climate. Relatively cheap prices in South Africa and the weak rand currency may also help.

Tonic for growth
Besides, the tournament may be just the thing to lift spirits at a time of global gloom.

Southern Sun, part of the country’s biggest hotels and leisure group, said it did not foresee any drop in hotel bookings, while ticket sales are strong.

Applications for the first tranche of match seats are oversubscribed across the globe, even before the final line-up is decided in November.

There are no more early tickets available for the opening match, the semifinals and final. The same applies to the matches in three host cities—Cape Town, Nelspruit and Pretoria.

Due to high demand, Fifa is for now no longer making team-specific tickets available for England, Brazil, Argentina, Australia, Ireland and The Netherlands.

South Africans love sports and have embraced other events despite budget constraints, as evidenced by the glitzy, month-long IPL Twenty20 cricket tournament that was moved from India at short notice in April with great success.

Corporates, however, have been slow to take up package ticket offers.

“The crisis, the worst in our lifetime, is of course impacting the whole economy,” said Peter Csanadi, head of marketing for Match Hospitality, which manages sales for Fifa. “Nevertheless, the signal we get is rather a postponement of the decision and nearly all traditional buyers are still excited and plan to buy hospitality at a later stage.”

The World Cup may be the tonic that helps not just South Africa but its neighbours get through the downturn.

Mozambique has urged its private sector to build more tourist hotels while Botswana and economically devastated Zimbabwe hope to attract teams and fans for practice matches.

Nomura International estimates the World Cup will add about 0,6% to 0,7% to South Africa’s economic growth in 2010.

The country has poured billions of dollars into infrastructure spending for the World Cup, leaving construction as virtually the only industrial sector left standing in the recession.

Official data shows that while manufacturing and mining contracted by record margins in the first quarter of this year, and the finance and retail sales also dipped, construction expanded by almost 10%.

New President Jacob Zuma, trying to combat scepticism about his ability to maintain stability and growth, has vowed to do everything possible to ensure the tournament’s success.

“We have, as government and the nation at large, pledged that the World Cup will leave a proud legacy from which our children and our communities will benefit for many years to come,” he said in his first state of the nation speech last week.

“We are on track to meet all our obligations and are determined to give the world the best World Cup ever,” Zuma said. - Reuters



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