Your Quarterly E-Zine
Edition 11 • December 2019

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Research1 suggests that the sharemarket of a football World Cup host nation enjoys average outperformance of 2.7% in the month after the event, while the market of the winning nation outperforms by 3.5% in the month following their victory.

While sage investors will note these statistics with interest (rather than as part of their investment strategy), with no fewer than five sporting World Cups being competed for in 2019 (basketball, chess, cricket, netball and rugby union), it’s perhaps worth reconsidering the broader economic impact World Cup events have for host nations.

From a New Zealand perspective, one of the more keenly followed World Cup events this year will be in Japan, where the All Blacks will seek to once again retain the title they successfully defended in 2015. Japan’s Rugby World Cup 2019 Organising Committee contracted Ernst & Young ShinNihon LLC to analyse the impact of socio-economic activity associated with the event.

Their analysis concluded that the total economic output of RWC2019 is estimated at NZ$6 billion, with the resulting GDP increase (value-added stimulus) at NZ$3 billion, the associated increase in tax revenue at NZ$300 million, and the rise in employment at 25,000 jobs.

Photo: Ned Snowman /

While in absolute (and in New Zealand terms), these are very strong numbers (and better than for the 2011 World Cup in New Zealand), in relative terms, in Japan (where for example, the total workforce exceeds 60 million, and GDP is US$4.9 trillion) the anticipated benefits are perhaps not so significant.

A 2016 study by Harvard University2 found that the real economic benefits of hosting a mega-sporting event are significantly lower compared to the forecasts of those benefits. Moreover, the study suggested that any real benefits are outweighed by the costs associated with preparing for the event. The study also found that there is little relationship between an event and increased economic activity, “whether directly or indirectly, or in the short-term or long-run.”

Of the 1.8 million tickets available for the RWC, it is reported that over 1 million have been purchased, with 70% of total applications for tickets coming from within Japan for the 48 games over 12 venues. By way of comparison, 7.8 million tickets are on sale for the 2020 Summer Olympic Games.

Stores in Tokyo’s Akihabara district are cashing-in on the Rugby World Cup opportunity

While this indicates a potential financial windfall for Japan, more generally there is evidence that sports governing bodies are taking an increasing share of the revenue streams (such as ticket sales, merchandise, sponsorships, licensing and broadcasting rights) which are considered to be crucial to tournament organising entities.

By way of example, the Economist magazine3 has reported that the International Olympic Committee now takes more than 70% of television revenue from the Olympic Games compared to 4% in the two decades before 1980. In the 2014 football World Cup, it’s reported that FIFA generated almost US$5 billion in revenue (including television rights), despite Brazil bearing the costs of hosting the Tournament.

For the 2019 Rugby World Cup, assuming that there is some level of real financial windfall, what will these benefits mean for the growth of the game in Japan and Asia more broadly? While in Japan recently, I spoke with people in Osaka, Nagasaki, Oita, Kobe, Toyohashi and Tokyo about the Rugby World Cup. The general sentiments expressed were that while most were not particularly interested in Rugby Union, there was a sense of national pride given that Japan was hosting the World Cup. However, there were mixed views regarding the economic benefit of doing so.

Asia has yet to embrace the game of Rugby Union. Both professional teams in the region competing internationally, the Asia-Pacific Dragons (Singapore) and the Sunwolves (Japan), are characterised by the foreigners that comprise their rosters. The Singapore-based team has one local player, while only 19 of the 61 players contracted to the Sunwolves are Japanese nationals.

Overall, Rugby Union in Asia is a spectator sport, with many obstacles and disincentives to growing amateur participation and a professional player pathway. While there is plenty of money to promote the game, most will concur that it is a mighty challenge to grow participation from the top-down.

(Ma’a Nonu and Dan Carter appear on a street-side service duct in Tokyo’s Shibuya district)

People may pay to watch a fixture occasionally, however it’s a different matter to grow the social infrastructure to engage the community on a voluntary basis.

Perhaps trying to analyse the legacy impact of the massive expenditure required to host World Cups is overdone. As the World Economic Forum points out “major sporting events are one of the few things that really bring the planet together. Sport is a powerful tool to bridge societal divides. And it’s not completely fair to reduce these events to hard numbers and statistics4.”

That being the case, perhaps it’s best to defer to the well-known Japanese kotowaza (or “saying"), “ichiri areba, ichigai ari”, which suggests there are two sides to every story. As in the sporting fixtures themselves, in the economic and financial wash-up of 2019’s various World Cup Tournaments, there will be both winners and losers.


Gordon Noble-Campbell
Director, Private Client Services

1 The World Cup and Equity Markets – (Goldman Sachs Global Investment Research)
2 Bringing Home the Gold? A Review of the Economic Impact of Hosting Mega-Events – (Harvard Kennedy School)
4 Does hosting a World Cup make economic sense? Stefan Hall, World Economic Forum, 2018

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