'Organization World Cup will not stimulate business'

No substantial positive effects on national business are to be expected from the organization of mega sports events, such as a World Cup. That is the conclusion of professor Bert Scholtens and student Anne Vennemann from the Faculty of Economics and Business, published in the journal Economische Statistische Berichten (Economic Statistic News). They investigated the reaction of stock exchanges in different countries on winning or losing a bid procedure.

Stock exchanges are good indicators of economic expectations, so they also indicate the expected profit of organising a World or European Cup football tournament, or the Olympic Games. Scholtens and Vennemann examined 114 situations, in which a country did or did not win a bid to organise such an event.

They calculated that the day of the announcement of the bid result shows a slight positive output on the stock exchange, but for the winners this output is not significant. The days to follow the announcement of the organizing country, the stock exchange output is usually negative.

Scholtens and Vennemann conclude that the appointment of the organizing country of a mega sports event does not have a significant effect on the stock exchange index in that particular country. This indicates that traders do not expect the organization of big sports events to be, on balance, positive for business. This can therefore not be used as an argument for a country’s decision to run for such an event.