The economics of the World Cup

Goldman Sachs may have taken a lot of heat lately, but they may have done themselves a great favor by releasing their 2010 World Cup Research Report earlier this month. Running a little over 70 pages, it's a remarkably in-depth summary of each country in this year's finals, including football prowess, economic state, and political situation. Furthermore, it provides a primer on the potential hosts of the 2018 and 2022 World Cups, and, unsurprisingly but more than interesting, an examination of economic growth and decline vis-a-vis the international football teams of respective countries.

Some of the most noteworthy things to take away: like most of the speculation has focused on, the report predicts a European-hosted cup in 2018, and a return to the U.S. in 2022. (Also included are bid pitches from Russia, England, and the U.S.) Interestingly, this is what it says about the U.S. bid:

The sport has taken roots in the USA and the market is quickly becoming one of FIFA’s most important. They already pay one of the largest television rights fees to FIFA of any country. However, the perception is still otherwise.

For U.S. soccer fans, that perception is extremely frustrating. It is somewhat accurate: for a team that has qualified for the last six World Cups (granted, a Foreign Policy* staff team could probably qualify for the finals out of the Confederation of North, Central American, and Caribbean Association Football -- CONCACAF), interest would appear to be lower than warranted. (Six out of six is, by the way, quite impressive: England, France, and the Netherlands can't claim that streak.)

But that's changing. Go to many bars in the District on Saturday or Sunday morning, and you'll see European football -- usually the English Premier League -- on the TV. From my own observations (be wary of perception bias), the sport with the most jerseys worn on the streets of Northern Virginia and D.C. is soccer, by far. Moreover, 24.5 million Americans play football, the second most  (behind China's 26.2 million) in the world. Since 1994, there has been a dramatic increase in the number of U.S. soccer fans, but among casual or non-fans, there still remains an idea that soccer is not an "American" sport. (It should also be noted that the U.S. Women's team is the dominant global powerhouse.)

UEFA's (Union of European Football Associations) selection of the 2012 Euro Cup host proved prescient, as well. Picking in 2007, Poland won the rights to host the tournament (OK, co-host with Ukraine, but since then UEFA has suggested Poland be the sole host, which the Poles have graciously declined to accept). Poland, however, was the only bid country that hasn't suffered economic decline since -- and yes, Greece was the first bid country eliminated.

Other notable findings: the Growth Environment Scores (a Goldman-devised figure of sustainable economic growth and productivity) of respective countries loosely correlate to soccer performance, but a much stronger connection exists between the improvement of economic conditions and national soccer teams. (Algeria, which did not qualify for the 2006 finals in Germany, posted the highest GES improvement among developing countries over the last four years.) The report also argues that success is partially dependent on the number of males aged 18-34 in countries, and provides a UN chart with predictions for 2050. If the claim is accurate, the Nigerian Super Eagles are going to be really, really good in a few decades.

Lastly, Goldman offers their own predictions of the semi-finals (I won't spoil, though I will say it's what my predictions are as well), and lists the probability (with their metrics) that each country will become World Cup champions.

It's lengthy, but an extremely interesting read, and provides the best rundown of the Cup to come that I've seen. Check it out.

*No matter what anyone says, I'd play right wing.



The most uncomfortable man in the Middle East

The most uncomfortable man in the Middle East right now is not Israel Prime Minister Benjamin Netanyahu, or even his defense minister, Ehud Barak -- who will undoubtedly face damning questions in light of the Miva Marmara affair -- but Hosni Mubarak.

Egypt's president is in a tough spot. The Egyptian government has for years cooperated with Israel in enforcing the blockade in Gaza and containing Hamas. For Mubarak, it's a policy that makes sense -- he wants to preserve good relations with his northern neighbor, and he has no interest in seeing Hamas's brand of  Islamist activism gain any further ground in Egypt. It's not very popular on the streets of Cairo, but any time the pressure grows too strong, he can relax the blockade a bit and show his magnanimity. And by never fully cracking down on smuggling, he keeps the restive bedouin population of north Sinai relatively quiescent, while avoiding the difficult and expensive task of actually trying to develop the area.

Sure enough, Mubarak has just ordered the opening of the Rafah border crossing, citing humanitarian needs in Gaza. After a few days -- once he gets back from his trip to the French Riviera -- he'll quietly close it again. But this time, there's a new wrinkle: he's got vocal, credible rivals who might be able to embarrass him and make some political hay out of the issue.

Amr Moussa, the head of the Arab League and a relatively popular figure in Egypt, used the incident to call for a lifting of the Gaza "siege" and summoned the Arab League to Cairo for an emergency meeting.

Former IAEA chief Mohamed ElBaradei twice tweeted about the flotilla, saying "The opening of the Rafah crossing is the demand of every Egyptian and Arab. In a democracy, foreign policy represents the will of its people" and that "The Israeli agression on the Freedom Flotilla exposes an inhumane regime, a blot on Arab conscience. Open the crossings immediately." But he's facing hard questions in Egypt about whether he's really committed to politics, and I'm not aware that he's taken to the press this line of attack.

Another problem for Mubarak is what happens if Egyptians, watching Gaza flotilla activists put Israel on the defensive, get ideas in their heads about domestic politics? With important elections coming up, it's political season again in Egypt. So far, the protests have been small and focused on Gaza, but Egyptians could easily make a connection between what's going on there and the government's policies. That's always dangerous territory for Mubarak.

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