June 25 ,2014 | by Hari Sri

England’s World Cup exit: How does it affect businesses?

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An early World Cup exit can spell trouble for a country’s businesses.

There may be three lions on the shirt, but England fans are certainly not roaring. Uruguay and Italy left the national team outclassed and Roy Hodgson’s squad will not be making it out of the group stages. The dull draw with Costa Rica on 24 June was the last chance English fans will get for at least two years to wave their St. George flags at a major international football tournament.

But the disappointment will not only be felt among the fans – businesses around the world are likely to notice the difference too.

Companies will feel the loss in different ways. For example, if less well-known teams make it into the later stages of the tournament, there’s a risk that some viewers will lose interest and not bother tuning in – and that could mean that advertisers who paid a premium for prime slots may not see the return on investment they expected.

 

Speaking to International Business Times, Baylor University professor of retail marketing Kirk Wakefield said that sponsors and equipment retailers such as sport shops are also likely to see their influence reduced.

“Everybody loves a winner, and losers go home – and take their fans with them,” he explained. “The primary market of passionate soccer fans will continue to watch matches, but not everyone else.”

In turn, that affects all the public spaces where matches are being displayed. As a result, the UK’s pubs and bars may all feel the knock-on effects. Reuters reports that the Centre for Retail Research found bars, pub and restaurants would have gained an extra £175 million if England had just made it past the group stages.

 

However, it may be that for cafés and restaurants, people who would otherwise have stayed at home to watch matches are more inclined to go out.

But in addition to the businesses involved in the broadcast of the matches, a host of other companies have invested in merchandise that will now be much harder to sell.

Small businesses often use flags as a simple design that allows them to capitalise on the World Cup and get around licensing restrictions. But as the England-branded merchandise that has already hit the discount aisles shows, businesses can potentially end up losing money on unsold stock if that team makes an early exit.

“I’m pretty sure there’s a warehouse somewhere in Hendon full of cheap plastic hats and inflatable Spitfires that were ready to be rushed out to market stalls around the country,” media commentator Mark Borkowski told the Guardian.

Hari Sri

Hari is the LSBF Blog's News Editor. He manages the editorial content on the blog and writes about current affairs, SME, entrepreneurship, energy, education and emerging market news.

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