Soccernomics: Is the World Cup a good investment?

There is no doubt that the World Cup is a big money spinner but not everyone enjoys the financial spoils of the FIFA World Cup.

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(Getty)

Brazil 2014 merchandise is popping up in many sports stores around the country but the items are not necessarily racing off the shop floor.
Around 41,000 tickets to World Cup matches have been snapped up by Australians -- the second largest foreign take-up of tickets behind the US and ahead of England and Colombia.
Former Socceroo Peter Katholos owns Football Depot in the Sydney suburb of Belmore. He says the retail industry is a tough business.

"It's not an easy industry because you're competing with the world and basically you've got online stores in the UK and Europe which people have got access to."

His online sales form 40 per cent of total sales, but most purchases are made on the shop floor.

He is expecting a late rush.

"The next month is going to be busy and buzzing and people that haven't got merchandise...When they go to an event, or they go to somebody's house to watch things, they want to get dressed and have a scarf or a cap - because if they don't, they'll feel left out."

Travel agents report ticket sales for trips to Brazil have already seen an uptick as enthusiasm for the World Cup ramps up.

The number of Australians visiting the country has doubled to more than 20,000 over the last decade, according to the Bureau of Statistics.
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Felicia Georgas from Metro Travel in Marrickville says Brazil has pulling power.

"It's got a fantastic culture." she said.

"It's got the flamboyant beach cutlure of Copacabana, the annual events like Carnival, [and] the natural wonders of the world like Iguazu Falls."

She says her business has already seen an increase in Brazil-related inquiries because of the World Cup.

Goldman Sachs says around 41,000 tickets to World Cup matches have been snapped up by Australians. It is the second largest foreign take-up of tickets behind the US and ahead of England and Colombia.
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While that means more Aussies on planes, Felicia Georgas says many have used the event as an excuse to bring forward their travel plans.

"Instead of travelling during the usual Christmas holiday period, they've chosen to visit family, relatives and friends around the World Cup instead."

Believe it or not, the World Cup can make some investors a bit of money.

Goldman Sachs says the winning country can expect its sharemarket to outperform the global market by 3.5 per cent before those gains taper off.

Brazil will win either way. History shows the host nation's sharemarket will see a brief outperformance, rising by 2.7 per cent.

Ultimately, it will be Brazil's $2.5 trillion economy hoping for a boost, with low growth, high inflation, internationally uncompetitive labour costs and an overvalued currency hindering growth.

Economist at the University of New South Wales, Tim Harcourt says the World Cup is important to the Brazilian economy.

"They'll get big increases in GDP with the influx of tourism and so on," he said.

"The question is whether they would have built those stadiums and transport anyway or if they [would have] pulled it forward like they did in Sydney in 2000."
Its success is critical in aiding an economy which buys more than $740 million worth of Australian goods and services.

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3 min read

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By Ricardo Goncalves

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