The World Cup Economic Effect

An article in Newsweek notes the negative economic impact that the World Cup has upon countries, particularly Brazil. It’s an interesting read, and speaks to just how all-encompassing this competition can be, especially in soccer-crazy countries in Europe and Latin America. On one hand, you have Willem Smit, a researcher at IMD, lamenting about the hundreds of millions of dollar (billions, in some cases) of lost productivity from workers who are surfing the net reading articles about the competition, watching the competition through streaming video from their desks, or have outright not gone to work, opting instead to watch the games at home or a local bar. The counter to this is the construction, tourism and event-management jobs generated by the host country (which doesn’t help Brazil or non-host countries) and intangible benefits such as colleague engagement and morale.

The workplace productivity calculation seems reasonable. But to be fair, it’s not just the World Cup is the culprit. In the United States, at least, any sort of major sports event (Super Bowl, World Series) or entertainment event (Oscars, season finale of American Idol) has a corresponding effect on people surfing the web to read recaps and analysis about these events or emailing or talking with friends around the events. On a smaller scale, there is constantly going to be periods of lost productivity and downtime due to people reading, talking or e-mailing about non-work related topics. I’ve wondered at time what the effect would be if our CIO shut down access to YouTube, ESPN.com and any web-based personal e-mail service. I hope this never happens in my company, but I’d be hard-pressed to justify why we need access to some websites that we currently have access to.

As for the intangible benefits around colleague engagement, I’m not sure I’m buying that. I’m a firm believer in colleague engagement, as defined by Gallup, and I’m convinced that there is a correlation between the degree that colleagues feel energized, equipped and willing to collaborate with other colleagues and bottom-line performance. What I’m less convinced about is the net effect of people watching the World Cup together in the cafeteria as being an enabler of colleague engagement. For example, if 70% of the department sits around and watches the United States beat Algeria, what’s the upside? The 30% who didn’t watch will resent having to pick up the slack for the 70% who ditched, and a victory will lead to people poring over the ‘net reading recaps and commentaries around the great win and what comes next. Unless Bob and Jim, who happen to be sitting next to each other, come up with a groundbreaking collaborative idea which saves the company millions, I’m not sure this is a good thing. Besides, there are no commercials, so Bob and Jim better look to brainstorm during halftime.

At the end of the day, I’d acknowledge (with a nod to my brother, who absolutely hates sports and thinks that they’re a complete waste of time and resources in our society as a whole) that World Cup is a killer for employee productivity for companies across the globe. What it does engender, at least for few weeks, is a spirit of healthy competition and entertainment which can help hundred of millions of people around the world forget and not care – just for a while – that their local economy might be in the tank, and might be just a little more in the tank afterwards… and that’s okay.

It’s entertainment, not an economic stimulus package.