World Cup 2014The Society and Economy

Alan Ng Wai Ming

Ben Lui Cheuk Yin

Jason Kwok Chun Nga

Kevin Lui Ki Fung

Content:

1. Fun Facts2. How the Society Affects the National Team3. World Cup Gambling4. World Cup Broadcast5. Economic Impacts on Brazil

FUN FACTSPart I

1. National Team

1. National Team

2. Gambling

3. Broadcast

4. Brazil Economy

HOW THE SOCIETY AFFECTS THE NATIONAL TEAM

Part II

Content

1. Relationship between National Team, Local League and Youth Training System

2. Social Factors & National Team Performance

3. How the Cultures Affects Football Teams

The Case in England

Relationship between National team, Local League (Barclay Premier League, BPL) and Youth

Training System

Strong Teams in BPL

BPL Team international competition

World Cup 2014 Result

Foreign Players Effects in BPL

How BPL affects World Cup 2014

Observations

Clubs in BPL heavily depends on foreign players

High percentage of top-class foreign players in BPL

Poor England Team performance

BPL vs. England team?

Any relationship between local league and national team?

Transfer Policy of Teams in BPL

Huge funds

Desire to hire the best player

1.Lenient restriction on

foreign players2.Few England

potential players

Hire foreign players

Those best players

improve the quality of BPL

Contribute to huge

broadcast rate

Youth Training System and Teams in BPL

Avoid relegation to receive huge

funding

Using green youth players means high

risk to relegation

Not willing to use local

youth players + buy better

foreign players

Fewer resources to

youth training system

Consequences

• Youth players need more high-level matches to gain experience

• Unfavorable policy and resources

• Few good local players

Social Factors Affecting National Team Performance

International Success and National Team Institution, Michael A Leeds

Findings from the paper

• Larger population and higher GDP per capita > less populous and poorer countries

Population and Economy

• Oil production countries > non-oil production countries

Oil Production

• Non-communist countries > communist countriesPolitical

Generally, this model describes the situation correctly.

However, there are some exceptional cases.

The Case in USA

Are there other factors?

Should be a strong

Team

High GDP

Large Population

Oil production

country

Democratic Country

Additional Social Factors(I)• Experience Factor– The number of high-level matches played

– For example, in USA• Between 1950 and 1990, USA didn’t qualify for World Cup• More matches• Import “experience” by bringing in outside coaches as shortcut• Result in WC14: Round of 16

Additional Social Factors(II)• Popularity of Football– Larger Player Pool ↑chance to find good players• Brazil

– Street football culture

• USA– Sports like American Football (38.3%), Basketball (15.3%) and

Baseball (14.8%) are more popular– Football ranked the 4th favorite (8.2%)

Another Example: China

High GDP

Very Large population

Communist Country

Ranking 88th in FIFA ranking!!

Additional Social Factors(III)

• Policy Factor– Strong Anti-Corruption Action• Players can play in fair environment

– Efficient Football Association• Find potential good players• Check on bribery and match fixing• Provide resources and support to players and clubs

– Preference of Political Leaders (for Communist Country)• For example,

– President Xi Jingping is a football fan– Investment in football has risen dramatically

– Retirement Support• Football careers are short-lived• Guarantee of prospects after retirement is vital

– From player to coach– Or other careers

Additional Social Factors(III)

Culture and Football

The Case of Germany and Brazil

The “German” Culture

Loyalty

• Teamwork, trust one another

Thoroughness

• Pay attention to details

• Perfectionism

Orderliness

• Organized• Always follow

the rules

How these culture related to German Football

Loyalty

• Support each other on the pitch

• Team building in Campo Bahia

Thoroughness

• Wrote down each Brazilian player’s properties during semi-final

Orderliness

• Perfect execution of game plan, discipline on the pitch

Effects of Professionalism & Perfectionism

Euro Cup 2000

Humiliation

• 1:1 Romania• 0-1 England• 0:3 Portugal

14-Year Plan Developed

Eliminated In Group Stage

The DFB Talent Development Program

• Committed, 10m EURO each year

• Formation-based• Competitive

football at an early stage

• 5500 Brand A coach (VS 115 in England)

• Aging from 8-14• Based on position

Selection Coaching

InvestmentTraining

Another side of the Match

Traditional Brazilian Style Analysis

Population does not enjoy equity

Football The disadvantaged to express attitude

towards life

Democratization of football: street

football

A way for climbing up social

ladder

The Street Football culture

Brazil Team style

Individual decision making, problem solving

Football is an expression of arts

Passionate and sometimes involving mild violence

Well, this is not the case anymore…

Reasons for Brazil Loss

Brazil players are exposed to European football rather than Brazilian football

The Decline of Street Football

Influx of European

Style

Decline of Street Football

Identity Crisis

-Talent outflow to Europe at an early age-Brazilian teams introduce European training methods

-Streets are occupied by urbanization and heavy traffic-Children focuses on study, teenagers focuses on work

WORLD CUP 2014 PREDICTION AND GAMBLING

Part III

Rational Prediction

Irrational Prediction

World Cup 2014: Gambling Options

Bet for the Top Scorer• Reason: only 20 players are legitimate, producing

a higher probability

Bet for the Black Horse in Group Stage• LadBrokes: USA +500 to have zero points• Bovada: Columbia -125 to win in the group stage

Bet for Specials• Any English player cried when eliminated (2/5)• Any keeper performed a scorpion kick (66/1)

Gambling in World Cup 2014: Surprising Results

Spain 0:2 Chile

Germany 2:2 Ghana

Germany 7:1 Brazil

Wilson Raj Perumal: professional match fixer

Cameroon: Intentionally sent off…no defense…fight among teammates…

Gambling in World Cup 2014: Match-fixing

Reasons for Gambling

Risk Taking

Glamorous

Escapism

Social

Conclusion

• Gambling - high risk, low yield• Dark side creates too many chances of losing

money• Match fixing, unexpected result, asymmetric

information, scams…

Cherish your life, Don’t gamble!

WORLD CUP BROADCASTINGPart IV

Local Situation

Global: Selected Cases

Observations & Trends

Content

The Local Case

• Hong Kong: only partially free (22/64)– Payment required to watch all matches legally

• For comparison– Mainland China: basically free– Macau: all free

Situation in & around Hong Kong

• Other ways to watch:– OTT (Over-The-Top) TV boxes, e.g. MI Box(小米盒子 )– Streaming on computers, tablets or smartphones– Restaurants and pubs– Shopping malls

Situation in & around Hong Kong

Profit Cost

Operating margin: -4%• 32% 28%

Cost of sales: +12%• HK$1030m 1150m• World Cup rights: HK$400m

Gen/Admin expense: +11.3%• HK$336m 374m

Pay TV losses• Loss +82% • Subscriber # not disclosed

Ad revenue due to World Cup rose by 5%

TVB 2014 Interim Report

Profitablity of TVB

reduced

World Cup bid increased cost

of sales

Additional TV production

further add to expenses

Little increase in ad revenue

Even worse losses in pay TV business

Possible limited increase in pay TV subscribers

Interpretation & Possible Factors

• Also, attention might have been on political issues (e.g. Occupy Central)

Interpretation & possible factors

22 free-to-air matches• Not enough in eyes of public

Saw TVB as inconsiderate• TVB only met minimum

requirement• Some popular team

matches are not played in group stage, like Argentina

Unwilling to pay for watching all

64 matches

Use other methods to

watch

• Air all 64 matches free-to-air– Increase advertising fee as a result

• Joint bid with other networks– Korea: the 3 TV networks (SBS,MBC,KBS) cooperate to

broadcast all matches freely

• Offer shorter pay TV contracts at reasonable price

Better ways for TVB?

Selected cases outside HK

• Situation similar to Hong Kong– Most matches are not free– Legal streaming available

• Ratings– Combined with coverage in Spanish

USA/Portugal: 24.7m

Germany/USA: 14.1m

USA/Belgium: 21.6m

Brazil/Germany: 12.4m FINAL: 26.5m

USA

Tradition

• Football has never been associated with the US

Competiti

on

• American football (NFL), basketball (NBA), baseball (MLB), hockey (NHL) constitute the traditional Big 4

Weak

local league

• Major League Soccer has not been very popular

Question: Why did this World Cup rate so well?

• Theory 1: “The World Cup rated better as the US team played relatively well this year”

• Theory 2: “Is soccer itself gaining a dedicated TV audience?”

USA/Portugal: 24.7m

Germany/USA: 14.1m

USA/Belgium: 21.6m

Brazil/Germany: 12.4m FINAL: 26.5m

Theories about WC ratings in the US

Original situation• Government “must-carry” rule all matches must

be aired free-to-air

What could have happened• Original carrier, RS International, asked for relaxation of rules

in 2013 air some matches only on paid platforms

Proposed arrangement: 22/64 matches to air free-to-air• Déjà vu: same arrangement as TVB in HK

Thailand

Thai Government Action

• Last-minute government intervention• Cause: ‘Happiness campaign’ by government • Military coup in May• From Thailand to Hong Kong: what if…?

Gov

ernm

ent i

nter

venti

on • Gov’t regulations re: sports broadcasting• China• Thailand• Australia

Cab

le /

Pay

TV • Sports: key assets

for pay TV operators

• Compare/contrast• US v HK• Content v carrier

Stre

amin

g • Legal or otherwise• Extension of pay

TV business?• “Cord-cutting”

Trends and observations

ECONOMIC IMPACTS ON BRAZILPart V

Brazil Economy: A Summary

Stagnation Recession-Inflation (Productivity)-Charges of corruption (Political Instability)

Resource-rich nation-7th largest economy-Booming until 2010

Past

Now

Before The Cup: Reactions

• Sponsoring Costs↑↑USD 11.5 B• Stadiums useless

Extravagant

• A show to pretend “All are good”Propaganda

• Lots of social problems still remain• Resources should be better utilized

Dismay

World Cup 2014 on Economy

• Insensible Investment– Investment = USD 11.5 B

• Preparation Phase: 0.5% GDP input vs 0.1% - 0.15% GDP contribution (2.9% real growth in the period)• Event YearTourist no↑ 2014 growth impact↑ (11% real growth in the period)• Post EventConstructions↓1-year-post-event growth contribution↓

World Cup 2014 on Economy

• Employment Drops– Short-term employment • Limited Country Impact• 0.7 m vs > 106.3 m needed• Mostly construction,

tourism & hospitality jobs: Short-term + Low-skill

World Cup 2014 on Economy

• Insolvencies increase– Domestic demands (post-

events)↓• Tax rates for corporates ↑• Monetary tightening: C.D.• Loan interests rose from

14% last year to 16% last April• Even more difficult for F.I

World Cup 2014 on Economy

• Inflation > Growth Brought– Current level: 6.75%– Coupled with all reasons• Economy lacks reason to rise People: Slight salary bounce vs Reality: Skyrocket prices

Conclusion• Society affects the national team– Too many foreign players in local league can badly

affect the national team– Various social factors affect the football

development – Different culture brings different play style and

leads to different result• Gambling– Situation in World Cup 2014– Reasons for gambling

• Broadcast– Cross comparison of local and global cases– Some possible measures for government and

private institution• Economy– More inflation than growth for Brazil– Protestors’ concerns are valid

Conclusion

Any Questions?

Thank You!