Home/Blog/Trading Ideas/At Long Last, the World Cup Wins Over the US

At Long Last, the World Cup Wins Over the US

11 July 2014 in Trading Ideas

It’s difficult to pinpoint the exact moment when the 2014 World Cup officially became a big-time crossover event in this country, but it might well have been after the American team was already eliminated.

Enthusiasm for the US run into the round of 16 had certainly delivered record TV ratings, but non-US matches this year, while above the viewership of four years ago, were still not much higher than hardcore fan levels.

But then – Brazil.

 

There didn’t seem to be anybody left unaware of the 7-1 thrashing the host country’s squad suffered at the hands of Germany earlier this week, including those who have no idea which country, for example, the tournament’s defending champion may be.

“Did you see what happened to Brazil in that game?” It was that oft-heard question in homes and offices across the US that has seemed to cinch it: you may not have known to correctly call it a “match” on the “pitch” or know that soccer is called “futebol” along the Copacabana, but you knew what happened between Brazil and Germany.

And when has that exactly happened before?

Of course, the relative success of the US team has been no small part of the attraction. As Richard Deitsch reported for SI.com, Belgium’s overtime win over the US averaged more than 16 million viewers on ESPN and more than 5 million on Univision.1

In addition, ESPN said it averaged 3.5 million unique viewers on its WatchESPN digital platform – a record for any event, while 1.8 million viewers watched via Univision’s digital site.

As Deitsch rightly points out, these numbers don’t count the many watch parties across America as well as throngs watching in bars and restaurants. Deutsch reckons the viewership total is closer to 30 million.

Such an audience isn’t quite Super Bowl level, but easily outdistances any recent viewership totals garnered by the NBA Finals or the World Series.

Naturally, the corporate advertisers who have aligned themselves with the World Cup must be pleased, as, no doubt, is FIFA, soccer’s international governing body that must already be licking its chops at the endorsement deals it can garner for the next World Cup in 2018.

Already, German sporting apparel maker Adidas is estimated to have spent $70 million on its investment as the tournament’s official sponsor. Meanwhile, its main rival, US-based Nike, enjoys no official sanctioning, but is likely reaping benefits from its sponsorship and outfitting deals with top players and teams.2

(Unfortunately for Nike, the two Cup finalists, Germany and Argentina, are outfitted by Adidas).

Interestingly, since the World Cup began on June 12, shares of Nike have gained 3.4%. During that same time, the S&P 500 has risen 1.1%.

Nike’s stock also has a 21.1% weighting in the World of Sports motif, a portfolio of stocks of sporting goods and apparel makers as well as content distributors that could benefit from increased media exposure to sporting events that spurs demand for related gear.

The motif has gained 0.5% in the past month; the S&P 500 is up 0.8% in that time. In 2014, the motif has risen 4.5%; the S&P 500 has increased 8.3%.

1Richard Deitsch, “USA vs. Belgium draws another huge American TV World Cup audience, SI.com, July 2, 2014, http://www.si.com/planet-futbol/2014/07/02/usa-belgium-world-cup-tv-ratings-viewers, (accessed July 8, 2014).

2James Fernandez, “It’s Nike vs. Adidas in the World Cup Semis,” thestreet.com, July 7, 2014, http://www.thestreet.com/story/12766229/1/its-nike-vs-adidas-in-the-world-cup-semis.html.

*