00:00 Ronnie

Hi everybody. Welcome back to The Barclays Brief. It's Monday, June 22nd, and I'm here in our New York studio with one of our senior US economists, Pooja Shriram. Pooja, I'm very excited for our conversation today on the World Cup and all of its ramifications. And thank you for joining the pod. 

00:16 Pooja 

Thanks, Ronnie. Very excited to be here to chat about this event.

00:19 Ronnie 

Look, I always find it fascinating when major events that span sports, culture and national spirit collide with economics. And this summer's World Cup checks all of those boxes for me. Before we delve into the impacts and focus items for investors, can you please give a high-level overview of the event and its format for our listeners who might be newer to this global phenomenon?

00:41 Pooja 

Absolutely. So, the Soccer World Cup is one of the largest sporting events globally, it’s held every four years. And in 2026, it promises to be one of the biggest in history. For the first time, it's being co-hosted by three countries, so US, Canada and Mexico, and the format is expanding from 32 to 48 teams. That means we have a total of 104 matches that will be played in a span of six weeks. The event concludes on July 19th, 2026, so we have a couple more weeks to go of, you know, great fun. One thing I will say, Ronnie, is what this means is we've got more matches, more geographies, and clearly a lot more viewership.

01:22 Ronnie 

Well, I'm already seeing the battle for tickets go on amongst my population here at work. So, look, for me, it feels like World Cup fever is sweeping through New York City, where I live. It's exciting for us to have the US hosting a portion of it. What does hosting a World Cup generally mean for that host country economically?

01:40 Pooja 

Yeah. Great question. Usually, one of the channels through which the host country benefits is in the lead up to the event itself, and that's through infrastructure build. So, think about roads, stadiums, amenities; that usually generates massive employment and spending.

But the US is pretty uniquely positioned in that we already have world class infrastructure in place. So, in the US, we estimate something like a modest 0.2% boost to GDP thing that's likely to occur over the summer, particularly Q2, Q3, just given that's the timing of the matches.

Now, this isn't a very big boost compared with what some of the other countries have recorded, usually in the vicinity of 0.5% or higher. And that's primarily because the US is a pretty huge economy and the share of tourism is quite small. And yet we think, you know, it could be quite noticeable in the data when we see the prints.

We expect much of this to be seen in the services sector via travel, hospitality, food and beverage. But at the end of the tournament, we think some of these effects could fade. Very similar assessment when it comes to employment, for example, we do think it's going to lead to a temporary, perhaps very localized increase in employment within the tourism and food and beverage sectors. And that could fade once the tournament concludes. So, I will say, bottom line is it is likely to create a very visible but transitory macro impact. And in terms of demand, I think it's really a shift in the timing, not so much a shift in the underlying trend itself.

03:13 Ronnie 

That is so interesting and surprising to me, because New York City is my home, and it just feels like things are completely buzzing, certainly around the Knicks, but now around World Cup for it. And so, it's just a good reminder that you can extrapolate New York City to the broader trend. Let's go back in time. Can you talk to us about previous World Cups that have generated the largest economic returns and impact, and maybe why that happened?

03:37 Pooja 

Yeah, sure. Let me start with empirical literature on this. You will find that most of the findings suggest that gains have been largely towards smaller economies, where tourism as a share of GDP has been larger.

Also, these effects have tended to be pretty transitory in that it hasn't meaningfully lifted the underlying growth or trend for that economy. But in terms of some of the notable World Cups so far Germany in 2006, Qatar in 2022, we had some very big revenue numbers from ticket sales, tourism, infrastructure renewal projects that came forth. So, I think these are quite memorable in terms of what the World Cup did for the host countries.

04:19 Ronnie 

So, we've covered betting and prediction markets on this podcast earlier this year. I imagine this will be huge for that sector. Can you help us quantify that impact for investors, please? 

04:29 Pooja 

Absolutely. I think it is one of the clearest beneficiaries of this event. Look, the World Cup is expected to generate a pretty sharp spike in attention. And that attention, we think, is likely to convert into higher engagement and could be used as a pretty decent on ramp for customer acquisition.

We did a note Ronnie a cross-asset piece called “Viewership Drives Value”, and in that we specifically talked about traditional sports betting as well as prediction platforms, which we think will stand to gain from this event. We think staking could increase. We're seeing increased marketing and promotions from platforms related to this. We're also expecting to see more engagement, just primarily because it's being held in the US.

And for investors, that means increased opportunity for customer acquisition, higher revenues, and perhaps more measurable profits as well. 

05:19 Ronnie 

What other sectors will be impacted? Where else do you think investors should be focused around this big event?

05:24 Pooja

Yeah. Great question. Look, we have a way of thinking about this. I think the first channel could be through capturing demand. Just because of the sheer scale of this event.

You could think about sectors related to packaged food, convenience retail, restaurants, very closely tied to how the average viewer chooses to watch the match, whether it's going to be at home or more socially. The second is through engagement monetization. So, think about your sectors like the media, advertising, the sports betting platforms, really about capturing attention and converting that into customer acquisition.

And finally, I think brand placement; it's a great opportunity for a lot of firms to amplify their brands, given the event is going to be held at such a large scale.

06:09 Ronnie 

So, let's go under the radar. If you think in broad economic terms, what are some things that nobody's talking about that could actually matter or be affected by this World Cup?

06:21 Pooja 

Yeah, that's an interesting one. I will say, on the first point is demand. There's been a lot of debate and discussion around demand for this World Cup. FIFA themselves think it's going to be a record-breaking year for them. There was a news article last week where they said that viewership was perhaps the highest it's been for a particular day.

And yet when you look at some on the ground metrics, the incoming data suggests that there are pockets of weaknesses. Hotels perhaps not seeing, you know, the same amount of bookings that they expected going into this event, for example. So, I will say what we're learning is demand for the time being seems to be pretty uneven, and it's going to be very linked to the matches themselves. Maybe there could be a ramp up as we enter the knockout stages. So, I think that's an angle that we will wait and watch to see how that evolves. 

The second point related to this is we are actually seeing some early imprints on economic activity, and we have data just through May, so this is a month ahead of the event. And yet we saw retail sales in the US take up quite substantially. 

07:29 Ronnie

And that’s because everybody wants the right jersey. Everybody wants the right gear to show up in things like that?

07:35 Pooja 

Absolutely. And we saw that spike in merchandise store sales, sporting goods sales. And the other thing is employment in May, particularly in leisure and hospitality - much higher than normal. So, we think that could be tied to the World Cup as well.

07:48 Ronnie 

So, it seems like people are getting way ahead in terms of getting their hands on the merchandise to be at the games, but then people are less inclined to lock up hotel rooms or commit to games until they start to see how things play out. 

08:00 Pooja 

That's right. And I think the ticket prices are also a factor to be considered.

08:03 Ronnie 

Interesting, because they're probably very high here in New York. And then if you want to be in Seattle, they're probably cheaper. And so, I think it's a good reminder that sports fans are fanatical enough to want to opt in and opt out based on whatever makes the most sense for them. It's just a reminder of how dynamic capital and consumer habits have gotten. Is that the right assessment? 

08:22 Pooja  

I think so, yeah. And the willingness to pay for these crazy ticket prices.

08:26 Ronnie 

Yea, as a New York Knicks fan, I certainly experienced a little of this in recent weeks. So okay, you've spent a ton of time on this topic, and so I can't let you out of the hot seat without asking you two questions. One, who are you cheering for? Two, who wins?

08:39 Pooja 

All right, I'll admit I'm not a day-to-day soccer fan, but once every four years I become a World Cup enthusiast. So, I am cheering for Team US. I thought we did pretty well over the weekend, but in terms of who wins, I think I will let that sit with the fans who watch the game more closely.

08:57 Ronnie

Come on!

08:58 Pooja 

And I will stick to forecasting inflation. 

09:00 Ronnie 

Okay, fine. That leaves me to predict that the US will win, even though I'm not that steeped in soccer, but happy to root for them, happy to hope for them to win. Thank you so much. This has been really insightful.

Wrapping up, the 2026 FIFA World Cup is set to be the largest and most geographically dispersed in history. The economic impact is likely to be highly visible, highly localized, and short term in nature. We think investors should focus on industries well-positioned to benefit from viewer engagement, like consumer staples, media and internet. Thanks for joining us, and please remember to hit subscribe wherever you listen to your podcasts to be notified of future episodes.