World Cup Loss Still Good News for Business

Sales of Germany flags soared as coach Rudi Voeller's team advanced to this year's World Cup finals. With each victory on the soccer-field, Germans by the ten of thousands rushed to flag stores to purchase their own black, red and gold banners. Spendings on beer increased accordingly.

Despite the team's 2-0 loss to Brazil, it looks like the Germans might keep shopping, not only for flags and home-brewn beverages.

Financial experts believe that the feel-good mood from the tournament, combined with the fact that Germany will host the next World Cup in four years, will positively affect the economy, which is currently struggling with a decline in consumer spending.

"The team's unexpected success is definitely making the country's outlook brighter," said Dietmar Herz, political scientist at Erfurt University. "There's been a thorough improvement in the national mood. The good feeling from soccer is eclipsing everything else at the moment."

A Much Needed Boost

A rise in the nation's mood comes at the right time.

Happiness over the unexpected run of the soccer team overshadows gloom over a sluggish economy, falling stock prices and a wave of corporate bankruptcies.

A new EU survey shows that one in two Germans say they have bought less since the introduction of the euro at the beginning of the year. Around 82 percent of Germans believe that prices have risen significantly since then - even as central bank and economic experts say that is not the case.

"The soccer team's rise to the World Cup finals might restore confidence among citizens, as it could help shake off some of the consumer gloom we have here in Germany," said economic adviser of the German government Bert
Ruerup.

Fruitful investment

Sponsors of the German team had wagered highly on these effects, reaching deeply into their pockets for the tournament. Daimler-Chrysler and Adidas alone invested 14 million euro ($13.5 million) together.

Due to extensive advertising budgets, Adidas expects profit growth to be temporarily reduced from 15 percent last year to 10 percent this year. Long-term advantages from their World Cup appearance are expected to influence the company's growth in the future.

The Bitburger beer brewery, another main sponsor of the team, already has data supporting the efficiency of their campaign.

"Our support of the German national team was to strengthen the image of our brand, and current research suggests we've reached our goal," Dietmar Henle, press speaker at Bitburger, told DW-ONLINE.

To thank German fans for their support, Bitburger has issued coupons for free beer in an advertisement campaign launched on Monday.

Historic Precedents

A World Cup victory has once before helped motivate Germans to rise economically. When German soccer-legend Fritz Walter and his team took home the world cup in 1954, a wave of enthusiasm took hold of the nation still struggling to rebuild the ruins of World War II.

The historic victory of 1954 propelled Germany back into the international spotlight, as Volkswagen bugs left conveyor belts by the thousands as a symbolic icon of the newly dawned era.

When the national team led by Franz Beckenbauer returned home victorious in 1990, the country was just entering a new time of optimism inspired by the recent fall of the Berlin Wall and the resulting re-unification.

Although Rudi Voeller's men only came out second this time, experts say the positive influence on the economy will prevail.

The boom we have predicted will occur even without winning the title, Wolfgang Nierhaus of the Ifo institute in the city of Munich told the German daily Berliner Zeitung.

All Eyes on the Future

Hosting the next World Cup at home in 2006 is expected to have an even stronger impulse than the German team's faring at the current tournament, said Eckhardt Wohlers, expert in economic fluctuation at the HWWA institute of Economy in the city of Hamburg.

Many stadiums will be renewed all over the country during the preparation phase of the tournament. Current estimates speak of a 1.7 billion euro ($ 1.684 million) investment necessary to bring all German stadiums up to World Cup par. Half of the money will most likely come from taxes.

Once the games begin, new employment opportunities will arise. Tourists flocking to Germany for the tournament - 3 million are expected to attend matches altogether - will also contribute to profits in trade and the hotel sector, Wohlers said.

Just when these effects will materialize depends on how soon preparations will begin, and who will have to pay for measures like the modernization of stadiums, the expert explained.

Until then, time will tell if citizens will store their newly-bought flags away in the attic, or if the World Cup has changed attitudes towards open displays of patriotism.

"We are still wary about nationalism," said Petra Woerner, a first-time flag-buyer said on Sunday. "But we're getting more relaxed. It's okay to wave the flag for the soccer team."