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The Economics of the Euros: How the Finalists Benefitted On and Off the Pitch


The European Championship – informally known as the Euros – began in 1958 after being proposed by the French Football Federation’s General Secretary Henri Delaunay.

This competition occurs every four years and consists of 24 teams each representing their nation.

Although the Euros were scheduled to take place in 2020, the outbreak of the COVID-19 pandemic necessitated its postponement to 2021, and it has instead been hosted over the past month.

Both England and Italy made it to the finals, yet ultimately Italy took home the trophy by beating England 3-2 on penalties.

Throughout the tournament, England demonstrated a combination of promise and momentum, comfortably beating the likes of Germany, Denmark, and Ukraine. Even so, Italy also displayed its competence, beating rank one team Belgium in the Quarterfinals and Spain in the semi-finals.

A crucial commonality is that both Italy and England were successful on and off the pitch.

Economically, the Euros have the potential to bring in a tremendous number of short-term profits as celebrations typically lead to increased spending and expand the economy for some time.

However, this is a two-sided coin as tournaments can take a toll on economies due to dips in productivity following nights of celebration or sorrow, since many are less likely to show up to work the day after a match.

Benefits for England

Various sources including the UK parliament have expressed that COVID-19 has had a detrimental impact on the economy.

In April 2020, the UK GDP was 25% less than it had been two months prior and by March 2021 the UK GDP was 6% lower than it was before the pandemic.

The pandemic essentially led to a recession in England due to redundancies, decreased productivity and less spending.

However, the Euros propagated major economic growth in England over the past few months. Brits’ spending in shops and online was 10.6% higher than before the pandemic.

£3billion has been spent on takeaways, beers and merchandise. Income has also been generated due to the opening of bars, pubs and restaurants as COVID-19 restrictions have eased.

England’s place in the final brought an expected £90million to the economy, with supporters spending roughly £40million on accommodation and millions on food and drink.

Unfortunately, there are opposing factors at play too: England’s loss in the final has had a negative impact on the economy.

As expected, England’s loss led to widespread emotional outcry, causing productivity dips in which hungover employees did not make it to work the next day. Many called in sick to attend the game, and some even lost their jobs after being caught live on camera.

The emotional despondency also manifested in the form of riots; small crowds broke into Wembley, costing taxpayers’ money in policing costs to keep everyone safe.

In addition, the final was also a key factor behind the significant dip in vaccinations that marked the following day.

Finally, the opportunity cost of the €3M that the winners receive was forgone, though even though the England team pledged to donate it to the NHS, this figure is more symbolic than it is pragmatic when considering the costs of running the NHS.

Benefits for Italy

The economic effects of the pandemic on Italy’s economy were no less significant than those on England.

By April 2020, consumption of leisure, hotels, and transportation was down 68%, 92% and 83% respectively.

Parallel to this economic downturn, Italy also struggled substantially to contain the virus. At its peak, COVID-19 was the main cause of death in the region and the country has had one of the highest mortality rates in the world.

Despite this, football continues to play a key cultural role for Italy and has been the first stepping stone towards normality.

Italian football also extends beyond entertainment, however, as evident in Italy’s status as the European leader in socio-economic value brought about by the competition.

Source: PWC Report Calcio

Over the past 11 years, tax and social contributions from professional football amounted to €11.4bn according to the Italian National Olympic Committee.

To contextualise this, a 0.19% rise in GDP in 2017 was associated with a 22.4% increase in ticket sales and a 9.5% increase in commercial sales.

Thus, when we partner the recent resurgence in Italian domestic football that has occurred over the past few years with the Italian crowd’s need for both economic benefit and entertainment, it is no surprise that all eyes were on the Euros.

Despite the fact that Italy only hosted three group games and one quarterfinal, the short-term gains were still roughly €4bn according to Brand Finance.

Since the Italian team won the final, they took home the additional €3M, bringing them to a total of €34M which is likely to be reinvested in their team.

However, winning may not always be desirable in terms of domestic stock options. A study by Goldman Sachs found that every winner of a final sees its equity markets outperform global markets by 3.5% in the first month, but then dip 4% below average over the following year.

Nevertheless, this is better than the alternative, as the report proceeds to demonstrate that seven out of nine of the runners-up underperform by an average of 1.4%, and this falls to 5.6% over the following three months.

Concluding Thoughts

Despite these statistics, the FTSE MIB and the FTSE 100 have seen significant growth throughout the year as economies begin their recovery from the pandemic.

Although the FTSE 100 dipped after the loss, it is unlikely that England will be in Goldman Sachs’ seven out of nine, as equities will be less likely to underperform for the following months due to a loss in the final.

This is due to the unique circumstances of the pandemic, yet the overall effectiveness of the UK vaccine rollout should stimulate business recovery and operation quicker than many other economies.

Fundamentally, tournaments such as the Euros do not bring in long-term growth but instead serve as a much-needed short-term economic boost to kickstart economies.

All of the money that UEFA and FIFA earn is tax-free, and since they are each technically a monopoly, this provides them with greater bargaining power to make such deals with governments.

Additionally, governments earn more money from tax revenue than from leisure spending in which companies themselves benefit.

Ultimately, the benefits will always stem from travel and consumption, meaning that they are bound to remain supernormal profits since consumption will dip after the finals.

Whilst the tournaments do not produce long-term growth, they bring something much more important: a sense of national identity and unity in us all.

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