Economic growth and the Rugby World Cup

October 18th 2007

It is 6 o’clock on Saturday October 13th in Paris. The semi-final rugby match opposing France and England is not to start in the next three hours. Yet, cars on the Boulevard Saint-Germain toot proudly, and smiling people start gathering in pubs where giant screens have been put in place to observe France’ bout. Inside the Wos bar, on Saint-Jacques street, beer orders seem never to stop, compelling the waitress to bring six by six the pints onto the tables. And as time goes on, the general euphoria exponentially increases.

Since France’s victory against the legendary All Blacks a week earlier, confidence has been boosted, bringing economists to once again raise the question of the correlation between sportive victories and economic growth. The so-called “World Cup Effect”gained some legitimacy after the 1998 Soccer World Cup. That very year, French growth had indeed reached 3.5%.

As the organizer, France already harvested economic benefits from the Rugby World Cup. Tourism was the domain where the “World Cup effect” was the most notable. Airports of Paris (ADP) underwent an increase of 5.4% in air traffic this September, compared to the same month in 2006. The competition also triggered an increase in French household’s immediate consumption. A document published in April by the European Chair of Sportive Marketing at the Essec (French Business Graduate School) forecast four milliard euros of direct receipts, through fans’ expenses, tickets, by-products, etc. A poll made just before the launching of the World Cup also revealed that hotels, restaurants, nightclubs and bars expected 10% of supplementary revenues during the World Cup, counting both on the fact that France was hosting the event, and on the enthusiasm and confidence generated by a nice performance of “Les Bleus”.

Will then the French defeat against England have a negative impact on national economic growth? “The week following the match opposing France and Argentina, we received almost no customers. And after tonight’s defeat, it will be the same. This will obviously have a direct effect on business, since the euphoria that characterized the past few months will relapse all of the sudden” explains Pierre Louvrier, owner of the Wos. And indeed, on the following Sunday morning, the atmosphere was rather gloomy in Parisian streets. “While strolling in the neighbourhood, I noticed that boldness had fallen,” comments Nicolas Laurent-Bonne, a 21-year-old law student. Certainly for real rugby lovers, this defeat will not kill joy. “We were in the doldrums right after France’s defeat, but we continued playing for an hour and a half”, narrates Sylvain Baratte, saxophonist in the Banda Kalimucho, which followed the French rugby team during the whole tournament. “A rugby match is festal, nothing can destroy our moral ». But French are not all rugby addicts.

And in any case, the question remains if the observed increase in household’s consumption could really have remained relevant in the long run, had France won the semi-final. In 1998, the World Cup Effect had not lasted for more than three months. And could the impact of the Rugby World Cup be as important as the soccer one? According to many economists, rugby remains less popular than soccer. Mihai, a 27-years-old intern in surgery in Paris, agrees on that point: “France doesn’t have the culture of rugby, it has the soccer culture. I think the euphoria you could observe was only transient, so defeat or victory, it couldn’t have influenced French economy that much.”

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