Once every four years soccer fans around the world are treated to arguably the greatest tournament in sport: the World Cup. This year the World Cup will be held in South Africa, marking the first time that the tournament has been held on the African continent. While the majority of folks will be spending the next week or so debating the merits of the teams or which player will win the "golden boot," I'd like to take this opportunity to focus on some companies that could stand to make some serious gains as a result of this year's World Cup.
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While the World Cup itself has many sponsors for the event, so too does the tournament's governing body, FIFA. FIFA has had long standing relationships with some of the world's largest companies for years, as multinational firms have always looked to take advantage of the positive promotion surrounding the game of soccer. A few of FIFA's and the World Cup's partner sponsors include the likes of Coca-Cola (NYSE:KO), McDonald's (NYSE:MCD), Visa (NYSE:V) and Sony (NYSE:SNE).
The title sponsor that stands to gain the most from the international attention the World Cup will draw is Adidas (OTC:ADDYY). The German athletic giant has grown significantly in the past 15 years through its acquisition of Reebok and TaylorMade, and the "beautiful game" is still its bread and butter. Adidas will have its stamp all over the tournament and South Africa by outfitting the host nation along with perennial powerhouses (and top sellers) Spain, Argentina and Germany - just to name a few.
Adidas also makes the official ball of the World Cup that will be used in every game of the tournament. Although many of the players have voiced their disapproval with the ball thus far, that is nothing new for new game balls and should have a minimal impact on the company. If, however, the game ball does become a bigger issue over the course of the tournament, that could have a significant impact on Adidas' revenues from the ball, which typically are quite respectable following the introduction of a new ball. Also, with the economic turmoil in the eurozone at the moment, nothing's a sure thing for any German-based firm, no matter how global its reach.
While Adidas is looking at the World Cup as its cash cow, Nike (NYSE:NKE) is looking at it as more of the icing on the cake. Nike has enjoyed a great start to the new year, having beat analyst estimates in the last quarter by 13%. Add to these numbers that management sees global revenues increasing 40% by 2015 to $27 billion and one can see that Nike holds clout as the premier athletic apparel company in the world and that the World Cup should only help Nike add to its dominance. Nike will be providing the kits for such premier soccer nations as Brazil, The Netherlands and Portugal, and if Team USA can make some noise in the tournament Nike could hit the jackpot with American consumers jumping aboard the bandwagon.
Drink It In
While it's obvious that the sporting apparel companies stand to gain/lose a lot from the World Cup, another less obvious industry is gearing up for what it hopes will be a joyous and raucous month - the breweries. With pubs and bars around the world full of die-hard and fair-weather fans the beer makers stand to generate some serious revenues from the event. While it can be difficult to invest in some of the more obscure and local breweries around the globe, two of the world's biggest alcohol producers seem like good bets - Anheuser-Busch InBev (NYSE:BUD) and Diageo (NYSE:DEO). Anheuser-Busch InBev boasts over 300 brands, 13 of which generate revenues exceeding $1 billion, including Budweiser, Stella Artois, and Michelob. Brands such as Beck's (Germany) and Brahma (Brazil) give BUD a global presence that is unmatched and will go a long way in generating revenues from all corners of the globe during the World Cup. InBev also owns a 50% stake in Mexican brewer Grupo Modelo (OTC:GPMCY) which is the company behind the popular Corona brand.
Diageo is geared more towards wine and spirits rather than beer, but has an ace up its sleeve in the beer wars: Guinness. The iconic Irish beer is almost the unofficial beer of soccer in the British Isles and North America and gives Diageo a solid foothold in the World Cup market. If the English soccer team can play to its potential, U.K. fans and North American transplants are sure to be soaking up the Irish stout in celebration. Lastly, Diageo also holds the rights to the popular African brands "Tusker" and "Senator Keg", which will be popular choices for many soccer fans visiting South Africa during the World Cup.
And lastly, taking a more macro-economic look at the games, keep an eye on the price of platinum in the early stages of the tournament. With South Africa being the world's largest platinum producer, some are anticipating that the increased stress on the African electrical could cause significant disruptions to the African mines. If power quotas or load shedding is implemented during the World Cup, platinum mines in Africa may be forced to halt production at a moment's notice, while some may opt to pause operations for days at a time, such actions would have a huge effect on the platinum market. For those looking to play the possible platinum spike, take a look at ETFS Physical Platinum Shares ETF (NYSE:PPLT).
While the World Cup is probably the next best thing to a global event after the summer Olympics, make sure you've got your bets placed before you get caught up in the spectacle - and I don't mean on the games themselves. (For more stock analysis, check out Following The Pros For Big Dividends.)
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