So, after spending yesterday morning (and the past few months) hearing about financial crises in Italy and Spain, I found it interesting to be watching an entertaining Champions League football match in the afternoon between AC Milan and FC Barcelona. Most striking to me was that these two countries that can’t seem to get their balance sheets in order manage to field two world class club football sides. So I let my mind wander a bit to see just how far I could take this little aberration.
First of all, this connection was inspired by a game between two club teams, AC Milan and FC Barcelona. While these two teams started an impressive share of nationals (5 for Milan and 7 for Barca) I think the performance of national teams would be a better indicator of the comparison I’m trying to make.
Let’s start in Spain. The Spaniards currently hold both the World Cup and the Euro Cup, however about 22% of the country doesn’t hold a job. That rate was at 9% at the beginning of 2008. Further, it was also in 2008 when Spain won the Euro Cup that their GDP (and sure, most of the rest of the world’s) began to contract. When 2011 data becomes available I would suspect that their 2010 World Cup victory will precede another precipitous drop in GDP.
So now let’s look at Italy. After winning the World Cup in 2006 they actually saw a fairly decent rise in GDP growth. However, Italy is now mired in public debt (around 120% of GDP in 2010) and at their most recent bond auction they had to offer yields of over 7% to clear the market. Their elected leadership was recently replaced by a team that looks more like an economics department than an Italian cabinet and even now there is uncertainty over whether they can avoid default.
Having lost that 2006 final to Italy, France seems to have avoided the same fate as their opponent. Although even finishing second seems to have resulted in suspicions around the solvency of their banks and talk of a credit rating downgrade continues.
The Euro Cup final in 2004 featured Greece and Portugal. The Euro Zone in 2015 will likely not feature one, if not both, of those economies. Both of these countries have received financial bailouts in the last few years to maintain solvency. Greece, who won the 2004 Cup, have since been the poster children for how not to run an economy. Enough said about those two.
Admittedly, these sort of comparisons are easy when, as has been the case since 2008, nearly every economy in the world has been sputtering. So what about the inverse? Does ineptitude in football lead to economic success?
Brazil, almost synonymous with elite football, last won the world cup in 2002. Prior to that victory, GDP in Brazil had actually contracted from $644 billion to $504 billion from 2000 to 2002. Since then? Brazilian GDP has grown at an exponential pace to just over 2 TRILLION in 2010. Brazil might want to stand pat with their record 5 World Cups for the time being.
On a much smaller scale, there is Colombia. Remember in 1994 when the Colombian national team was a favorite at the World Cup in the US after their historic 5-0 away victory at Argentina? Colombia has since faded from the international football scene, but has risen on the economic stage. GDP in Colombia has tripled from $81 billion in 1994 to $288 billion in 2010. They have cut back on their infamous white powdery export to instead focus on legal exports such as gold, oil, and coffee and are now considered one of the most intriguing rising economies in Latin America and the world.
And what of the English? While they remain safely outside of the embattled Euro Currency Zone their ineptitude in the World Cup since 1966 has been talked about (almost) enough by now.
What does this all mean? Absolutely nothing. But these correlations exist nonetheless. Could it be that all of those unexplained absences at workplaces across Spain on matchdays during their last two Cup runs lead to the firing of 10% of the population? Or maybe financing the Azzurri’s World Cup winning team in 2006 added a significant burden to the Italian public debt. And maybe some of those Brazilian children who used to play football barefoot in the favelas are now dreaming of growing up to be engineers rather than midfielders. Or maybe it’s just a coincidence.