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France Looks to Euro 2016 for Economic Boost
France’s struggling economy has opened its doors to more than 1.5 million fans from around the world for the UEFA Euro 2016 Football Championship. Long considered to be the second biggest sporting event behind the World Cup, Euro is expected to add some much needed life to an economy struggling with high unemployment and soft demand.
UEFA expects €2 billion in revenue from the tournament, up from €1.4 billion four years ago when Poland and Ukraine hosted 16 teams from across Europe. The 2016 iteration of the tournament features 24 teams, which means there are more tickets and ad revenue to sell. About one million more tickets were available for the 2016 games. An estimated 130 million viewers are expected to tune in on TV for the early games. This number is expected to rise to 300 million toward the end of the tournament. Sponsorship is already up 40% to approximately €450 million, according to UEFA marketing director Guy-Laurent Epstein.[1]
Just how much of that economic stimulus will trickle down to the French economy is yet to be seen. However, evidence from recent tournaments suggest that the economic lift will likely be small and concentrated in a few key sectors.
“Evidence from other countries suggests the lift is likely to be small and short-lived,” according to Bloomberg Intelligence economists Maxime Sbaihi and Jamie Murray. “Hopefully the country will enjoy some much-needed weeks of partying, but it will take much more than games to improve France’s economic output.”[2]
However, the Centre for the Law and Economics of Sport expects that the European Championship will add around €1.3 billion to the French economy, a significant short-term boost. Supporters in the stadiums and designated fan zones are expected to contribute €1 billion to the tournament, with contracts awarded to French businesses expected to make up an additional €400 million.[3]
France’s economy has shown signs of progress, having expanded for three consecutive quarters. The latest expansion of 0.6% was double the previous quarter’s 0.3% growth pace.[4] The French government is targeting full-year growth at 1.5%, which is well above the latest estimates provided by the International Monetary Fund (IMF). The international lending institution representing 188 countries said in April it expects France’s gross domestic product to expand just 1.1% this year.[5]
However, the Eurozone’s second largest economy continues to struggle with double-digit unemployment, with recent efforts to ease labour restrictions causing widespread protests.
France’s unemployment rate has been above 10% for the better part of three years, highlighting the economy’s fragmented recovery.[6] The Euro games are expected to have generated approximately 114,000 jobs, including 20,000 positions to build and upgrade stadiums and 94,000 to organize the tournament itself.[7]
French officials are also relying on Euro to boost tourism in the wake of last November’s terrorist attacks in Paris that left 130 people dead and hundreds wounded. According to estimates, the attacks may have cost the French economy €2 billion in lost tourism revenue. The Paris Convention and Visitor Bureau, also known as the Paris Tourist Office, said the economic impact of the November attacks were bigger than the Charlie Hebdo shooting that took place the previous January.[8]
It therefore comes as no surprise that French authorities have committed significant resources to improve security measures during the games. Over 90,000 police and private security personnel will provide security to the tournament. Security forces have already been busy thwarting violent outbursts from English and Russian football fans. UEFA has issued warnings to both countries that continued violence could lead to both teams being kicked out of the tournament.
“Their actions distract the police from their primary mission, which is to protect our country from the terrorist threat,” French interior minister Bernard Cazeneuve said on Sunday.[9]
[1] Tariq Panja (June 10, 2016). “As FIFA Reels, UEFA’s Euro 2016 Will Make More Money Than Ever.” Bloomberg.
[2] Tariq Panja (June 10, 2016). “As FIFA Reels, UEFA’s Euro 2016 Will Make More Money Than Ever.” Bloomberg.
[3] France Diplomatie. Euro 2016: France ready to welcome tourists from around the world!
[4] Trading Economics. France GDP Growth Rate.
[5] Sam Bourgi (June 4, 2016). “French Economy Sustained by Strong Consumer Spending as Outlook Improves.” Economic Calendar.
[6] Trading Economics. France Unemployment Rate.
[7] France Diplomatie. Euro 2016: France ready to welcome tourists from around the world!
[8] Lucie Aubourg (November 26, 2015). “The Paris Attacks Could Cost the French Economy 2 Billion Euros.” Vice News.
[9] Own Gibson (June 13, 2016). “England and Russia could be thrown out of Euro 2016 if there is more violence.” The Guardian.
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