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Can The World Cup Do For Brazil What The Olympics Did For England?

The 2012 Olympics had provided a £9.9bn boost to the UK economy by July last year, according to a report at the time, and there have been estimates of a total legacy of around £40bn by 2020.

And it’s probably no coincidence that we turned out of recession during the third quarter of 2012 — ticket sales alone added 0.2% to our economic growth of 1% during the quarter, according to the Office for National Statistics.

Construction boost

Balfour BeattyWhile a lot of business went the way of smaller and privately owned companies, some FTSE firms did well directly from the outset. The Olympic Stadium was built chiefly by McAlpine, but engineering firm WS Atkins (LSE: ATK) provided consultancy — and in the past two years its share price has more than doubled to today’s 1,300p.

The least said about G4S and its security contract the better, but Balfour Beatty (LSE: BBY) also won some of the £6bn worth of construction contracts handed out, and went on to snag a £154m deal to redevelop the stadium once the games finished. Balfour Beatty shares haven’t done quite so well, dropping 10% in two years, but things would have been tougher without the Olympics.

Same at the World Cup?

What about the potential for the World Cup’s affect on Brazil?

Despite those missed construction deadlines (or perhaps in part because of them), Brazil’s infrastructure has had a much-needed kick in the pants. Tourism minister Vinicius Lages has predicted a $13.6bn boost to the country’s economy in 2014 — and a poll by Reuters has suggested the Cup will add a modest 0.2% to Brazil’s economy this year.

Then, of course, are the hosting costs themselves, with the World Cup coming with a price tag of around $11bn.

But that’s just the tournament itself, and a report from Ernst & Young Terco reckons the five-year build-up to 2014 will have created more than 3.5 million jobs a year and brought in nearly $30bn for Brazil’s workers — and provided close to $8bn in tax for government coffers.

British winners?

The potential long-term affect on Brazil is still hotly debated, but UK investors will surely be wondering which British companies are likely to share in the £150m that has reportedly come our way in contracts.

One perhaps unlikely winner is defence specialist Cobham (LSE: COB), which owns antenna and wireless engineer Axell Wireless — Axell has contracts for both the World Cup and for the 2016 Rio Olympics.

ITV LogoA host of smaller UK companies have won contracts, too, but perhaps the most likely winner is ITV (LSE: ITV) which has the TV rights and should attract a lot of peak-time (and highly profitable) advertising. The betting companies should do nicely, too, so William Hill and Ladbrokes might be worth a punt.

Food and drink

Then there’s the boozers like JD Wetherspoon, and fast-foodies like Domino’s Pizza.

But what if England should actually win? Well, let’s not drift too far into the world of fantasy…

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Alan does not own shares in any companies mentioned in this article.