Impact Of Football Games On Russian Economy – Part I

Dear Readers:

I saw this interesting piece in VZGLIAD, the author is Olga Samofalova, who usually writes good stuff.  There is a lot of material here, so will be a two-parter.  Due to this, I will postpone for one day my ritual “Monthly Closing” post, which would normally take place tomorrow, July 1, as I close out the month of June; so as not to break up the football set.

Anyhow, Olga’s piece is about the Russian economy and the contribution (or not) therein of the FIFA World Cup football games, and all the football hooligans tourists and fans flocking into Russia.

In general, it is possible to state, already, that the games have been (so far) a good propaganda victory for Russia.  But then, what could you expect?  Westie (=American + European) propaganda organs had demonized Russia to such an extent, and turned it into such a hilariously ludicrous comic-book caricature of a country, that any tourist bold enough to go there, expected to be assassinated on the spot by sharp-shooting Spetnaz; and that’s only if they were lucky, the unlucky ones are poisoned by KGB and they die a slow, slow death.  More prosaically, football fans were expecting to barely survive in sordid hovels in a broken-down Third World toilet of a country.  And yet many people still came, that’s just how much they love their sport and their national teams!

Some of the anti-Russian propaganda in Westie fake-news outlets was so over the top, that it reminded me of that scene in Eisenstein’s masterpiece Ivan the Awesome Part II, where the Livonian Ambassador whispers to the ladies of the Polish court that the Russians are known to roast children alive; and the ladies, dressed in their outlandish ruffs, gasp:  “You don’t say!”

Foreign guests are greeted by cross-dressing Oprichniki

To be greeted, instead, with the classic Slavic/Eastern hospitality, discover the innate friendliness of [most of] the Russian people; and see a not-bad European country with such modern conveniences as hotels, bars and restaurants, etc. — well, there was bound to be a backlash against all the previous unfair sniping.  In fact, many English football fans are kicking themselves now (pun intended – ha ha!), that they were too chicken to go there and support their (lousy) team, after all the negative press about Russian barbarism.

Propaganda aside, did the games have any impact on the Russian economy?  Samofalova gives us some positive numbers — very small ones though.  So here is the skinny on all of that:

The lede:

The Russian Central Bank published some numbers.  Millions of tourists brought a few bucks into the country, but not enough to show on the statistics.  However, there might hopefully be a positive long-range impact on tourism.

The FIFA World Cup is estimated to have contributed somewhere around .1 or .2% of the GDP growth of the Second Quarter.  [yalensis:  The Russian government, like all sane people in the world, uses the Calendar Year as the Fiscal Year; hence Q2 comprises April-June].  The Bank had already included that estimate in its prognoses, which expects a GDP growth of 1.1 to 1.6% in Q2 and Q3.

Economist Alexander Razuvaev

Nobody really expected FIFA to contribute much to the GDP growth.  After all, the games only last a month.  Also, Russia is not some tiny banana republic, the economy as a whole is around $1.3 trillion (American) dollars, hence a few bucks here and there don’t really make a significant difference.  Alexander Razuvaev, Director of the Analytical Department of the company “Alpari”, man-splained to Olga that the Russian economy is way too huge and diversified to be that impacted by football games.  Razuvaev, by the way, just glancing at the contents of his link, seems like a very interesting blogger in his own right, with many posts worth reading.

Razuvaev:  Actually expect the football games to increase inflation a bit.  Currently, inflation stands around 2.4% and could, by the end of the year, amount to 4%.  Consumer demands of the foreign fans would contribute to that, as they need to acquire more rubles.  Fortunately, this will be partially counter-acted by the mirror image of Russian tourists travelling abroad for their summer vacation.

The effect of the games on certain regions of Russia, could well be significant.  The hotel business, trade and transport will see an effect.  Small businesses are already seeing dividends from the flocks of football tourists.

When Mohammed goes to the games, he only uses Visa!

The Visa (credit card) company, which is an official partner of FIFA, for the duration of the World Cup, whipped out their abacus and counted up the purchases of foreign fans during the first 5 days of the games.  American tourists came in first as the big spenders; Chinese second; and Mexicans third.

In just the first five days of the games, foreign fans spent 2.5 billion rubles on their Visa cards!  The city of Moscow took the lion’s share of this loot: around 1.7 billion rubles.  In Saint Petersburg tourists spent over half a billion rubles.  The smaller cities took in less, but also nothing to be sneezed at.  For example, the first five days netted Sochi over 100 million rubles; Kazan over 70 million; Ekaterinburg almost 50 million!  These purchases were mostly for hotels, but also for clothing, restaurants, cafes.  At the actual stadiums people are mostly purchasing food, beverages and souvenir items.  The average amount spent at the stadium:  1682 rubles.

Moscow Sucks In The Cash

The Moscow stadium “Luzhniki” grossed the most:  In the course of just 5 days visitors managed to loosen their wallets to the tune of almost 140 million rubles; of which half was spent by foreign tourists and the other half by the aborigines.  The opening match between Russia and Saudi Arabia was, it goes without saying, the most lucrative one of all.

Nikolskaya Street, Moscow

In the hospitality arena, Moscow is also skimming the best cream:  Municipal leaders are boasting, that the hotels in the center of Moscow are full almost up to the gills.  Or at least 90%.  Football tourists are staying in around 1400 hotels and an additional 72 smaller hostels.

Restaurants and bars are raking it in, as well.  The ones on Nikolskaya Street are doing the best business; this ancient thoroughfare having become, unexpectedly, a favorite of the tourists.  In just the first week of the 2018 World Cup, visitors spent, in the bars and restaurants of Nikolskaya 13 million rubles; in the second week 25 million, the Central Bank calculated; and that’s just what they put on their credit cards (not counting cash tips, etc.)  The average check, by the way, is not that much at these places:  2000 rubles [yalensis:  which is only around $32 American bucks, according to the google exchange rate today].

Unfortunately, some wily restauranteurs took advantage of non-Russian speakers by offering them menus in English, with higher prices than the Russian menu!  [Which is why I always tell people:  Even if you don’t read the language, just point to something on the native menu, and it’ll probably be okay!]

On the positive side, restaurant managers on Nikolskaya got wise and extended their business hours to accommodate the hungry mobs (and bring in more bucks too).

Next:  What will be the longer-range effects of all this Football Cornucopia?

[to be continued]

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