Japan optimism runneth over but may ring hollow
• South Korea, Japan build facilities for 2002 World Cup (Graphic)
By Daisuke Takato and Ichiro Suzuki
Bloomberg News Service
TOKYO — Masako Harada canceled her annual vacation and pooled her savings with her bonus to spend more than $2,500 on tickets for the 2002 World Cup soccer finals.
She didn't stop there. Even though she doesn't like burgers, she ate every day at McDonald's for a month to win tickets in a contest. She plans to shell out $155 for a satellite dish to watch the games live on Sky PerfectTV.
"I'll spend whatever it takes to fulfill the World Cup experience," said Harada, 33, a telephone systems engineer.
Japan is counting on these fans, plus almost a half-million foreign visitors, to help the world's second-biggest economy rebound from 12 years of decline that left it with a lower credit rating than first-round opponent Belgium. Economists are skeptical it will get much of a kick.
"There are deeper problems in the Japanese economy for it to simply be pulled out of recession by this event," said Eiji Kitada, an economist at Hamagin Research in Yokohama, where the final game will be played June 30. Among them: a five-year decline in bank lending, 2 1/2 years of falling prices and a jobless rate stuck near a record high.
Moody's has threatened to lower Japan's "Aa3" credit rating on local currency bonds — already two notches lower than Belgium's "Aa1" — a further two notches by the time the World Cup kicks off in Seoul, South Korea, on Friday.
In addition, the first World Cup held in Asia is also the first with two host countries. Japan, which built seven new stadiums for the tournament, will reap only half the benefits of being a host because it will split the 64 games with South Korea.
An increase in spending by fans, officials and the media may come at the expense of reduced spending on movies, the theater and other forms of entertainment as people stay at home to watch games on TV, economists said.
World Cup spending will add just 0.3 percentage point to gross domestic product in the three months ending June 30, said Shinichiro Kawasaki, a senior economist at Dai-Ichi Life Research Institute.
That may not be enough to avoid the economy shrinking further — the gross domestic product will shrink 0.2 percent this quarter, according to the latest Bloomberg News survey.
In Yokohama, 45 minutes by train from downtown Tokyo, local merchants share the pessimism of economists.
Take Hiroko Tominaga, who runs a bakery next to Kozukue Station, the closest train station to the 72,370-seat Yokohama International Stadium. She doesn't plan anything special to commemorate the games, such as soccer-ball-shaped cakes.
"It just wouldn't be worth it to do something special," she said. "It will be like any other business day."
Others are more confident. Sky Perfect Communications Inc., Japan's biggest pay-television operator, the only Japanese broadcaster showing all 64 matches live, aims to sign up 360,000 new customers by the end of the tournament, spokeswoman Naoko Ohya said.
Adidas-Salomon AG, the official supplier of this year's tournament balls, forecasts sales will rise 30 percent in Japan this year, helping it meet its goal of overtaking Nike Inc. as the largest seller of branded sporting goods in Japan.
Companies that stand to gain the most are the official sponsors and suppliers with licenses to market World Cup goods.
It isn't just World Cup shorts, badges, hats and flags. Stores are also selling bottles of World Cup sake, raincoats that look like a soccer ball when they are rolled up, tableware and binoculars. They have incentive for pushing sales: Companies had to pay millions of dollars in licensing rights to FIFA, world soccer's governing body.
Dentsu Institute of Human Research, a unit of Japan's biggest advertising company, says the tournament may generate more than double the $11.1 billion Japan has spent staging it — provided the national team makes it to the second round.
"The World Cup ... may be the hook that could lift consumer confidence and spending in Japan," said Norio Kamijo, general manager at Dentsu Research.
"This will be the biggest event in Japan since Tokyo hosted the Summer Olympics in 1964," Kamijo said. Dentsu's parent holds exclusive rights to market World Cup products in Japan.
Success on the pitch is anything but a sure thing. Japan is a 66-1 long shot at British bookmaker William Hill to lift the winner's trophy. Fans say it's at risk of becoming the first host nation to be booted from the first round.
But even if the outcome is disappointing and economic benefits prove short-lived, Japanese officials are still upbeat.
"The host cities will be in the international spotlight for at least a month," said Koichi Hayashi at Yokohama's tourism office. "You can't quantify the benefits that this will have for the city in the long run in money terms or in a report."
