Listen to the full episode, here.
John Norris (00:30):
Well, hello again, everybody. This is John Norris of Trading Perspectives. As always, we have a good friend, Sam Clement. Sam, say hello.
Sam Clement (00:36):
John, how are you doing?
John Norris (00:37):
Sam, I’m doing really fantastically. And you know who else is doing fantastically?
Sam Clement (00:42):
Probably some of these soccer teams that are winning so far.
John Norris (00:44):
Yeah, without a doubt. I think the U.S. men’s team won its first game against Paraguay, four to one. All that stuff, I guess if you can’t figure it out now, we’re going to talk about with a fever that is sweeping the world as it does this time every four years, the World Cup. And really what we’re going to talk about is the World Cup really is great for the U.S. economy as everyone is telling us and what you might think intuitively all these people coming around, what is the true economic impact of the World Cup? And Sam, the first question I want to ask, maybe we won’t be delving out to the weeds and all that stuff. It’s like obviously the World Cup, every four years big celebration of football or soccer as we call it, world championship. And actually what’s weird about soccer is and other teams, when they throw a world championship, they actually invite teams from other countries to participate unlike in the United States.
John Norris (01:39):
Your thoughts on that?
Sam Clement (01:40):
There’s a few Canadian baseball teams for the World Series. That’s
John Norris (01:44):
Something John Cleese of Monty Python used to say years ago. So if you were coming here to the United States from some of these places from around the world, what do you think would impress you the most and maybe the least? So what are some of the things that you’re just like, wow, I never imagined?
Sam Clement (02:03):
From my experience, I think we’ve talked about some friends in the U.K. and when they talked about visiting the United States, I think the sheer size of the United States is the first thing for a lot of people. And again, this is slightly anecdotal for me, but saying they’re going to come visit the United States, like saying, “We’re going to just hop over and we’re going to see it over the next week.”
John Norris (02:26):
Hey, while I’m in New York, I’ll come and see you in Dallas.
Sam Clement (02:30):
Yeah. And again, so I think the size is the first thing that is probably shocking to a lot of people.
John Norris (02:36):
It’s a
Sam Clement (02:36):
Comment. I
John Norris (02:37):
Mean, it’s huge.
Sam Clement (02:38):
Yeah. It’s massive. And then the vast cultural differences within the United States. And again, I get that most countries have different cultural varieties within the country, but it’s so significant in the United States.
John Norris (02:52):
Well, if you think about it, I mean, what do people say from Nome, Alaska or Barrow, Barrow point and Miami truly have in common where people from Hawaii to Boston-
Sam Clement (03:04):
Venice, Louisiana,
John Norris (03:06):
Oklahoma, all those places. Oh, heck San Francisco and Coleman, Alabama or Watumka. It’s a massive place. A lot of regional differences, probably a little bit even more so than what you would have over in Europe, although there’s certainly national differences there. But just when people hear a country, they think of it being sort of more of a cohesive sort of amalgamation of governing entities as well as people not fully appreciating or understanding just how different the United States is from, I mean, locality to local.
Sam Clement (03:40):
Well, and it’s just the origin or the genesis of the United States, right? As you have groups of people coming from different areas, largely. And obviously it blends the longer we’ve been a country, but by and large the culture, even how you speak, what people do, I mean, it is all based on things that have come from all across the world and kind of settled. I mean, we could talk about the Louisiana Creole dialect and just the difference. Yeah. But it’s a pretty unique country and I think it is not grasped by a lot of-
John Norris (04:18):
Well, I’ve read an article and I forget where it was. Gosh, I wish I could remember it about, it was either a Dutch or a Japanese tourist fan, what have you, went to a breakfast restaurant also known as Waffle House or I guess they were in Atlanta or wherever Waffle House and they were just shocked by how good it is. And I’ve got to tell you- It is really
Sam Clement (04:41):
Good.
John Norris (04:42):
If you’re listening to the sound of our voices here and you’ve never been to say a Waffle House in the United States, I mean, it’s just another option for breakfast for us. But I mean, for people coming around me, it’s like fast diner type food and amazingly consistently just really good. People from California, I don’t think they’re waffle houses in California. But then again, we don’t have In-N-Out Burger here in Birmingham.
Sam Clement (05:05):
Well, I didn’t have Waffle House till I lived in Georgia, so it was- Are
John Norris (05:09):
You serious?
Sam Clement (05:10):
I had never even heard of it.
John Norris (05:11):
Well, there you go. Some of the things that might impresss foreigners might not impresss us terribly much. Some of the restaurants, all that stuff, but I think you’re right. The thing that would probably impresss people the most is just the sheer size of the United States and just how different really the various regions of the country are. Now with that being said, a lot of these games are being played in a number of different locations around the country, but if there is seemingly a common thread that I’ve heard about all of it is just how expensive the tickets to some of these games are, especially the key games. So it begs the question, understanding everyone’s got to make their skin, you know what I’m saying? But it does beg the question, and what is supposed to be a celebration for the world, the world’s most popular game, people get fired up for it.
In terms of watching it in person, is it truly a rich man’s game?
Sam Clement (06:09):
Well, it’s such a high demand event that it’s naturally … We’ve talked about it before when you try and limit ticket prices or really anything that you try and set prices away from market conditions, something’s going to happen. It’s either going to work its way back to market conditions or the supply and demand just going to be really off. And you see some form of both of those really, but it is such an in demand event and it’s in the United States, it’s in some amazing cities. It’s not just in the United States, but in some amazing cities and amazing venues, just think it’s natural for prices to continue to skyrocket for that. Even if you set the prices low and people are going to buy them and resell them close to market price and it’s going to just move that direction.
John Norris (06:53):
Well, I mean, I remember when I was taking a look at it, I mean, my son, 24, said it’d be kind of cool to go to a World Cup game. And I said, “I agree with you. ” So obviously the closest venue to us is over in Atlanta. And I looked at the games that they had in Atlanta and even for the sort of who in the hell would want to watch this one, games are very expensive. So much so that right before we did that, and doing some of the research for this podcast, I went to a website called the travel.com or something like that where they’re estimating just the prices of some of the game for four, how much it would cost some cost to the average person, family of four to go see a game, concessions, all that type of stuff, not including hotel rooms and airfare, but just going to the game itself, it estimates that in Monterey, Mexico, it’d be a little over 2,100 bucks and Monterey, congratulations.
You’re the cheapest overall host city and ticket compares ranking. Whereas for Miami, a family of four or a group of four, the estimate is for $5,664.
Sam Clement (08:04):
Beats New York.
John Norris (08:05):
I mean, that is just like holy smoke and New York’s next up at $4,341. Again, these aren’t the numbers that I generated. I didn’t generate numbers from the travel compares or the travel.com and that’s what they’re saying. Now, Sam, that’s a commitment. I mean, that is a real commitment and that’s not, “Hey, I’m going to go watch a couple of games here.” That’s sort of like this is my once in my lifetime. Now, is this one of these things that because it is in the United States and FIFA obviously gets to keep a whole bunch of this ticket revenue because it is in the United States and because of the wealth of the country as well as the sheer size, that’s just the way it is. I mean, that’s probably the reason why they’re not throwing this contents in Bosnia every year or in Croatia or some such place.
But again, I’m going back to the question, is this really kind of a rich man’s event? Well-I mean, the numbers would
Sam Clement (09:00):
Suggest yes. Yeah. I think that’s hard to argue it’s not if for four it’s going to cost over $5,000 to go to an event in Miami. But these things like the World Cup, things like F1 races, which I think of with Miami having won and just the vast amount of wealth and the status symbol of going to these events, it just puts this hot air balloon on prices for such things.
John Norris (09:24):
And then FIFA is allowing the surge pricing and all that stuff. So I mean, you kind of look at it. I mean, it’s just like I was hoping that as we got closer to game time, some of these tickets would get back down from the stratosphere and even then they didn’t to my liking to kind of warn a two and a half hour drive over to the Mercedes-Benz stadium and sitting in the nosebleeds was still a very expensive proposition for me and I’ve decided not to do it.
Sam Clement (09:54):
I haven’t even watched the match, so I was definitely not going to spend thousands of dollars.
John Norris (10:00):
So unfortunately, while this is the people’s game and arguably the people’s tournament, because it’s once every four years to determine the world champion on it, people who are going to enjoy it the most are the wealthiest among us. And even the top 1% is sitting there taking a look at in Miami having to drop over $5,000 to go to a game for a family of four, that requires a pretty wealthy family in order to be able to afford that. Now we’re talking about the economic impact of this now. We’re going to shift gears a little bit. Economic consultants estimate the tournament could generate billions of dollars in overall economic activity. How reliable are these estimates? Because I remember when we were doing stuff here in Birmingham for, what is it, World Games, whatever we called it, a few years ago and you’re forgiven if you didn’t catch it, but all this economic activity is supposed to come in and sure we had a few people from around the world, but the hotels weren’t exactly swollen and groaning with folks and all that.
When people throw these numbers, it’s going to generate 17, 25 billion trillion, quadrillion dollars worth of overall economic activity. Are these guesses reliable? I mean, because when I’m taking a look at it, I would imagine a lot of the people that are going to some of these games already live in the area,
Sam Clement (11:23):
Right?
John Norris (11:25):
And so if they already live in the area and they’re spending their money in the area, how much of an economic boost is that really? You can sit there, oh, you spend it on the world, look at all this economic benefit, but let’s say for me, let’s say if it was in Birmingham, and I dropped a few hundred bucks to go get a ticket, chances are I’m probably going to spend most of that money in Birmingham anyhow. So is that really a true economic boost if local people are spending their money in the economy? I would say that’s maybe not what people making these forecasts would want to hear, but I’d say it’s probably not the big boom that the consultants say it
Sam Clement (12:01):
Is. That’s what it’s like how much of it is kind of double counting in a sense, dollars that were already going- It’s a better way of putting it. Thank you. It’s not really the broken window fallacy, but yeah, how much of that’s already being spent. But for a lot of maybe smaller hotels or restaurants or bars or what have you, I mean, again, I think of it less as the global impact or the impact on the U.S. economy and more so there’s going to be businesses and people that this influx of people is going to just change their business, change their year, change their lives. So it is going to be impactful. I don’t hold onto those massive numbers that are hard to even grasp. No,
John Norris (12:46):
No. They’re used as a justification for doing something that you want to do anyhow. I would say really for the majority of these cities, yeah, there’d be a little bit of a short term boost and overall sales tax receipts and some of the local bars and restaurants and hotels will do pretty well. But let’s face it, I’m going to start rattling off the host cities for the North American World Cup. You got Mexico City, New York, Dallas, Los Angeles and actually, I guess I should say in Dallas, it’s actually Arlington because they’re playing at AT&T Stadium, Kansas City, the Bay Area, Houston, Philadelphia, Atlanta, Seattle, Miami, Boston, Vancouver, Monterey, Guadalajara, and Toronto. Focusing really on the U.S. cities, what do you notice about those cities?
Sam Clement (13:32):
I mean, they’re the big cities.
John Norris (13:34):
Those are the big cities. Those are the tourist
Sam Clement (13:36):
Destinations. I was waiting for you to say Birmingham. I’ve been out of the loop on the World Cup. I didn’t know if maybe we were a host city, down to protective.
John Norris (13:47):
So people are coming to these cities anyhow. How much is New York going to notice an extra, let’s say five to 10,000? I mean, who knows, 10,000 people from overseas coming in and staying at the hotels? Maybe. I mean, it’ll be short-term booze. I would say out of that list, and I don’t mean to pick on these people, I imagine Kansas City is probably going to feel the biggest impact because it’s the smallest metropolitan area listed on here. I think they’ve got Argentina and England playing some games there, some countries that travel pretty well. But if they were stuck with a whole bunch of Cabo Verde and Bosnia and Croatia and all this, Kansas City might be going, “We spent a lot of money on nothing because really the economic impact is going to be dependent on how many people come from outside the metropolitan area to your area.
Having people that live there, spend money there, that’s a wash. And my estimation, that’s a wash. However, if I drive over from Birmingham to … If I go to Kansas City from Birmingham, I’ve got to spend a hotel there, going to restaurants, all that stuff. And in truth, if I’d gone over to Atlanta, it wouldn’t be that much of an impact for Atlanta. I would simply be buying the ticket, driving over there, dropping 50 bucks on parking probably and then driving back home and
Sam Clement (15:01):
Back home. That’s the big question, Mark, is focusing purely on ticket revenue, how much of that money goes to the city. And I don’t know. I don’t know. I don’t think I want. But the true impact on the city would be from people you already mentioned that the influx of people that-
John Norris (15:19):
People who would not have been spending their money there but for
John Norris (15:23):
World Cup event. Right. And I don’t know. I mean, I don’t know. I haven’t seen the numbers. I haven’t seen the estimates, the number of people coming in from overseas, coming from other areas, undoubtedly there are going to be some. But overall, in terms of the massive U.S. economy, I’ve seen some crazy estimates of up to 50 basis points of GDP. I’m going, I don’t see how. I mean, we would have to in
Sam Clement (15:47):
Terms of the- Is the consumption of the …
John Norris (15:49):
Well, I mean, it’s just like how much are Americans going to consume because of the World Cup that they weren’t going to consume otherwise? And I don’t know. I don’t know the answer to that. I mean, my buying habits haven’t changed. I’m here in Birmingham and nothing changed. In terms of my economic activity, World Cup has not changed me one bit. Now, in terms of how many people are coming in from overseas to go to some of these places or traveling around the world, I don’t know that either. And so I don’t think anyone will ever get a good guess on it, and how many of these people would not have been coming to the United States anyhow and you just don’t know because I would imagine a bunch of people tracking the three lines, the English team, a bunch of people from the UK, Scotland’s in the tournament as well.
(16:35):
They might have been coming to the United States this year on holiday. Anyhow, they’re just going to catch a game while they’re here.
Sam Clement (16:42):
Well, and I even wonder, you talk about people flying in, right? That’s great for the airline. I get they have hosts or their centralized locations and maybe some of that flows down to the employees, but by and large, I wonder how much of even staying at massive chain hotels really impacts the city in that area. Just the
John Norris (17:04):
Sales tax lodging.
Sam Clement (17:05):
Right. And so you have to go down several layers to get to true economic impact for the city. Flights into Atlanta. Okay, that’s great for the airlines, but how much of that goes to the city of Atlanta? How much of it becomes revenue for the city? So I think of it more as, again, we already covered the basis that these large gargantuan numbers really aren’t probably telling the whole story of true impact to the cities. Well,
John Norris (17:35):
Again, particularly for the cities in which the games are being played, obviously, I mean the host cities are cities that people want to attend anyhow that have the big infrastructure be able to handle these games, but probably not really going to make much of a difference really by the time we close the books on this to New York. Yeah, it’s better than a sharp stick in the eye. Most things are. However, being a city would have been a far bigger economic impact for a place like Birmingham, Alabama or Oklahoma City or Omaha or some of these places that didn’t quite make the cut. Big places, decent enough places might be able to pull it off, but wouldn’t have gotten that out of town visitor but for the World Cup.
Sam Clement (18:20):
Yeah. And also, I don’t know how you could fully measure this. What events and things are not taking place in the cities because of events
John Norris (18:28):
Like this? Yeah, because of this. Yeah. So I guess I think you can probably tell from what we’re saying and how we’re saying it. I think maybe some of the rosiest expectations of overall economic impact, you got to take those with this very significant grain of salt. Those people are talking their book when they do that or trying to get hired by other people. I would tell you that I think the overall economic impact lasting for some of these cities might not be that fantastic. I mean, yeah, it’s better than, again, the proverbial sharp stick in the eye and it might be great for Kansas City probably a little bit more than the others because of just it’s so much smaller than some of those other major … And it’s still a big place, but it’s what? A fourth the size of New York, a fifth maybe, maybe even less than that, six.
John Norris (19:12):
I mean, Kansas City is a couple million people. New York’s 18, so a ninth. Wow. Where was I? But you take a look at really all of it. What’s the last thing economic impact that Atlanta held a couple of World Cup games there for Atlanta?
Sam Clement (19:30):
I mean, unless you get permanent buildings being built and permanent jobs being …
John Norris (19:37):
That’s the whole deal. I mean, we’re going with existing stadiums
Sam Clement (19:40):
Here.
John Norris (19:40):
And so I would say the lasting impact, probably relatively minimal. It’s going to be a nice impact to short-term sales tax revenue as some people come from around the world to catch some of these restaurants, bars and hotels. So yeah, it’s going to be a nice little boost for some of these host cities for people in Birmingham, Alabama might as well be happy. It could just as easily be happening in London
Sam Clement (20:04):
Agree.
John Norris (20:06):
There you say. So that was kind of taking us to the next point, which is I wanted to talk about the World Cup might be great for host cities, but how much will it impact the remainder of the USA? Will the average Joe and Fargo really benefit? And I think at least we’ve got two people’s opinions on this that probably not so much. I mean, there’s probably not going to be a lot of economic impact. I just don’t think it’s going to happen at all.
Sam Clement (20:31):
I think it’s negligible. If any.
John Norris (20:33):
And I would tell you, Sam, I mean, this is a huge endeavor. Bigger than the Olympics for a lot of people, as we all want to. I mean, for Americans, it probably just, this is like a month long Super Bowl for a huge chunk of the world, bigger than the World Series easily by far. I mean, this is big deal. The average American, it’s kind of nice where we’re holding a little bit of a tournament because soccer or football is not the primary sport in the United States. It’s getting more popular. But for us, kind of taking a look at it, again, I don’t know that many people sitting around the office, sitting around talking about the World Cup, “Hey, did you watch the Cabo Verity match?” Which was, I mean, I think they tied the Spaniards, which is unbelievable that they did that.
Sam Clement (21:17):
This is news to me.
John Norris (21:18):
And so it’s two to two, which is absolutely crazy. Spain was, I think, the number two ranked team in FIFA standings and Caba Verde is a group of Islands often- Tiny West Africa. Yeah. I mean, former Portuguese colony off of West Africa and it’s crazy. They shouldn’t even been on the field with them, but no one’s talking about it. So how is it going to be a huge economic impact in places like Birmingham or what did I mention? Oklahoma City or Omaha or what have you with people not even talking about
Sam Clement (21:49):
It,
John Norris (21:51):
Which now takes us down to last question for the day, Sam. Question number five, who’s going to ultimately win and how well will the Americans do?
Sam Clement (22:00):
Well, given my lack of World Cup knowledge and soccer knowledge as a whole, I will say we probably aren’t one of the last eight teams left. I think that’s-
John Norris (22:12):
Probably not. Hey, listen, hey, I don’t think we’ve won a game that handles we beat Paraguay a few days ago. Four to one, I don’t think we’ve won a game that handily in the actual World Cup since 1930 or something like that. But I would still tell you the men’s team, the stars and stripes, whatever our nickname is, might make the knockout rounds, but I mean, I think we’re ranked 16th in the world or something like that and that’s great. It’s quarter finals in a tennis tournament. I think that’s probably about as far as we’ll go means a nice big payday for U.S. soccer and I think it’s pretty good. More sort of top 16 sort of type of finishes for the U.S. men’s team will certainly help improve the popularity of the sport around the world because when you’re watching soccer and it’s played at a high level and a good level, it is absolutely a fascinating, fun game to watch.
John Norris (23:06):
When you’re watching it playing at little league level, it’s pretty brutal. What do you think about
Sam Clement (23:12):
That? I’m not going to argue with that. Okay.
John Norris (23:13):
So I would say my predictions, listen, I might know a little bit more than the average American about global soccer. That’s not saying much. This being Messi’s last go around more than likely Argentina being, I think, the number one ranked world and number one ranked team in the world, according to FIFA. I mean, I guess they probably have the best odds of winning it. Out of anyone, Brazil always seems to do pretty well and seems like France and Germany are always in the thick of things.
Sam Clement (23:44):
I’m going to guess England.That’s my guess.
John Norris (23:46):
Listen, the three lions. Okay. We got U.K. and okay, why don’t we do this? If it’s U.K. and Argentina in the finals, I’ll take Argentina, you take U.K. and be like Falcon Islands war all over again.
Sam Clement (23:59):
All right.
John Norris (23:59):
All right. With that.
Sam Clement (24:01):
Like my odds there.
John Norris (24:04):
I don’t. I like mine. All right guys, thank you all so much for listening. We always love to hear from you. Also, if you have any comments or questions, please by all means, let us know. You always drop us a line in trading perspectives at oakworth.com or you can leave us a review on the podcast out of your choice. As always, if you’re interested in reading more, hearing more of what we got to say or how we think, you can go to oakworth.com, O-A-K-W-O-R-T-H.com. Find access to all kinds of exciting information underneath the thought leadership tab, including links to previous Trade Perspectives podcast, to our blog, Common Sense, our quarterly analysis called Macro Market, and then also all the good stuff that our advisory services group, Mac Frazier, puts out there as well. Now, Sam, in order to make our compliance people happy, in order to not run afoul of the SEC, I am now am going to continue to read off this script and I’m glad to brand new compliance piece or kind of disclosure here.
You ready?
Sam Clement (24:58):
Deep breath.
John Norris (24:58):
All right. This podcast is for informational and educational purposes only and should not be construed as personalized investment advice or as an offer to buy or sell any securities or investment services. Listeners should consult their own financial tax and legal professionals regarding their specific circumstances. Any reference to specific securities is provided for informational and illustrated purposes only and should not be considered a recommendation to buy, sell, or hold any particular investment. It should not be assumed that any such securities discussed were or will be profitable. References to political or policy matters are provided solely for purposes of economic analysis and do not represent any political views or endorsements by Oak Worth Information from third party sources is believed to be reliable. However, Oakworth does not warrant its accuracy or completeness. Past performance is not indicative of future results. All right. Sam, I’d say I’m about 60% of the way done.
John Norris (25:49):
Ready? Okay, I’ve got some more. Oakworth Asset Management LLC is a registered investment advisor owned by Oakworth Capital Bank. Member FDIC, Equal Housing Lender. This podcast may describe the services of both Oakworth Asset Management and Oakworth Capital Bank, but please note that they are two separate legal entities that provide different services. Advisory services, investment management, and financial planning are provided by Oakworth Asset Management. Because of the ownership relationship and possible involvement by Oakworth Asset Management Associates with Oakworth Capital Bank, there exists a conflict of interest to the extent that either party, Oakworth Asset Management or Oakworth Capital Bank recommends the services of the other. Investments offered by Oakworth Asset Management or not FDIC insured may lose value, have no bank guaranteed, or not insured by any federal or state government agency. For additional information about Oakworth Asset Management, including its services and fees, please visit advisorinfo.sec.gov.
Now I’m done.
Sam Clement (26:48):
Deep breath. Catch your breath.
John Norris (26:50):
All right, thank you. Sam, you have anything else to say on this exciting topic for today?
Sam Clement (26:55):
That’s all I’ve got.
John Norris (26:56):
That’s all I’ve got today too. Y’all take care.
This podcast is for informational and educational purposes only and should not be construed as personalized investment advice, or as an offer to buy or sell any securities or investment services. Listeners should consult their own financial, tax, and legal professionals regarding their specific circumstances. Any reference to specific securities is provided for informational and illustrative purposes only and should not be considered a recommendation to buy, sell, or hold any particular investment. It should not be assumed that any such securities discussed were or will be profitable. References to political or policy matters are provided solely for purposes of economic analysis and do not represent any political views or endorsements by Oakworth. Information from third-party sources is believed to be reliable; however, Oakworth does not warrant its accuracy or completeness. Past performance is not indicative of future results.
Oakworth Asset Management, LLC (“OAM”) is a registered investment adviser owned by Oakworth Capital Bank Inc. (“OCB,” or together with OAM, “Oakworth”), Member FDIC. Equal Housing Lender. This podcast may describe the services of both OAM and OCB, but please note that they are two separate entities that provide different services. Advisory services, investment management and financial planning, are provided by OAM. Because of the ownership relationship and possible involvement by OAM associates with OCB, there exists a conflict of interest to the extent that either party (OAM or OCB) recommends the services of the other. Investments offered by OAM are not FDIC insured, may lose value, have no bank guarantee, and are not insured by any federal or state government agency. For additional information about OAM, including its services and fees, visit adviserinfo.sec.gov.