World Cup sponsors are defensive stocks
We are now in the Quarter Finals of the World Cup tournament at the time of writing.
Those who have been watching would have seen sponsor logos plastered on the perimeter boards.
Sponsors were estimated to contribute 29% of FIFA's 2022 revenue of US$4.7 billion. But it is likely an underestimation as the actual revenue has ballooned to US$7.5 billion with sponsors contributing more dollars than before.
Let's look at some of these sponsors which are also listed companies.
Visa (NYSE:V) is one of the largest payment networks in the world. It has a market cap of US$402 billion while its share price has declined 3.5% in 2022.
The Coca-Cola Company (NYSE:KO) owns many beverage brands and its products are distributed worldwide. It has a market cap of US$274 billion and its share price has gained 7% this year.
McDonald's (NYSE:MCD) is the largest fast food chain in the world with a market cap of US$199 billion. Share price gained 1% year-to-date.
Anheuser-Busch Inbev (NYSE:BUD) is the parent company of Budweiser. It is the largest beer company in the world with a market cap of US$103 billion. Share price was down 6% this year.
Hyundai (KRX:005380) and Kia (KRX:000270) are two top Korean automotive brands. In fact, Hyundai owns 34% of Kia. Hyundai's market cap is at US$31 billion while Kia's at US$20 billion. Hyundai and Kia share prices were down 22% and 21% respectively this year.
Adidas (ETR:ADS) is a famous sporting brand and is listed on the Frankfurt stock exchange. It has a market cap of US$23 billion but share price has fallen 53% in 2022.
Mengniu (SEHK:2319) is one of the top two milk brands in China. It has a market cap of US$20 billion and its share price was down by 22% in 2022.
Hisense (SEHK:0921) is the world's fifth largest TV brand with a 6.8% market share. It is listed in Hong Kong and US$2.3 billion market cap and saw its share price down 7% this year.
It is hard to measure the ROI of sponsoring the World Cup but intuitively it makes sense for these consumer brands to put their brands in front of spectators (who are potential customers).
Most of these powerful consumer brands are defensive stocks as their share prices have been resilient - comparing to the Total World stock index which was down 17% this year, stocks like Coca-Cola and McDonald's still saw positive returns while a handful others declined less.
Hence, these sponsors may give you some trade ideas if you are looking to invest in defensive stocks, especially with recession looming ahead.
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David Smolgol from Klichesela near Zagreb says it was a “nail-biting” match.
“I was on the edge of my seat the whole time … this is amazing feeling – to win when you were sure you were going to lose,” the 21-year-old told Al Jazeera.
A group of Croatian men sang, “Bring back Brazil, so we can play with it” while the Brazilians headed towards gates, dejected – some in tears as their friends and loved ones tried to console them.