England failure 'may hit economy'

Sports businesses are warning that England's failure to qualify for the Euro 2008 football tournament will hurt their profits next year.

England's kit manufacturer Umbro, and the retailer Sports Direct both issued statements warning of the impact of the team's loss to Croatia on Wednesday.

The defeat may also have a wider impact on the economy, with sales in pubs and retailers likely to be hit.

One estimate puts the cost to the economy as high as ?2bn.

"A successful run to the 2008 final would have led to a ?2bn bonanza for the economy," said Simon Chadwick, professor of sport business strategy and marketing at Coventry Business School.

Professor Chadwick also explained that the impact of England not playing in Euro 2008 could even go deeper than just lower retail sales.

"Evidence from previous tournaments also shows that, at another level, worker productivity normally increases as the England national team progresses through major tournaments and the 'feel good factor' takes hold," he said.

Shares in Sports Direct tumbled 15% after the retailer warned that it was no longer confident that profits this year would beat last year's level now that England had failed to qualify.

Another sports retailer, JJB Sports, also suffered, with its shares falling 3.4%.

Umbro shares fell 2.3% after it warned that it expected a "substantial reduction" in sales of England shirts.

Umbro said that it was particularly worried about demand for the new England away kit, which is due to be released in 2008.

The decline for Umbro could have been worse, were it not for the fact that it has agreed to be taken over by Nike, analysts said. More details of the takeover are due to be released on Friday.

It is not just businesses directly related to football that could take a hit next summer.

Pubs expect to miss out because their business is usually boosted by the major football championships.

"If we just look at the first round of a championship like that where you have three matches, we think that equates to between 20 and 25 million extra pints over the three matches," said a spokeswoman for the British Beer and Pub Association.

Retailers will also lose out on the boost they would have expected from the tournament.

The British Retail Consortium (BRC) estimates that World Cup 2006 boosted coffers by about ?1.25bn through extra sales of food and drink, and products such as flat-screen televisions, replica shirts and flags.

The BRC predicts that the boost from Euro 2008 will only be half as much as the World Cup because the home nations are not involved.

"There is a diverse range of nationalities in Britain, so there will still be people supporting countries involved," said Richard Dodd from the BRC.

There may not be bad news for all sectors of the economy though.

"A football tournament can have a slightly negative effect on the travel industry," said Francis Tuke from the Association of British Travel Agents.

"If fans are not going to Switzerland and Austria then it's not going to disrupt their travel plans and it may be positive overall," she added.

Bookmakers are also putting a brave face on the failure of all the home nations to qualify.

"I suspect Euro 2008 will rival the last World Cup in terms of betting turnover," said Graham Sharpe from William Hill.

"We will be trying to persuade fans who can't support with their patriotic hearts to invest with their wallets and become an honorary German, Croat or Italian."

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