| | |  Business News | August 2009 
Mexico-U.S. World Cup Game Threatens Televisa Sales
 Jens Erik Gould & Carlos Manuel Rodriguez - Bloomberg
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August 10, 2009
Mexico’s national soccer team takes a losing record into a World Cup qualifying match against the U.S. this week. Another defeat may mean lower profits for Mexican broadcasters Grupo Televisa SAB and TV Azteca SA de CV.
A U.S. victory in an Aug. 12 match in Mexico City may keep Mexico out of the FIFA World Cup for the first time since 1990. Mexico has lost all its away matches so far in the final round of World Cup qualifying, which forces the Mexican team to have a near perfect record at home.
Mexico’s absence would reduce ratings during the tournament by 30 percent for Televisa, the world’s largest Spanish-language broadcaster, cutting advertising sales by $16.5 million, or 12 percent of the company’s total estimated growth in sales in 2010, according to BBVA Bancomer SA. TV Azteca, Mexico’s second- biggest broadcaster, would see a 15 percent drop in total sales growth, BBVA analyst Andres Coello said in a report.
The national team “is the goose that lays the golden egg,” said Roberto Gomez, who played for the national team in 1981 and is now a soccer columnist at Reforma newspaper and on- air analyst at Televisa. “The media, the federation, the Mexican league teams and the national team sponsors will miss the profits of not being in the peerless world showcase.”
Televisa reiterated in a July 17 conference call that advertising revenue won’t grow this year because of the economic slump. Latin America’s second-biggest economy will contract as much as 7.5 percent this year, the most since 1932, Mexico’s central bank has said.
Both Televisa and TV Azteca will show World Cup 2010 games in Mexico. Televisa spokeswoman Lyssette Bravo and TV Azteca spokesman Daniel McCosh declined to comment. The companies are based in Mexico City.
Consumer Spending
Missing the world’s biggest tournament in soccer, Mexico’s most popular sport, may have broader economic consequences for a nation already suffering from a recession, the threat of a possible credit rating downgrade, a H1N1 swine flu epidemic, and rising violence from a war against drug cartels. Consumer spending may fall, said Enrique Alvarez, head of Latin America fixed-income research at IDEAglobal Inc. in New York.
“People will be less willing to buy electronics or consume beer” if their team is not participating, Alvarez said.
Mexico’s national team is in fourth place in its regional group with a record of three losses and two wins, while the U.S. team is in second place. Only the first three teams are guaranteed a spot in next year’s World Cup in South Africa. If Mexico finishes fourth, it could still make the tournament if it wins a playoff game against a team from South America.
Betting Odds
The U.S. has never defeated Mexico in 23 games played in Mexico dating back to 1934. The site of this week’s game is Azteca Stadium, which sits 7,200 feet above sea level and holds 105,000 fans. Last month, Mexico defeated the U.S. in the Gold Cup final 5-0. That was Mexico’s first victory against the U.S. on American soil in 10 years. Both teams played without many of their regular players.
Mexico is favored to win this week’s game, according to the sports book at Grupo Caliente, Mexico’s largest casino company. A $160 bet on El Tri, as Mexico’s national team is known because of the three colors in the Mexican flag, would pay $260 if the team wins; a successful $100 bet on the U.S. would pay $350.
Players
Mexico is still deciding whether to play younger players that helped the team win the Gold Cup, or more experienced players such as 36-year-old Cuauhtemoc Blanco, who has played 102 games with the national team, coach Javier Aguirre told reporters last week.
The U.S. team, which includes Landon Donovan, its all-time leading scorer, may play with a similar lineup as the one that earlier this year defeated Spain, which was ranked No. 1 in the world at the time.
To be sure, the absence of Mexico in the World Cup would have a relatively small impact on Televisa given the size of its total revenue, said Martin Lara, an analyst at Vector Casa de Bolsa SA in Mexico City.
Televisa may get $55 million from World Cup advertising sales next year, according to Coello’s report, while the company took in 48 billion pesos ($3.67 billion) in total sales in 2008.
“There is indeed an impact, an economic effect, but it is marginal,” said Jose Miguel Garaicochea, a fund manager at Grupo Financiero Santander Serfin SA who helps oversee $500 million in Mexican equities.
Restaurants and bars may also see a decline in sales during the World Cup if Mexico doesn’t qualify, and sales at sporting- goods retailers may also be affected, said Gabriel Casillas, chief economist for Mexico and Chile at UBS AG in Mexico City.
“There would be an impact on services and television,” Casillas said. “It’s not the same to watch the World Cup when Mexico isn’t there.”
Stocks, Bonds, Peso
Mexico’s Bolsa index gained 4.2 percent last week, the fourth straight weekly gain. Cemex SAB, the largest cement maker in the Americas, rose 14 percent to 14.15 pesos on speculation that a stronger peso will help it restructure $14.5 billion worth of debt.
Mexico’s peso rose to a two-month high last week, bolstered by a U.S. government report that showed the pace of job losses slowed more than forecast last month and a report by Moody’s Investors Service that affirmed the country’s credit rating and stable outlook. The currency gained 1.8 percent to 12.9539 per dollar from 13.1917 per dollar on July 31.
Yields on Mexico’s 10 percent bond due December 2024 rose one basis point to 8.43 percent. The bond’s price fell 0.1 centavo to 113.45 centavos per peso. |
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