Lasting words


"My wife was slightly apprehensive about this edition of ERSTE RESPONSIBLE RETURN –

The ESG Letter", says Gerold Permoser, Chief Investment Officer (CIO) der Erste Asset



Brazil, Land of the Future!


After all, she is Brazilian. And it is my job to write “critically” about the World Cup in Brazil. The risk of running

into a relationship offside is considerable. Let’s see…


Global sporting events trigger the flow of enormous amounts of money. This year’s Winter Olympics in Sochi

set a new “milestone” in this respect, as at USD 50.8bn the event was the most expensive sporting event of all

times. This number is roughly equal to the GDP of Bulgaria or Slovenia.


The opportunities for enormous profits harbour the temptation of not taking the boundary between public and

private sector very seriously. That is exactly the issue addressed by the mass protests last year in Brazil. While the

protests were built on numerous causes and topics, many protesters were also asking questioning the legitimacy

of the World Cup Final. Should the government pump billions into stadiums instead of public education or infra-

structure? Is it legitimate for international companies and organisers to make profits while the population covers

the costs? Is it acceptable for a government to ensure a status of tax exemption for organisers and sponsors and

to even provide them with a monopoly at the expense of the domestic economy?


After 2008 banks had to get to grips with the question whether their business models were based on privatising

profits and nationalising losses. I think this is a question that can be asked with regard to major sporting events

too. The citizens have to bear the sometimes enormous costs, whereas the profits remain with organisers and

sponsors. The protests in Brazil show that this situation does not go unnoticed. All we can do is repeat the words

of Stefan Zweig – a great Austrian admirer of this country: Brazil, Land of the Future!


I wish you a wonderful World Cup Final. And I wish for myself and my domestic situation that Brazil wins the final.


© Erste Asset Management GmbH  |  Imprint  |  Disclaimer  |  Privacy