TIP Strategies Featured at the Buenos Aires Global Summit: Economic Development Districts

October 2, 2015

By: Jeff Marcell, Senior Partner, TIP Strategies, Inc.

Innovation Districts, Prosperity Zones, Creative Districts or Tech Towns—no matter what the terminology, the concept of concentrating industries, technologists, companies, entrepreneurs, and R&D within a definable geography is top of mind for many in the economic development community. Prime locations are usually dense urban environments offering mixed-use real estate, allowing residents to work, learn, and have fun all in the same neighborhood. Examples and elements of these districts are being studied by economists, think tanks, and economic developers alike. Best practice models are scattered around the US, often led by public-private collaborations. Examples include Seattle’s South Lake Union, Detroit’s Downtown and Midtown developments, and recent developments in downtown Las Vegas. Sometimes these districts are executed by formal, organized efforts with specific boundaries, and sometimes they grow from an organic process with informal boundaries. However they take root, successful districts have generated a lot of attention and inspired many communities to pursue similar approaches in hopes of stimulating job creation.

The Summit

In September, I was honored to join some of the most knowledgeable and successful thought leaders in economic development from across the US to participate in the City of Buenos Aires’s Global Districts Summit in Argentina. The Summit was driven by the city’s motivation to share best practices in the creation and sustainability of economic development districts with a focus on public policy, entrepreneurship, and international business development. My fellow US delegates included leaders from the Research Triangle Park, Ann Arbor SPARK, Creative Oklahoma, the University South Carolina, IAE Business School, and the Center for Strategic International Studies out of DC.

The conference began with a full day tour of the city’s five creative districts dedicated to technology, audiovisual, arts, design, and sports/entertainment. The districts were established in 2008 to address blight, unemployment, and poverty in economically disadvantaged areas. The goal of the districts program is to attract new investment, jobs, and redevelopment. A daylong workshop followed, discussing the districts’ accomplishments and ways in which the city could improve and expand on what has been completed. The summit culminated in a half-day public forum attended by over 200 dignitaries, business leaders, and city officials. This forum is where I and other delegation representatives shared our thoughts on lessons learned from other districts around the world and suggested opportunities the Buenos Aires districts could pursue in the future. An enthusiastic keynote address, about the possibilities that innovation holds for Argentina, was given by Guibert Englebienne. Guibert, who is regarded as the Steve Jobs or Bill Gates of Argentina, is co-founder of Globant, the country’s largest technology company with more than 4,300 employees serving clients like LinkedIn, Zynga, and Google.

The Takeaway

At TIP Strategies, we think about successful economic development efforts in terms of Talent, Innovation, and Place. These three components are critical to a successful economic development district as well as to the region in which that district is located. What follows is an outline of some of what is happening in the City of Buenos Aires and its creative districts, as well as ideas that were shared by the delegation, as they relate to Talent, Innovation, and Place:

Talent: Buenos Aires exudes excitement and energy. Its architectural beauty, vibrant art, culture, and nightlife act as a magnet for the creative class. The city also has over 30 universities and colleges within its boundaries. Buenos Aires has made meaningful commitments to strengthen its talent base. One effort is a partnership with three universities, including the prestigious Technology Institute Buenos Aires, to collectively build a new campus in the heart of the technology district. The production of more trained engineers is imperative; roughly 40% of engineering graduates from local schools leave the country to work elsewhere. This is an unacceptable loss of a precious asset. The delegation agreed that all efforts must be made to keep and grow this engineering talent if the districts, city, and country are to be successful.

Innovation:The rapid success of Globant is proof that innovation and entrepreneurship is alive and well in the Buenos Aires region. The city has received international recognition for its growing software industry, drawing attention from companies and technology leaders in places like Silicon Valley. But recognition and international contracts for only the largest firms is not enough. Technology businesses within the district primarily serve back-office functions for business and government clients within Argentina. If businesses within the district are going to succeed, their customer base must be larger than the opportunities within the country’s borders. The city can help attract international business for its emerging tech cluster. Additionally, the city’s university system has focused its energy on the production of skilled students, which is vital, but not enough to achieve success. The conference’s US delegation encouraged an emphasis on research and development and technology commercialization out of these institutions as well.

The city also has a fledgling entrepreneurship program. The program has limited staff and resources with a broad directive to help the people of Buenos Aires create their own business. The US conference attendees recommended that the program narrow its focus to just serving entrepreneurs in the sectors that align with the districts, rather than a more general approach.

Place: Buenos Aires benefits from attributes that create fertile ground for innovation districts: a dense population and mix of residential and commercial activity, served by mass transit. In this respect, the city is fortunate; it didn’t have to create this environment, like many other cities with similar ambitions have to do. In 2008, the city took bold steps to establish the creative districts, identifying areas of focus, setting boundaries, establishing tax incentives to encourage investment and relocation, and making the catalyst investment of building a new state-of-the-art city hall in the technology district. The new city hall not only serves as an architectural gem, it is a statement that the city is committed to the districts’ success. Many businesses have responded—with over 200 firms locating in the technology district alone. They are all benefiting from incentives and infrastructure investments made by the public sector. The US delegation unanimously agreed: if the districts are to meet their potential, the business community must now take a larger leadership role. We encouraged a new formal partnership between the city and the business community with dedicated staff and programming to address the districts’ opportunities and ongoing needs. This kind of initiative would require that the city give up some control; this is necessary to achieve the city’s goals for the districts and ensure their sustained, long-term success.

The concept of innovation/creative districts translates around the world. Concentrating industries, entrepreneurs, and technologists creates an abundance of opportunities that may produce new businesses, investments, and jobs. The Buenos Aires creative district program was established just seven years ago, and they have already generated palpable success. These districts serve as an inspiration to communities everywhere. If it keeps on this path, the city will reach its ambition of being the unquestionable technology capital of South America and will provide jobs and opportunity to its people. Buenos Aires is a place economic development practitioners need to watch.

To learn more about the City of Buenos Aires creative districts visit:
www.turismo.buenosaires.gob.ar/en/article/economic-districts
I welcome the opportunity to discuss innovation districts with you and learn about the economic development efforts in your community. Please feel free to contact me at jeff@tipstrategies.com.

Recap of Inner City Economic Summit in Detroit

September 29, 2015

By: John Karras, Consultant, TIP Strategies

Photo credit: Detroit Skyline (HDR) by Bryan Debus via Flickr (CC BY-ND 2.0)


Last month (Sept. 14-16, 2015), I attended the Inner City Economic Summit in Detroit with Jeff Marcell, Senior Partner from our firm’s Seattle office. We spent the first part of the week in Detroit, engaging with leaders from other urban markets and national experts on the subject of inner city economies. Following the conference, we joined our clients at the East Michigan Council of Governments in Saginaw to share what we learned and to continue our work helping evaluate options for establishing a center of excellence. The work is part of the implementation phase of our prior engagement which resulted in a plan to boost economic development in the 8-county region centered on Saginaw.

The Inner City Economic Summit was created by the Initiative for a Competitive Inner City (ICIC), the Harvard-based think tank established by Michael Porter, and was sponsored by three other organizations: the W.E. Upjohn Institute for Employment Research, the Federal Reserve Bank of Chicago, and the Economic Development Quarterly from Sage Publications. For those of you not familiar with the ICIC, it’s worth getting to know their organization and their work. My favorite aspect of the ICIC is their incredibly useful “library of best practices in urban economic development.” The summit was hosted at the Detroit Marriott Renaissance Center (the same complex where GM is headquartered) on Day 1 and at the Detroit branch of the Chicago Federal Reserve on Day 2. During both days, we heard presentations and panel discussions from national experts on urban economic development, including a keynote from Michael Porter. We learned first-hand about the unprecedented private sector investments centered on downtown and Midtown Detroit, led primarily by Rock Ventures. We also participated in a three-hour bus tour through several revitalized and distressed areas in Detroit. And at the end of the conference, we took our own “self-guided” tour of the most challenged neighborhoods before heading up to Saginaw for the second part of our Michigan visit.

The Summit was filled with high-quality presentations, panel discussions, and conversations with leaders from urban markets across the US. But three presentations rose to the top as the most insightful and relevant to the challenges and opportunities facing urban economic development:

1. Michael Porter, the famed Harvard economist and corporate strategy expert. Porter revisited 20 years of groundbreaking research and experience on inner city economies and their competitive advantages, reflecting on lessons learned and providing perspective on what’s next for the field. [Read more]

2. Matthew Cullen, President and CEO of Rock Ventures. Cullen provided an in-depth perspective on how private sector investment has shaped Detroit’s infrastructure, economy, and culture in recent years. [Read more]

3. Martin Lavelle, Business Economist with the Detroit branch of the Chicago Federal Reserve Bank. Lavelle shared an overview of Detroit’s current economic situation and offered perspectives on where it is headed, including some of the remaining barriers and potential pitfalls facing the city’s economy. [Read more]

Throughout the summit, an underlying theme emerged during the discussions about Detroit’s economic future:
Does urban economic development need to be big or small?

I would argue that, in order for cities to have the greatest shot at success, their economic development programs must include a combination of big and small initiatives. Detroit is focusing on both ends of the spectrum, which is a good thing, given the serious challenges facing the city’s economic development. I’ll share with you the highlights from the summit, including what Detroit is doing to catalyze economic growth. But first, let me share a brief summary of how the city arrived at its current state of affairs. There are an infinite number of things that can be said about Detroit’s economic history (people have written lengthy essays and books about it), but I’ll be as short and to-the-point as possible. Here goes…

Detroit, Michigan played a leading role in the development of the US economy during the 20th century. It was the birthplace of modern manufacturing and large-scale industrial production. Henry Ford’s Model T and the innovative assembly line that made it possible transformed the global economy in ways that no one could have anticipated. Detroit was arguably the most important city in the world from 1900 to 1950, from an economic development perspective. The city was, and still is, the global epicenter of the automotive industry. Only a handful of US cities dominate a single industry in the same way (New York with finance, Houston with energy, and Los Angeles with film/entertainment). Detroit also occupies an important place in our nation’s cultural identity, thanks in large part to Motown.

But despite its many accolades, Detroit is better known today for its epic decline. Even though its business leaders and companies were responsible for revolutionizing the world’s economy, the city has become a universal symbol of economic failure. Detroit is the only city in US history to have reached the 1,000,000 mark in population and subsequently drop down below that mark. Even worse, Detroit came close to the 2,000,000 mark around 1950 (estimated at 1.85 million in 1950) before its population decline. Detroit is by no means the only US city where such a dramatic economic decline took place…but it is the by far the largest and most well-known. In 2010, the city’s population stood at 713,777. In 2013, the city entered the largest municipal bankruptcy in US history. The latest 2014 estimates for Detroit show a population of 680,250, less than 37 percent of its 1950 peak. And the city’s decline has taken place against a backdrop of racial inequities. With a city population that is 83 percent black and 11 percent white, compared with a metro area population that is roughly 70 percent white and 23 percent black, the city offers a glaring example of racial segregation. Interestingly, the city’s decline over the last several decades has played out within the context of a relatively stable metro area population. The Detroit metro area was home to 4,490,902 residents in 1970, compared with 4,296,611 in 2014, a decline of only four percent (compared with a 45 percent decline in the city’s population during the same period).

Although there are stark challenges facing Detroit’s economic future, there are some major signs of life in the city. Private sector investment, business expansions, and job growth are beginning to take place in portions of the city, especially in downtown and Midtown. Positive things are happening in Detroit on a level not seen in more than half a century. It’s too early to gauge whether these recent changes will turn the tide, but there is finally a reason to be optimistic about Detroit’s future. At the very least, it is an unprecedented experiment in urban economic development that will provide the rest of us with case studies and lessons learned for years to come. Hopefully those future lessons will be referred to as “best practices” instead of cautionary tales. Time will tell…

So, back to our question of whether urban economic development needs to be big or small: What does a struggling urban economy need to get back on track? What does Detroit need to change the course of its economy- many small things or a few big things?

Detroit has an aversion to big things. For nearly a century, their economy has been defined by big auto companies, big unions, and big government. All three of these big things have dramatically (and permanently) decreased. So it is understandable that many residents are placing their hopes of recovery in small things (e.g., block-by-block revitalization of Midtown, expansion of the Eastern Market as a local food hub, a new protected bike lane on Jefferson Avenue). On top of that, the city’s business and community leaders are equally concerned with pursuing larger, more transformative, strategies (e.g., the massive private sector investments from Dan Gilbert, a new streetcar line, the innovation/acceleration efforts lead by TechTown Detroit).

Below are three additional ideas for Detroit to consider as part of its “all of the above” approach to transform the local economy, each of which could potentially include a combination of big and small things:

1. R&D and higher education.
2. International development.
3. Aggressive business recruitment and expansion.

R&D and higher education. When we completed the Regional Prosperity Strategy last year for the 8-county region in East Central Michigan, one of the most surprising findings from our data analysis was how concentrated the academic R&D investments in Michigan are in the state’s top two schools. The University of Michigan in Ann Arbor is the nation’s number two institution ranked by academic R&D spending (nearly $1.4 billion in FY 2013). The state’s other top school and research powerhouse, Michigan State University in East Lansing, spent $516 million on R&D in FY 2013.Together, those two institutions account for more than 83 percent of Michigan’s total academic R&D expenditures. While this is greatly beneficial for those institutions, it’s a huge missed opportunity for the rest of the state. In fact, Michigan has a higher percentage of academic R&D investments in its top two universities than the investments in the top two universities in the other top 10 states in the US ranked by total academic R&D expenditures. This is especially frustrating for the Detroit metro area which accounts for nearly half of the state’s population but less than 10 percent of the state’s academic R&D spending. Wayne State University in Midtown Detroit is the city’s only significant research institution, with $224 million in academic R&D investments in FY 2013. Wayne State is certainly playing a critical role in the revitalization of Midtown, thanks in large part to its 27,000 students and its nearly 6,000 employees, but it is still a far cry from being one of the world’s preeminent research universities. The link between higher education and economic development is well-established. Besides the most prevalent examples (Stanford University in Silicon Valley, Harvard and MIT in Boston, and the University of Texas in Austin), dozens of communities across the US can trace their economic development success to the role of higher education. Which is why it’s no coincidence that Ann Arbor, just 40 miles from Detroit, is the best performing metro area in the state (along with Grand Rapids), having surpassed its pre-recession employment levels by 5 percent as of July 2015.

International development. With Windsor, Ontario right across the river from downtown, Detroit is part of the largest integrated, bi-national metropolitan economy in North America. Many people do not realize that the automotive manufacturing cluster centered on metro Detroit is actually a highly connected economic region that extends well into Canada. Given the city’s strong existing international ties, the multitude of nonstop international flights at Detroit-Wayne County International Airport, and the city’s global business connections, international business development represents a significant opportunity for Detroit.

Aggressive business recruitment and expansion. There is an untapped potential to bring in large private investment and business expansions from outside of Michigan into Detroit. An aggressive business recruitment program could play a large role in Detroit’s resurgence, while the city has a global brand and a reputation as an up-and-coming place for Millenials. The relocation of firms from Detroit’s suburbs into the urban core (e.g., Quicken Loans, Little Caesars) is wonderful for downtown, but the real opportunity lies in attracting new businesses from outside of the state. This won’t be easy, but business recruitment will be critical to the long-term growth of Detroit’s economy.

The beginning of something new? Or the beginning of the end?

This post could leave off on a positive note, citing once again the incredible transformation of downtown/Midtown Detroit. Or it could end on a less optimistic note, acknowledging the realities of a still-declining city that has yet to turn the tide. I’m going to do both.

Google Maps has a really cool new feature. You’ve probably used the Street View tool before, but you may not be aware that you can now use Street View to see the same photo perspective from multiple points in time. This is especially useful for cities that are experiencing rapid change, whether the change is positive or negative.

In Detroit’s case, I will leave you with two sequences of photos from Google’s StreetView. The first shows a house in the city’s near-East side neighborhood of McDougall-Hunt in 2009, 2011, and 2013. The second sequence shows Campus Martius Park in downtown Detroit in 2008, 2011, and 2015.

I’ll let the images speak for themselves.

June 2009

June 2011

September 2013

October 2008

June 2011

July 2015

Highlighted Inner City Economic Summit Presenter Summaries in Detail:

Michael Porter’s presentation was a comprehensive overview of the challenges and opportunities for inner cities, based on multiple decades of research and observation. It was fascinating, not only because Porter is a dynamic and incredibly knowledgeable speaker, but because he did a great job of tying the challenges facing inner city economic development to the realities in the larger national economy. You can download Porter’s presentation here [PDF]. You can also see a re-cap of his talk on YouTube. Porter began his talk by describing the structural challenges facing the US economy, concluding that “strengthening America’s inner cities has become more challenging due to the overall state of the US economy.” He contrasted this with the relatively strong national economy in 1990, back when ICIC was first getting off the ground. ICIC defines an inner city as “contiguous census tracts within central cities that are economically distressed”. Their definition of distressed is based on the following two criteria: 1) “a poverty rate of 20 percent or higher, excluding students” or; 2) “a poverty rate, excluding students, of 1.5x or more than the MSA” and at least one of two other criteria: “median household income 50 percent or less than the MSA” or “unemployment rate 1.5x or more than the MSA”. One of the more interesting points in Porter’s presentation was that inner city economic success is not closely correlated with overall metropolitan economic success. At first glance, this seems to go against commonly held beliefs that a strong inner city is needed for a strong metro economy. But Porter was also keen on pointing out that the central cities (not including the portions classified as inner city according to ICIC’s definition) accounted for all of the net job growth in the US from 2003 to 2013. He also shared several key findings about how to stimulate economic development in inner city economies, including: the importance of clusters as drivers of growth, connecting inner cities to regional clusters, and capitalizing on anchor institutions present in inner cities. While Porter’s talk touched on many of the challenges and opportunities facing inner city economic development, he did not cover one key area, real estate. Urban areas have many barriers impacting real estate development that don’t exist in suburban and exurban areas. Fortunately, the other keynote presentation from Matthew Cullen did cover real estate.

Matthew Cullen, head of Rock Ventures, also gave a dynamic keynote presentation. Rock Ventures is the umbrella entity created to manage Quicken Loans founder Dan Gilbert’s portfolio of 110 companies, investments, and real estate development projects in Detroit primarily, and to a lesser extent, in Cleveland. Cullen’s talk showcased the major transformations in downtown and Midtown Detroit, largely spearheaded by Rock Ventures and other private sector leaders (e.g., the Illitch family, which is bringing its Little Caesars corporate HQ from the suburbs into Midtown and is also building a new arena for the Red Wings hockey team as part of a new mixed-use district). It’s funny…at TIP we sometimes joke about the ”fairy godfather/godmother” strategy for downtown revitalization. As the story often goes, “all you have to do is find a rich/famous person with an affinity for your community, and then convince them to funnel millions of dollars into the renovation of historic buildings to create a bunch of cool new offices, restaurants, and loft apartments.” Well, downtown Detroit may be the best example ever of this strategy, with Dan Gilbert serving as Chief Executive Fairy Godfather and Matthew Cullen serving as Chief Operating Fairy Godfather. You can see Cullen’s presentation for yourself (parts 1 through 5 on YouTube), but I’ll give you the highlights. Since 2010, Rock Ventures has been responsible for the creation of 13,000 jobs, nearly $2 billion in investment, and the renovation/redevelopment of 13 million square feet of building space (office, residential, retail). They are also leading an effort to create a new $140 million streetcar line (with a remarkable $100 million coming from private and philanthropic investors, and only $40 million in public funds) that will connect downtown to Midtown after construction is completed in 2017. Rock Ventures has also invested in a downtown broadband internet infrastructure known as RocketFiber, which is purported to be 100x faster than Comcast. It’s pretty obvious that Gilbert’s efforts are starting to pay off in a major way. All it takes is a 10-minute walk through downtown Detroit, and you feel like you’re in an emerging hipster haven. Take another 20 minute walk north to Midtown, and you’ll find growing clusters of creative businesses like Shinola among the large anchor institutions of Wayne State University, the Detroit Medical Center, and the Detroit Institute of Arts. Lastly, Rock Ventures is keenly aware that bringing jobs and investment into the urban core will not create a vibrant district without a thoughtful approach toward improving the urban design, or the “connective tissue” as Cullen described it. Of course, it’s worth keeping in mind that, no matter how inspiring the work of Rock Ventures and other private sector leaders, the downtown/Midtown area only represents a small portion of Detroit, roughly 6 to 8 percent of the city’s land area, depending on how you define it. And when you consider the fact that the city’s urban core has seen a large amount growth (investment, job growth, and residential growth) while the city as a whole is still losing more than 8,000 residents a year (from 2010 to 2014), it is clear that the rest of the city is still declining rapidly. It will be interesting to watch the evolution of Detroit’s downtown/Midtown urban renaissance over the coming years. Hopefully, the success of the city’s urban core can translate into broader economic development for the rest of the city.

Martin Lavelle, an economist with the Detroit branch of the Chicago Federal Reserve Bank, gave a brief talk as part of the introductory set of presentations. (You can find his presentation at the tail end of this document.) I really appreciated Lavelle’s comments because he cut through the hype and gave a realistic assessment of where Detroit is and where it might be headed from an economic development perspective. Lavelle started by acknowledging the major progress in the city: improving city services, ongoing investment (largely in the downtown/Midtown area), a growing neighborhood focus, and a greater willingness among civic leaders to discuss the tough issues. Lavelle then went on to discuss some of the significant structural impediments that act as barriers to economic development in the city, most notably the lack of a premier research university and an inadequate public transportation system. He also highlighted several potential pitfalls that could send the city back into bankruptcy including: tax revenue declines, fiscal challenges facing other regional entities (e.g., Detroit Public Schools, Wayne County), and a potential return of corrupt elected leadership—a long-time hallmark of Detroit’s government. Finally, Lavelle touched on some of the key issues the city must tackle in order to become a prosperous community: reform of Detroit Public Schools, addressing the city’s many unique land use challenges, and regional cooperation.

A Practitioner’s Perspective On Understanding And Developing Industry Clusters

August 14, 2014

By: Dave Olson
Via: Inforum

Photo credit: Nick Wagner / The Forum


MOORHEAD – A workforce study released Thursday confirms what many employers have been painfully aware of for some time: There aren’t enough people living in the Fargo-Moorhead area to fill available jobs.

But the study went one step further and stated that over the next five years, at least 30,000 new job openings are expected, with close to half of those being low-paying positions that make it difficult for workers to cover the cost of child care, transportation and housing.

“If we don’t address this problem, this issue is going to get worse and worse,” said Jim Gartin, president of the Greater Fargo Moorhead Economic Development Corp., speaking to an audience of community leaders who gathered in Moorhead to hear highlights of the workforce study.

The 100-page report was prepared by TIP Strategies, a consulting firm based in Austin, Texas.

Tom Stellman, president and CEO of TIP, told the group that the Fargo-Moorhead area is at a tipping point. The community is small enough that individuals feel they can still make a difference, but large enough to be a competitor nationally when it comes to attracting a qualified workforce.

He said the challenge becomes how to convince people to live here when many areas around the country are also striving to attract and retain workers.

“This is a national issue,” he said.

One thing the study highlighted is a pay gap when median wages in Fargo-Moorhead are compared to national numbers.

Local numbers tend to lag the national figures, particularly at the high end of the wage scale, where the difference between what companies pay here and what they pay elsewhere is greater than 20 percent, Stellman said.

Charley Johnson, president and CEO of the Fargo-Moorhead Convention and Visitors Bureau, said local employers have started raising pay, but he said the pace may be too slow to make an impact when people are deciding where they want to live and work.

“This (pay gap) is a huge part of it,” he said.

Some other findings of the report:

• The number of jobs in the Fargo-Moorhead area grew by nearly 30,000 between 2004 and 2014, a 24 percent increase.
• That compares to a 5 percent increase in the total number of jobs in the U.S. for the same period.
• There are now about 6,700 job listings posted online in the Fargo-Moorhead area.

Stellman said one approach to attracting more people to the area would be to embrace one of its perceived weaknesses, its northern climate.

“Embrace the cold,” Stellman said, adding that organizing something along the lines of a communitywide winter carnival should be made a priority.

He said current efforts that promote the Fargo area as a hotbed of innovation and entrepreneurial drive should be supported and he suggested a contest could be organized that invites the public to offer ideas on how the worker shortage can be turned around.

Gartin agreed community input will be valuable in finding solutions and he challenged those attending Thursday’s gathering to give of their time and energy.

“This is just the beginning and we need your help,” he said.

Austin Vs. Seattle: Talent, Innovation, And Place

June 30, 2014

By: John Karras, Consultant, TIP Strategies & Jeff Marcell, Senior Partner, TIP Strategies

The View from the Austonian by Todd Dwyer Via Flickr
Seattle Space Needle by David Lee Via Flickr

Now that TIP Strategies has a permanent presence in both Austin, Texas and Seattle, Washington we’ve been having fun comparing and contrasting the two regions. One feature the two share: momentous growth. According to two recent articles, Austin’s metro area is the “fastest growing large metro area” and the City of Seattle is the “fastest growing large city.” This growth is a direct result of another commonality between Austin and Seattle, a cool factor that generates a gravitational pull of people, investment, and attention.
Speaking of cool, Seattle was recently named America’s Most Hipster City by “Thrillist” …Austin came in at #3. And between the two cities, you have a long list of internationally recognized events and festivals: South by Southwest, the Austin City Limits Music Festival, the Formula 1 U.S. Grand Prix, Bumbershoot, the Seattle International Film Festival, Seafair, and many others. If you want to define cool, you can’t get closer than Austin and Seattle. The evidence is substantial:

While the competition for cool is a fun conversation, we at TIP Strategies do take successful economies very seriously. There is much more than the entertaining buzz of oddball rankings that drives the success of these regions. Our firm has identified the formula to economic success as Talent, Innovation, and Place. Austin and Seattle have tapped into this formula and are benefiting from job growth and investment because they deliver on these critical components of a successful economy.
The regions are similar in a number of important ways:

  • The Austin and Seattle metros are national leaders in population growth as evidenced by the latest Census data.
  • Both cities also lead the nation in job growth. In fact, the U.S. News & World Report recently included Austin and Seattle in its list of “The 10 Best Cities to Find Jobs” (Austin is #5, Seattle is #6).
  • The Austin and Seattle regions contain the most significant concentrations of high-tech companies in the country outside of Silicon Valley and Boston, thanks to headquarters and major facilities of tech companies like Microsoft, Amazon, Google, Facebook, Dell, Apple, Samsung, and many others.
  • Both cities have high levels of educational attainment (44.8% of Austin residents age 25 and older hold a bachelor’s degree and 56.5% of Seattle residents age 25 and older hold a bachelor’s degree, compared to a U.S. average of 28.5%).

But each region meets the Talent, Innovation, and Place formula in its own unique way. Let’s briefly explore how the regional economies of Seattle and Austin are leading the pack:
Talent:
Austin and Seattle are both magnets for talented professionals and entrepreneurs. The talent pool in each metro area is the basic building block of each region’s economy. Of course, the cool factor in both cities helps to attract talent from across the country. But each city also has a strong pool of locally grown talent thanks in large part to the University of Texas at Austin and the University of Washington, two of the top public universities in the world. As economic development professionals, we understand that access to talent is the number one issue for both companies and communities. Here’s how Austin and Seattle compare in the competition for talent:

  • A recent study by the Milken Institute ranked the Austin and Seattle metro areas as two of the “Top 10 Best-Performing Cities” (Austin is #1, Seattle is #6). The study analyzed the 200 largest metro areas based on job, wage, and technology growth.

Innovation:
There’s a special kind of energy in Austin and Seattle that you just don’t feel in most cities. Both places are hotbeds of creativity and innovation. This is partly due to the influx of people moving to these cities each day, but it’s also due to the level of growth taking place in locally based start-ups and small businesses. Austin and Seattle are among an elite group of cities that are on the cutting edge of innovation and entrepreneurship.
Here are a few examples of how the economies of Austin and Seattle are driving innovation:

Place:
The level of growth (population, jobs, investment) taking place in the regional economies of Austin and Seattle is strong evidence of each metro area’s quality of place. You can experience this first-hand simply by seeing the amount of construction cranes towering over each city’s urban core. Yet even if you’ve never visited either city, chances are you have a good impression of them. Each city has its own unique brand, but they are both vibrant cities with strong identities.
If a quick look at the population and job growth data (or construction cranes) isn’t enough to convince you that Austin and Seattle are two of the most appealing places in the U.S., here are a few more examples that might do the trick:

  • Jones Lang Lasalle recently named Austin and Seattle among the “World’s 20 Most Dynamic Cities” as part of its proprietary City Momentum Index (Austin is #7, Seattle is #18).
  • Austin and Seattle both rank highly on the “City Energy Efficiency Scorecard” LINK http://aceee.org/local-policy/city-scorecard from the American Council for an Energy-Efficient Economy (Austin is #6, Seattle is #5).

TIP Strategies is linked to each of these metropolitan economies like no other economic strategy firm. Our approach is grounded in understanding these economies, taking what we know to be their successful components, and applying and leveraging these lessons for the benefit of the communities we work with across the country. Being connected to and engaged in the two capitals of Talent, Innovation, and Place is our strategic advantage.
While our staff will continue to have fun debating which TIP location is cooler, we will always place serious emphasis on the lessons we can take from each of these metropolitan economies, lessons we can bring to our clients to help them build their own unique brands through Talent, Innovation, and place.

Economics Of The 2014 World Cup

June 9, 2014

By: Jon Roberts, Principal & Managing Director, TIP Strategies

"Outubro, 2012" by copagov via Flickr (CC BY 2.0) [Arena Amazonia, Manaus]

There will be those who say the only thing more boring than soccer is the economics of soccer. I am not one of them. I do, however, have friends and acquaintances who are very much of that opinion. To disabuse them of their benighted view, I’d like to tie Brazil’s current political crisis to more general questions of economic development. What does it mean to spend many billions (yes, billions) of dollars supporting the construction of stadiums? What does it mean to provide subsidies to private corporations or to international governing bodies to host large sporting events? These questions are also ours here in the US. We publicly subsidize everything from the Super Bowl to minor league ball parks to NASCAR tracks. We do this in the belief that there will be a return on investment. Are we justified in this view?
If economic development issues are not complicated enough, I have also indulged my desire to weigh in on the World Cup itself, who will win, and why. Fans of the game can add one more voice to the countless prognosticators and pundits who think they know who will win the World Cup by reading my post on the matter here.
Beyond the spotlight a single World Cup provides lies the larger public policy question of whether massive subsidies for sports are necessary—or even desirable. This post uses the World Cup stage as an opportunity to talk about the economics of sports and the peculiarities of soccer generally.
Brazilians ask: Why did we decide to host this event?
The World Cup begins this week. Thirty-two nations are participating, and a total of sixty-four games will be played in 12 stadiums. Some of these facilities are brand new and purpose-built. All have been constructed or improved through public financing of the Brazilian government. The most remarkable of these is in Manaus, a city at the edge of the Amazon rain forest. There are no viable roads in. Construction materials were sent by barge. Visitors to the four matches will fly in, though there is a river boat option as well. Yes, four matches at a stadium designed for 42,000 fans. And after the matches are played? No one knows. There is no local team that can justify a stadium of this scale. More broadly, the cost is well over $3 billion for all of the stadiums.The entire budget deficit of the country could have been offset by that spending. And there is no discernible ROI for the stadium development. What’s more, soccer’s international governing body (FIFA) will take all of the gate receipts and broadcast rights—one hundred percent.
So with no direct ROI, what justifies that spending? The most common answer, one familiar to cities who have vied for the Olympics (or sports venues or events generally), is that they generate welcome publicity for the host community. Never mind that no credible study supports the perceived benefits. Wh, then, you may ask, do communities continue down that path? There are two answers to that question, neither of which is very encouraging. The first is that officials are corrupt. We have ample evidence of that. FIFA itself is rife with kick-backs and bribery. Sepp Blatter, the head of FIFA, is deeply complicit in “selling” the Cup to the highest bidder. The 2022 Cup is scheduled to be held in Qatar, which would force players into matches where the temperature can reach 140 degrees. Moving the Cup from the summer to the winter would disrupt the professional league matches, so that’s not a good idea. And did I mention that the next World Cup will be held in Russia?
There’s corruption, and then there’s a simple case of being misguided. In 2007, the former Minister of Sport, Orlando Silva, said that no public money would be required for the construction (and improvement) of stadiums for the 2014 World Cup. More recently, Silva’s replacement, Aldo Rebelo, dismissed the notion that the new stadiums would become white elephants. In fact, there is every reason to think that neither the new construction nor the improvements to existing stadiums will ever justify the expenditures. The experience after the World Cup in South Africa strongly suggests that not only is there no ROI, but that the host nation is saddled with additional debt. This was Greece’s experience after the Olympics, and almost certainly played a part in that nation’s debt crisis.
Brazil was the only nation to bid on the 2014 World Cup. Since then, support for the Cup among Brazilians has steadily declined—from over 70% to under 30%. It may sink even further. Brazil’s president, Dilma Rousseff, is a vocal defender of the Cup, but she is struggling with the strikes and protests that have engulfed the nation. Even high profile former soccer stars are questioning the expense. Street protests made the news early this year and can be expected to play to the international news media for the next several weeks. The complaint is that money spent on stadiums should have gone to the country’s “Third World” infrastructure. It’s an argument that deserves more than passing consideration.
It is entirely possible the relationship between major governing bodies (FIFA, the IOC, and even the NFL, with its non-profit status) and host cities and nations will have to change. If countries and cities quit bidding on events, or subsidizing stadiums, sports won’t go away. TV coverage won’t stop, and there will still be breath-taking moments for fans across the country and around the world.
Why the US should care about the Cup
Around the globe, nations are waiting for the first game between Brazil and Croatia with bated breath. But Americans will, as they always do, wonder what all the fuss is about. There are obvious reasons for this: we already have a game called football and it’s, well…different. Beyond that, we have a national team that rarely wins and pretty much struggles against all opponents.
Soccer is a game we don’t understand and we play poorly, but there are other reasons to be skeptical of the hoopla. In addition to the massive capital outlay to host the event, this World Cup carries a load of scandals that rival the Lance Armstrong era in cycling. Are the stadiums actually prepared for the tens of thousands of fans who will occupy them? Are the police ready for the tens of thousands of citizens who will occupy the streets? And that’s not all. Accusations of match-fixing associated with illegal international betting are hitting the presses, just as teams are leaving for Brazil. Then there is the systemic corruption of the sport’s governing body, FIFA.
How, you may wonder, can we be enthusiastic about a quadrennial event the host nation no longer cares to have, is tainted by match fixing, and is overseen by an organization that no fan of the game will defend? And oh yes, an underperforming national team, sub-par officiating, and players that may fall over and writhe in agony when an opponent so much as breathes on them?
Despite all this, soccer’s influence in the US continues to grow. Close to a million Americans may now watch a high-profile English Premiership match. Hundreds of thousands more carefully track the fortune of national teams from Germany, Italy, Nigeria, and, of course, Mexico. Soccer is rapidly becoming our “fourth” sport, ahead of hockey, and it is beginning to rival baseball in popularity. It’s no great stretch to imagine soccer joining basketball and football as one of the big three by the time of the 2022 World Cup in Qatar (or the US, if the scandal that accompanied the selection of Qatar results in a change of venue). In short, soccer is big in this country, and the World Cup will command attention for three glorious weeks. Despite the riots in the streets of Rio and Sao Paulo, despite the bad officiating and the prima donna antics of some players, despite all this, the tournament will captivate a global audience of which the US, for better and worse, will be a part.
What soccer has, and what constitutes a huge part of its appeal, is the flow of the game. In the US, one could argue that sports have lost that beauty. Our major sports are so over-managed that actual playing time is an absurdly small percentage of the coverage. I timed the fourth quarter of the recent Super Bowl from when the ball was snapped to when the play was blown dead. There were less than eight minutes of action in a quarter of play that seemed to go for an eternity. Basketball has begun to follow a similar pattern, with an increasing number of mind-numbing time outs. And baseball, well let’s not even go there. In American sports, players don’t so much play the game as follow the instructions of the coaches. In soccer, there are no time outs. You play for 45 minutes, then you take a break, then you play for another 45 minutes. There are only a total of three substitutions allowed. If you required more than that, due to injury, you would have to play a man down. All this and the players run an average of six miles during the match, often at sprint speeds. Flow is everything—or the ability to disrupt the flow. (Watch Italy.) But in any case, decisions are made and executed by the players rather than managed by the front office’s or television’s demands.
The US can learn to love soccer because it is a beautiful game. People can love it even if their interest in sports isn’t all that great in the first place. Why? Because the passion that drives the 32 nations who participate is unlike that of any other sport, or any other event. While we do watch the Olympics, the intensity has never equaled that of soccer. US sports certainly generate enthusiasm, but soccer more closely resembles collegiate athletics than it does our professional sports. There is also the separate question of how insular our big sports are. Yes, baseball is international, but we continue to host the “World” series even though we won’t allow other countries to participate (excepting Canada). American football is little more than a curiosity outside of North America. Basketball is the notable exception, but it pales in comparison with soccer.
Soccer is wonderful for the non-sports enthusiast, if for no other reason than it provides an alternative to Ambrose Bierce’s chillingly funny adage: “War is God’s way of teaching Americans geography.” Soccer, it turns out, can also teach Americans about geography. We can learn to appreciate that Bosnia and Herzegovina is a single small country in what was the former Yugoslavia (and the former Austro-Hungarian Empire), that many great Belgian players have more than a passing affinity for the Congo, and that England is, well, just England and that Scotland and Wales and Northern Ireland all have their own soccer teams (none of which qualified for this Cup).
What does this all mean for economic development?
There are lessons to be learned from Brazil’s misadventures with the World Cup. Yes, we want the Cup to be a success, but if we fail to understand the consequences of bad decisions, we will certainly repeat them ourselves:

  • Do not assume that public subsidies for facilities will yield measurable benefits.
  • Question assumptions about the promotional value of sports generally.
  • Acknowledge that governing organizations (such as FIFA and the NFL) are profit driven even if they are “non-profit.” Their profits are simply allocated differently
  • When working with private developers, ensure that the stadiums are integrated into the fabric of the community (Portland’s Providence Park soccer stadium).
  • Promote and support sports that the community can participate in, not just as spectators but as participants and investors (youth organizations, for example).
  • Stand firm in the face of pressure from professional teams who will claim to “put you on the map.” You are already on the map. Your economic development success will not be the result of sports franchises. Here in Austin we have no professional sports teams (and did I mention that we lead the nation in job growth)?

The World Cup is a unique event. Its viewership (and the passion it generates) is second to none. Being the host nation, however, is not a reason to cave to the demands of an overreaching governing body, and to ignore the greater needs of the country. If we think our sport is so great, we’ll find a way to support it without bankrupting a country.

The 2014 World Cup: The Lessons Of Geography And History


By: Jon Roberts, Principal & Managing Director, TIP Strategies

"P1110941" by José Maria Silveira Neto Via Flickr (CC BY-SA 2.0)

In a separate post, I shared some thoughts about the economics of sports and the peculiarities of soccer generally. Fans of the game, and those who know me personally, will quickly see through my ruse in writing on the subject: “You’re don’t really care about public policy, you just want to talk about the World Cup.” Not true! (Ok, well, a little bit true.)
But this post is just that: a post about the World Cup. It is my thoughts on who will win and why. For you sports fans that still don’t get soccer and why a scoreless draw can be exciting, maybe this post can help provide some context. Or not. For those of you who care to learn your geography through other means than sports, or who don’t care about sports at all, well, you may just want to sit this one out.
Who will win the Cup: In which a statistical perspective sheds light on what it takes to be the best in the world
Let’s talk about tennis for a minute. The data are revealing. If you have not already won a Grand Slam event, the odds are stacked against you. In other words, winners keep winning. Expressed differently, there are far fewer winners of a single slam than there are winners of multiple slams. It’s hard to win, but much easier, statistically, to keep winning. This turns out to be just as relevant to football. (We’ll quit calling it soccer now that only the purists are reading this blog.)
The World Cup began in 1930. There have been 19 tournaments since then, with the matches in Brazil this summer marking the 20th anniversary. Only eight nations have won the trophy in over 80 years. Of those eight, five are multiple winners. France and England each won just once, and it was when they were the tournament host. Hosting a tournament confers a clear advantage for the home team. Spain is the only other single winner; they are also the defending champions. In all, 76 nations have been represented in the tournament, which now hosts 32 teams.
So with these facts safely tucked away, let’s ask the question a different way. Who among the teams going to Brazil really believes they can win? Not, can play well. Not, will match up against other teams or can advance out of their group. No, who among the teams has a conviction that they can win? The answer to that question will narrow the field, and will do so in ways that aren’t reflected by the nominal team rankings.

  1. The host country almost always believes it can win. It believes this with some justification. Nearly a third of winning nations (6 in all) did so when they hosted the tournament. More recently, as FIFA (football’s governing body) sought to make the sport more global, the tournament was hosted in countries without a rich footballing tradition: the US, South Korea/Japan, and South Africa. Those nations may have fantasized about a win, but they never believed they would raise the trophy.
  2. Previous winners have an edge.
  3. Defending champions believe they can repeat. Italy and Brazil have won back-to-back championships, and while it is not a common event, the belief is there.

Ignoring everything else for now (injuries, susceptibility to tropical heat, player selection) and based on these statistics alone, listed below is who is likely to advance:

  • Brazil
  • Spain
  • Germany
  • Italy

To these we can add Argentina. And Uruguay (as a dark horse). These choices will come as no surprise to fans of the game, but the underlying reasons are what’s important.
Of these six teams, only two teams have an unshakeable belief in victory: Brazil and Germany. Once the rosters are set and we take a fresh look at the groups, we’ll see what progress we can expect from our two frontrunners and the remaining two to four contenders. Comments made to the media last month by England’s team captain, Gerrard, illustrate what it means not to have this belief: “It would be very stupid and naïve of me to stand here and say we’re going to win it.”
Against this background, we can think about who is selected for the national teams. For Klinsmann to leave Donovan off the US team was an odd and potentially devastating choice. Contrast it to Joachim Löw’s decision to include Miroslav Klose. At age 35, he is far from his prime, and while he was good at Lazio (in Italy where he plays professionally), there were other choices for the German national team. Klose’s motivation is to set a World Cup goal scoring record—and that was enough for Löw. He wanted someone who believed both in his own goal-scoring prowess and the team’s success. The same can be said for the inclusion of Pirlo (age 35) on the Italian squad and for Xavier Hernandez (age 34) on the Spanish team. Coaches who believe their team can win will find players who share that conviction. Donovan did (or at least he believed that the US would find a way to win any given game). It is far from clear that Clint Dempsey or Jozy Altidore, for example, believes it.
The Groups: Why the luck of the draw matters so much
The contestants are drawn into eight groups of four teams each. Three points are accorded for a win, one for a draw, and none for a loss. The top two teams of each group advance to the “knock-out round.” For the remaining 16 teams, a loss means they are out of the tournament.
Even the casual observer will quickly see why the group in which the team plays, and the subsequent pairings, are so important. An unlucky draw, one in which two or three of one’s opponents are highly rated, can effectively mean the tournament is over before it begins. This is the case for the United States. The opposite can also be true, where a single strong team is likely to dominate the group. This is the case for Brazil. Further, the subsequent pairings pit the number one team in Group A against the runner-up of Group B, and so on. This can create significant incentive to win the group in order to avoid a particular opponent.
Here are the groups and my prediction for who will emerge from them. Am I confident in these choices? Absolutely! Dart-throwing monkeys and soothsaying octopi notwithstanding, I expect to be 100 percent accurate, because pundits always are.
Group A: Brazil, Croatia, Mexico, Cameroon
Brazil wins the group. And second place goes to…? Croatia. Why Croatia? Luka Modric, who plays for the championship-winning club Real Madrid, is a big part of the answer. The other part is that Mexico has suffered recent injuries and lacks the confidence to win two matches (after the presumed loss to Brazil). Their best hope is to advance on goal differential over Croatia (one win, one draw, and one loss). Cameroon is not to be taken likely. Veterans like Samuel Eto’o (Chelsea) and Alex Song (Barcelona) will give any team problems. The depth, however, is not there. And while I have no African teams advancing out of group play, Cameroon may be the exception.
Group B: Spain, Holland, Chile, Australia
This is a very tough group. You have last year’s finalists (Spain and Holland), and a deeply talented Chilean squad. Australia would be fortunate to garner a single point. There is also the added burden of knowing that the team that finishes second in this group will almost certainly face Brazil in the first pairing of the knock-out round. In other words, this group is a toss-up. Based on the assumptions at the beginning of this blog, I’ll pick Spain to win. Second place to Chile, but this is a guess at best. Having watched both teams only a handful of times, it’s clear that each has real firepower.
There is a separate game fans like to play. It’s called “Who is the best footballing nation never to have won the Cup?” Spain led that competition for decades, finally breaking the curse four years ago. The title is now held by Holland, a great footballing power and runners-up in 1974 (to Germany), 1978 (to Argentina), and 2010 (to Spain). They’ve led the way in the concept of “total football” that ushered in a new attacking philosophy. If they were unable to advance out of their group – a real possibility – it would be a colossal blow. The $800 ticket to watch Holland and Chile play on June 23rd in Sao Paulo may well be worth the money. It will be the final group game. Expect the loser to be out of the tournament, crushing the hopes of a nation.
Group C: Columbia, Ivory Coast, Greece, Japan
If there’s a group of death, why can’t there be a marshmallow group? That’s not fair, though none of these nations has made a deep run in any World Cup. Columbia has played some impressive football in qualifying, and there are top-notch players for the Ivory Coast (Drogba and Gervinho ) and for Japan (Kagawa and Honda). My picks? Columbia to win the group, with Ivory Coast and Japan vying for the coveted second spot. Japan will surprise everyone and finish second.
Group D: England, Costa Rica, Uruguay, Italy
Yikes. Three former Cup champions and the toughest of the Central American teams. But let’s just cut to the chase. Italy wins the group, followed by Uruguay. Why? Because Italy feasts on England and because Uruguay’s brilliant striker – Luis Suarez – will want to show up his Liverpool team mates on the England team (Gerrard, Henderson, Johnson, Sterling, Sturridge and Flanagan). Italy will best Uruguay because their stifling defensive tactics, honed over decades, have served them well. Only Brazil have hoisted the trophy more often.
Before leaving this group, let me confess my allegiance to the Liverpool Football Club (YNWA!). The Uruguay-England match-up will have special significance to all LFC fans, but the real hope is that none of the players suffer injuries.
Group E: Switzerland, Ecuador, France, Honduras
The composition of the groups is always devilish, but especially in this tournament. Group E should present the least obstacle to the advancement of the European teams. France to win, Switzerland to finish second. Honduras and Ecuador are unlikely Cup participants in the first place. Ecuador may have acquitted itself well in tough qualifying rounds, but they did so by winning at their high-altitude home stadium. Take them out of that rarified air and they struggle.
Group F: Argentina, Nigeria, Iran, Bosnia-Herzegovina
An easy group for Argentina to win, with Bosnia-Herzegovina as runners-up. And meta-data aside, Argentina is a formidable team, deeply talented and brimming with optimism. Second place is less certain, though Bosnia-Herzegovina have more depth and more consistency than Nigeria. African teams, even with star players, tend to struggle at the World Cup. Iran, well, they may have a dedicated fan base, but a last place finish is likely. Back to worrying about sanctions and a weak currency.
Group G: Germany, Portugal, Ghana, USA
This is not the group of death. Germany to win, Portugal to finish second. Of course, all eyes (all US eyes, that is) will be on this group. The omission of Landon Donovan will be blamed for the US gaining only a single point in its three matches (drawing against Ghana), but the result would be the same even if the US could bring 44 players and had unlimited substitution. There is simply not enough talent for Klinsmann to draw upon. The inclusion of young German-American players may help for 2018, but will do nothing for this tournament. The faithful will be hoping for a win against Ghana on June 16th, followed by a stunning draw against Portugal in the rain forest of Manaus on the 22nd. Those hypothetical four points – along with a favorable goal differential – would then just be enough to edge Portugal for second (assuming everyone loses to Germany, and Ghana loses to everyone). Pure fantasy. Portugal have world class players (including the best on the planet, according to many fans, and not least to Ronaldo himself) and they show well at the World Cup. When they lose, it is often to eventual Cup winners (though as Andy Coe reminds me, Portugal lost to the US in the 2002 Cup). They are also in contention for the best team not to have won the tournament, along with Holland.
The US will go home and talk about rebuilding. There is a bridge I can sell you if you expected more, but the bridge would also need to be rebuilt. Our failing infrastructure goes beyond football.
Group H: Belgium, Algeria, Russia, Korea
This group mirrors Group A: a single dominant team with a three-way fight for second. Yes, Belgium is that good. They finished top of their qualifying group in Europe and they have strong and experienced players. Two of the best keepers in the world, a great defense (led by Kompany) and Mirallas, Benteke, and Lukaku are part of a formidable squad. Their lack of World Cup accomplishments shouldn’t matter at this stage. It’s interesting to look ahead for Belgium if they won the group: a meeting with, most likely, Portugal. This is a stretch, but then I have high expectations of Belgium. They’re my European dark horse and a run to the quarter-finals would not surprise me. Belgium-Argentina? Definitely a possibility.
Second place is a race between Korea and Russia, and who wouldn’t want to see Korea advance (I mean, other than Putin). Korea do well at the World Cup generally, so they are my prediction.
Beyond the groups (but don’t call it the Sweet Sixteen)
Looking beyond the group stage is like predicting the weather: we’re often right about tomorrow and almost never about the week after next. Still, we can make some general observations. First, the top half of the draw (Groups A-D) is tougher than the bottom half. Five of the eight former Cup holders are in those groups, as well as perennial power Holland. The bottom half has Germany and Argentina, plus France. By the time the first knock-out games are decided, however, the dynamics change. Germany, for example, could face Brazil in the semis.
While Brazil has numerous advantages going in – not least of which are familiarity with the food and the climate and the rabid fan base – they will be looking at formidable competition as soon as group play ends. They may also be less cohesive than other teams. Talent yes. Magic? Not as certain. The second place team in Group B (Brazil’s opponent if they win their group) would probably be Spain, Holland, or Chile. All very tough. Next up might be Uruguay. In short, Brazil’s road to the final is treacherous. I’ll go predict a Germany-Brazil semi-final. To suggest that Germany could win that match may raise an eyebrow, but if all goes well for the Germans, they will emerge fresher than the Brazilians, who face tough matches against fellow South American teams. On the other side, Spain could face Argentina in the semis. So Brazil, Germany, Spain, and Argentina in the semis.
And the winner is? Well, if you give me the prerogative to revisit my predictions after the group stage, I’ll simply quote Gary Lineker, the English footballer and commentator: “Football is a simple game; 22 men chase a ball for 90 minutes and at the end, the Germans always win.”