Daniel Schwartz has some good thoughts on the issue of dealing with employees who are distracted by major sporting events like the world cup. He cites European employers who caution against being overly harsh with employees who are distracted by the World Cup.

One overseas company goes even further by recommending that employers adopt a “flexible” workplace policy, suggesting that employers should have agreements in place to deal with requests for time off, sickness absence or watching TV or websites. ... I wouldn’t go nearly that far. You don’t need “workplace agreements” here in the U.S. Work is still work and employers can still require employees to get work done during work hours — even with the World Cup.  But if you do find your employees going a bit astray, consider counseling them before serious discipline. No need to issue a red card when a yellow one, or even a warning, will do.

Daniel Schwartz - "World Cup Fever: Workplace Considerations Before Giving Out That Red Card"

Smart approach. If an employer is going to lose a certain amount of productivity to the event anyway, why lose a bunch of employee good faith at the same time. Look for a way to embrace and capitalize on the excitement of the even. Have a "Wear your favorite team colors to work" day or set up a viewing room in the office and allow employees to sign up for flex time so they can watch their favorite team but then agree to work different hours to make up the time.