The Real Impact of the World Cup

World-Cup-2014-Brasil-logo-2Arguably the biggest stage in sports around the world comes every four years. The World Cup is a magnificent time for soccer fans across nations. When one typically thinks of big events like this or the Olympics from an economic stand point, the usual thoughts are these events help boost the country’s economy due to enhancements in foreign trade, investment, and tourism. While these points are somewhat true the impacts are very short lived and typically die out with the event ending. These events never live up to the economic expectations.

First off, lets examine the 2010 World Cup that took place in South Africa. The country spent $3.9 billion on the event and “the Journal of African Economics calculates that South Africa attracted about 220,000 extra tourists from countries outside southern Africa during the 2010 World Cup and 300,000 over the entire year.” With that statistic in mind that means they spent around $13,000 on each visitor. (Egan) On top of that the total expenditure of the tourists was $340 US million, so the return on investment compared to the $3.9 billion spent is low (Croarkin.) Especially after FIFA takes their cut.

The problem with countries like South Africa and Brazil (2014) is that they each respectively have many major issues that are neglected when events like the World Cup come to their countries. Some of the issues in these countries are as follows: crime, corrupt politicians, gap between rich and poor, and poor school systems. (Petronzio) Millions get spent on the World Cup stadiums, infrastructure (transportation), and many other things when the money could be much better spent improving the lives of its civilians. The potential economic benefits never come around; in fact the country continues to spend millions after the event is over in order to maintain everything that was built.

After last summer with Brazil hosting the World Cup, we have got a bit of time to see how things have turned out since. Leading up to the World Cup there was much civil unrest in the country. One poll taken by Gallup last may showed that 55% of Brazilians believed the World Cup would hurt their economy and that their economy is worsening (Petronzio) On the other hand there have been some bold predictions like, “Brazilian Minister of Sports Aldo Rebelo said the tournament could pump $90 billion into the economy over the next 10 years” (O’Reilly.) This is a very bold prediction especially after looking at the actual revenue from the 2006 World Cup in Germany and from the 2010 one in South Africa. The revenues from Germany have turned out to be just under $5 billion and South Africa total revenue is about $500 million.

One example of wasting money in the World Cup happened just over the summer in Brazil. They built a $300 million stadium in Manaus, which very remote and surrounded by thousands of miles of rain forest (Garofalo.) This stadium was built specifically for 4 matches in the World Cup and is no longer in use because there are no teams to use in such a remote location. Brazil literally spent $300 million on a stadium that will be no use after 3 weeks when it has a very poor schooling system and an absolutely huge population in poverty. This is the basis for much of the unrest and riots that took place before and during the World Cup.

On top of all of this, long after the World Cup is over the countries still have to deal with the maintenance cost of their stadiums and infrastructure. “Annual operation and maintenance of a modern outdoor sports facility can cost over $10 million in the U.S.” (Croarkin) This cuts into a country’s revenue each year and like the example in Manaus, some stadiums may not even be used much more.

In 2022, the small Arab country of Qatar is set to host the World Cup. This will be an interesting event for them to host for many reasons. Economically they may not make much just like every other country that hosts. They have the Highest GDP per capita in the world and that means most citizens are wealthy. This leads to the dilemma of who is going to do the dirty work to build everything. The answer is they have been importing people to do it. They have imported people from India, Pakistan, and some other Asian countries. The problem with this is Qatar’s money is literally leaving its boarders due to paying immigrants. It is predicted that the World Cup will cause a short term boost in GDP due to all the spending but in the end things will even out and the investment in all the stadiums and such will not be worthwhile.

All in all, the World Cup really does not bring what you would expect to the host country. The economic benefits of the World Cup are few and far between, however, the costs continue long after the event it over. It is nice to see lots of countries getting the privilege to host the World Cup, but it is sad to see that sometimes sports matter more to a country than helping its own people. One thing is for certain, when it gets down to it there is nothing like watching the beautiful game on the world stage.

Works Cited

Croarkin, Brandon. “Economic Impacts of Qatar World Cup 2022.” Econintrest. N.p., 2 June 2014. Web. 02 Feb. 2015.

Egan, Matt. “South Africa’s World Cup Warning to Brazil.” CNNMoney. Cable News Network, 10 June 2014. Web. 01 Feb. 2015.

Garofalo, Pat. “The Cost of a Good Time.” US News. U.S.News & World Report, 11 June 2014. Web. 02 Feb. 2015.

O’Reilly, Andrew. “Brazil Loses Big At World Cup – And Not Just On The Field.” Fox News Latino. N.p., 09 July 2014. Web. 02 Feb. 2015.

Petronzio, Matt. “61% of Brazilians Feel World Cup Is Bad for the Nation, Survey Finds.” Mashable. N.p., 14 June 2014. Web. 02 Feb. 2015.

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One thought on “The Real Impact of the World Cup

  1. nickwechter says:

    I really appreciate this blog post. It isn’t uncommon to hear people make these sort observations about the world cup, especially when it is being hosted by a poorer country. I think that it would be interesting to see FIFA’s role in this process, and what type of returns they (if any) in comparison to the hosting country. FIFA is a business, and I am very curious to their role in all of this. Also, from what I understand, there is a bidding process to host the world cup, and I am curious as to why countries compete for this task if in recent years the returns have not been as high as expected.

    Like

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