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Is Hosting The FIFA World Cup Worth It?

June 28, 2018 5 min to read

The reason why we are asking if hosting the FIFA World Cup is worth it is due to a lot of criticism from people of the former hosts, like South Africa and Brazil.

There were mass protests in Brazil four years ago because of the amount of money which was being spent on the tournament in an economy which was struggling.

It is essential to ask this question especially when a developing country hosts a country in the hope that it would boost economic development.

We'll look into the previous two editions of the world cup in Brazil and South Africa to see what effects it had before we look into what Russia stands to gain (or lose) from doing so.

South Africa

South Africa World Cup

South Africa became the first African nation to host the world cup.

First of all, we will talk about the positives. This world cup helped put not only South Africa but the whole continent of Africa on the map.

The world has realised that Africa is not an impoverished continent, it is a continent with a lot of potential, wealth and beauty.

Over $3 billion, and it on the World Cup. FIFA made over $2 Billion in revenue in 2014.

The government of South Africa reported that the tournament contributed over $500 million for the country´s GDP and benefits worth almost $1 Billion for South African households.

But this study, explains why these numbers are disputable and did not have any real benefit to South Africans.

The Country spent an estimated $1.7 billion on infrastructures like airports, train station transportation, roads, and safety.

This created 40,000 new jobs for police officers, who were still in employment two years after the World Cup.

However, most of the development occurred next to low-crime areas to attract tourists.

Tourism contributed to over 1 million jobs and attracted an estimated 300,000 foreign fans and tourists which was well under the expected 450,000.

Stadiums Lying Abandoned and Unused

Average attendance in most of the games, in their Football league, called ABSA premiership is 5000.

The Iconic green point stadium, which is in Capetown was constructed at a cost of $600 million, it lies abandoned except for the occasional use for concerts which saw attendances of less than 10% of its capacity.

This stadium loses an estimated $6-10 million annually.

The authorities in Cape Town suggested to FIFA that a rugby stadium called Athlone Stadium could be renovated and it could benefit the surrounding impoverished area called Cape Flats.

The same thing happened in Durban, where a 55,000 seater stadium was offered to FIFA after a potential renovation which would not have cost a lot of money.

FIFA rejected these proposals and instead insisted on the construction of 2 stadiums at the cost of $600 million and $380 million respectively.

The rugby team refused to use this new stadium after the World Cup because they couldn’t afford the high rent.

It is estimated that $1.8 billion was used to construct or renovate stadiums.

It was estimated that the cost for doing this would be around $800 million.

It was later found that many construction companies colluded in bid rigging to push up this price by an estimated $400 million.

Brazil

Brazil World Cup

It is estimated the world cup in Brazil cost almost four times more than South Africa at with an estimated cost of $11.2 billion.

There were several protests in Brazil before the start of the world cup, a lot of people were evicted from their homes for world cup preparations.

Carlos Braga is a Brazilian professor of international political economy in IMD in Laussane.

He said that that the world cup had minimal effects in stimulating the Brazilian economy.

A lot of the light rail projects weren’t completed, even a year after the world cup ended.

The most expensive stadium which was built for $550 million in Brasilia, was lying abandoned and used as a parking lot.

It was being used for children’s birthday parties. The reason for this was most of these stadiums were built in remote areas.

Most of the local teams did not have enough following in these areas and did not even play in the top tier of the Brazilian football pyramid.

Another stadium which is located in Cuiaba was built for $215 million was closed due to ‘emergency repairs.

Russia

Being the host country allows you to be qualified without playing which is good.

But:

The current world cup is the most expensive edition yet and costs over $14 billion.

The Russian government predicts that the world cup will add between $26 million to $30 million to the GDP between 2013 and 2023.

However, Moody, a famous, financial rating agency, has said that this world cup will have a minimal economic impact on the Russian economy.

Again, Russia faces the same problems of watching their newly built stadiums going into a loss because a lot of them are made in cities with minor football teams where attendances are very low.

Another criticism that can be directed at FIFA is that they don't allow local businesses to sell merchandise or food within a 2 km radius around the stadiums.

Only official FIFA vendors can conduct within this zone called the ‘Area of Exclusivity'.

It costs over $5000 to apply for this license, which is beyond the reach of most small businesses in most developing economies like South Africa, Brazil or Russia.

So Is It Worth To Host a World Cup?

Well, it's not all gloom and doom.

Hosting a World Cup improves a country´s image internationally, it helps provide employment and a small boost to, the economy, and it spreads happiness and prestige amongst the people.

The 1994 world cup contributed towards the development of football’s (or shall we say soccer’s?) development in the United States with the beginning of the MLS.

The United States has one of the best women’s teams in the world and their youth teams are also pretty talented with the sport gaining popularity among young people.

So, putting money aside, yes, it's definitely worth to host the World Cup!

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Oliver

Oliver is by profession a financial trader and spends his days predicting financial markets but in his free time enjoys watching sporting events like horse racing and European football.

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