Weighing the Costs of the World Cup

Posted in 2012 Globalization Column The Gnovis Blog  |  Tagged , , , , , ,

The FIFA World Cup, along with the Olympic Games, is one of the few truly global entertainment events, with the largest worldwide viewing audience for a sporting event and over 200 countries from every populated continent competing to qualify every four years.
The planning, structure, and production of the month-long tournament have both positive and negative economic effects on productivity, tourism, media exposure, job creation, and public spending, among other issues. What is not often highlighted in discussions on the World Cup is the immense cultural value attributed to the event, both as a unifying tradition and as a chance to showcase distinct national identities on the global stage with less focus on political, economic, and social imbalances.
Final estimates on the total spent by South Africa to host the 2010 World Cup ranged between $3.94 billion and $4.6 billion (Cohen). Only 309,000 foreigners attended (less than 70% of early projections), and the predicted 0.3% to 0.5% increase in the country’s gross domestic product failed to materialize. FIFA came under harsh criticism for announcing record profits of $631 million in 2010 and $4.19 billion over the course of the four-year financial cycle associated with the event, a 59% increase over the 2006 World Cup, and their perceived disregard for native citizens and enterprises led to accusations of exploitation (“FIFA Reports,” Bolsmann). Tickets were priced at unaffordable levels in comparison to the country’s average income of $3 a day and were initially sold online, despite the fact that less than 10% of the population had internet access at the time. FIFA monopolized merchandise sales and services around the stadia, and even the tournament’s official mascot, Zakumi, was mass-produced in Shanghai.
In light of these underwhelming economic results, how can South Africa’s decision to host be justified? Were the international exposure and boost in national morale worth the immense costs? Sporting events at this level often fail to meet financial expectations (the Olympics have been similarly critiqued for leaving host countries with staggering debt), so clearly there are other factors driving the desire to play host. When South Africa was selected to host the 2010 World Cup, it was a momentous occasion. President Jacob Zuma summed it up nicely: “For four weeks…South Africa will be the center of the world…The eyes of billions of television viewers, millions of international visitors and the cream of the world’s sporting media will be focused on the southern tip of Africa. We don’t aim to disappoint” (“2010 FIFA World Cup”). It was an opportunity to defy expectations (such as speculation that the country was not fit to host in the first place), and to overcome the last remnants of international scorn remaining from apartheid. If nothing else, these issues of national identity complicate assigning the tournament a single objective value.
As Brazil gears up to host the 2014 World Cup, critics have already begun to condemn the excessive economic costs: early reports estimate around $13 billion, over three times what South Africa spent. But what are the unacknowledged benefits that will continue to accrue long after the last match has ended? Brazil is quickly emerging as one of the most powerful developing markets in the world, and chances are that when all is said and done the impact will be much greater than economic costs and profits.

  • “2010 FIFA World Cup South Africa.” SouthAfrica.info. South African Government, n.d. Web. 2 Feb. 2012.
  • Bolsmann, Chris. “Is the World Cup Bad for South Africa?” Harvard Business Review. Harvard Business School Publishing, 10 Jun. 2010. Web. 3 Feb. 2012.
  • Cohen, Mike. “The World Cup: No Winner in South Africa.” Bloomberg Businessweek. Bloomberg, 1 Apr. 2010. Web. 5 Feb. 2012.
  • “FIFA Reports $631-m Profit on 2010 World Cup.” Jamaica Observer. Jamaica Observer, 5 Mar. 2011. Web. 5 Feb. 2012.