Benefits of Hosting the World Cup: A Case Study of Brazil

Every few years, countries around the world engage in a fierce round of competition to host the FIFA World Cup. Aside from the global prestige, many nations believe strongly in the Cup’s capacity to attract massive revenue streams to tourism, transportation and retail sectors and spur modernization.

In order to attract such economic growth, host nations must first invest enormous sums in infrastructure development. The costs of covering these upgrades can be staggering. While Germany spent $1.87 billion on stadiums for the 2006 World Cup and South Africa spent $1.48 billion on arenas, Brazil stands to spend approximately $3.68 billion on modernization and construction of various facilities.TIME estimates that by next year’s games, the state will have invested over $14 billion in the World Cup.

Some commentators claim that sporting events like the World Cup have net or negative benefits for their host countries rather than the positive benefits that public officials frequently tout. Inspecting the post-World Cup trajectories of many former host nations, these critics may have a point.

According to CNN, “eight of the 10 stadiums built or renovated in Japan for the 2002 World Cup lose between $2 million and $6 million a year, the balance of which is picked up by Japanese taxpayers.”

Initial gains in hospitality-related sectors are often short-lived. While events coordinated for the benefit of tourists do provide jobs, these frequently low-paid, temporary positions, which do not foster skill development, are not the solution to the unemployment crisis plaguing many developing nations.

In unequal societies, the impacts of any economic gain may be concentrated among small segments of the population. Inequitable distribution of wealth and lavish spending on the World Cup lead thousands of South Africans to march in Durban over 4 years ago protest FIFA and government spending on the World Cup,

Now history repeats itself in Brazil, a country that is also sharply divided along race and class lines.

In the 2012 Human Development Index, Brazil ranked 85th out of 186 countries. As a society with high levels of inequality, poverty and uneven social cohesion, the soaring costs of Brazil’s World Cup expenditures have sparked an uproar among its citizens.

Hundreds of thousands of Brazilians in over 25 cities have taken to the streets to protest the exorbitant spending on the World Cup, high taxes, corruption and a lack of infrastructure maintenance or quality provision of public goods like education and healthcare.

The protests may threaten President Dilma Rousseff’s re-election prospects next year. A recent Datafolha poll put her approval rating at 57%, a marked decline from her 65% approval rating this March. Considering that former President Lula de Silva left office with an 83% approval rating, Rousseff’s continually slipping approval rating show she is not faring well with Brazilian voters. However, she has publicly supported the protests as a sign of the democracy’s vitality and pledges to work towards easing social tensions and improving services.

Despite Rousseff’s promises, even if investments in events like the World Cup fail to pay off, they often cast a long and terrible shadow over host nations’ economies. Numerous economists and policy analysts have speculated that the massive costs associated with the 2004 Athens Olympics may have triggered Greece’s economic decline. It is imperative that future host nations tread carefully in consideration of their deficits before pursuing such large-scale ventures. 

Akinyi OchiengComment