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How has the economy of the countries that hosted World Cups changed?


The World Cup is perhaps the most popular tournament. But this does not translate into profits for all the countries hosting World Cups.

"When Argentina plays, the whole country unites," says an Argentine fan 3:16

(CNN Spanish) --

The FIFA World Cup is "probably" the most popular sporting event in the world and, as the soccer governing body itself says, "the most prestigious tournament on the planet."

It is not surprising that, due to the massiveness of this event, many countries want to host the World Cup every four years that it takes place, as it can mean not only a great image promotion for the host nations, but also a major boost to the economy.

However, the latter is not the same for all hosts.

Although it is true that the World Cup projects the image of a country on the international stage (more than three million people have attended the matches of each cup since Germany 2006, according to FIFA), organizing it does not always mean economic growth and can even be in negative numbers.

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According to the academic article "Comparing the Urban Impacts of the FIFA World Cup and Olympic Games From 2010 to 2016", published in 2018 by the peer-reviewed

Journal of Sport and Social Issues

, the host countries of mega-events such as the FIFA World Cup World spend an average of US$ 10,000 million to make material changes in cities, from the construction or remodeling of stadiums and roads, to the adoption of new technologies and the creation of airports or new means of transportation.

This figure, however, changes if we examine the World Cups on a case-by-case basis.

From Germany 2006 to Qatar 2022, investment has varied and not all countries have found it profitable to host this event.


Although each host nation of the World Cup receives negative impacts after the event, the academic article points out, some countries did not see an economic boost with the cup, to a large extent, due to the lack of planning for the tournament as an event to grow in the medium and long term. , said Gerardo Molina, CEO of the company specialized in sports and marketing Euromericas Sport Marketing, in an interview with CNN.

The economic impact of the World Cups on the host countries

Molina mentioned that in the economic impact of the world cups there are always two fundamental pillars: FIFA and the countries that host the tournament.

On the one hand, FIFA is the organizing entity of the tournament and in each World Cup it has a planned expense for its operation, which on all occasions is many times less than the expenses made by the host country, as mentioned in the analysis in the

Journal of Sport and Social Issues article.

For example, the CEO pointed out that FIFA's operating spending on each World Cup is usually around US$1.6 billion, which coincides with the budget of US$1.696 million for Qatar 2022 that the soccer governing body has forecast since 2020.

In contrast, data from Euromericas Sport Marketing indicates that Qatar's total investment to hold its World Cup is estimated at US$ 190,000 million, which would make it the most expensive in history to date, according to Molina.

The above indicates that, no matter how much the host spends, a World Cup is always business for FIFA.

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"FIFA, as the organizing body, has all the sports rights. It has the audiovisual rights, the television rights, the digital rights, the license rights, it has in its possession the right to tickets, the


rights , the official use of the emblem official tournament. So, FIFA has a preponderance over the host country and has always had a surplus. This is: for FIFA, the World Cup is profitable in all cases," added Molina.

Now, in the second fundamental pillar, we have the host countries.

As we have already seen, they always end up spending more than FIFA.

But for whom and for whom was it not profitable?

1) World Cup in Germany 2006

Germany was the host of the World Cup in 2006, the year in which Italy was crowned and the host came in third place.

According to figures from Euromericas Sport Marketing, Germany invested US$4.2 billion for its World Cup, of which it was able to recover US$4.100.

However, the World Cup ended up being extremely profitable for the European country, since FIFA gives 5% of its profits in the cup to the host countries, with which Germany even had a surplus.

(Molina indicates that the 5% that FIFA gives to the country includes a percentage of the tickets to the stadiums, another for taxes on prizes and one more simply for being hosts).

The success in German territory was due, according to the CEO, to the good organization of the tournament and planning in the medium and long term.

Since there was already a sports infrastructure, only minor modifications were made (with which there was little expense) and the strategy focused on promoting the brand of Germany as a country to attract tourism.

"Tourism increased in the country by 25% in the following 10 years, with which Germany is a World Cup that can be said to be victorious, an exemplary World Cup in terms of its organization," Molina declared.

2) World Cup in South Africa 2010

South Africa was the 2010 World Cup and the first African country to host this tournament, both in the men's and women's categories.

The winner was Spain, while the host country stayed in the group stage.

In this case, it was an unprofitable World Cup for the country, according to Euromericas Sport Marketing, since, contrary to Germany, they did not have sufficient sports, road and mobility infrastructure, for which they had to invest more in that aspect.

According to the company's data, South Africa invested some US$6.9 billion for the World Cup.

The strong point for the African country, as well as for all the hosts of the World Cup, was tourism;

however, the profit here was $440 million, below expectations, the CEO said.

The rest that the African nation managed to recover was for the 5% that FIFA gave it.

"Actually, South Africa aimed at the world image and the new works and providing short-term employment, it generated a lot of short-term employment that could not be sustained over time. As often happens in underdeveloped countries, the large stadiums and large infrastructures remain unused In other words, they do not find a business plan so that these stadiums have a level of competitiveness for not only soccer teams that can use them, but also that they are used in terms of shows, events, that have a true post-world utility. "Molina said.

"For this reason, South Africa is classified as the World Cup with the greatest loss of those that FIFA has carried out to date. It is the worst World Cup of all in terms of the economy and in terms of the situation of impact on the economy later," he added.

3) World Cup in Brazil 2014

In 2014, the World Cup returned to Brazil, after the one organized in 1950 with the memory of the "Maracanazo" in the background.

Despite their efforts, the five-time world champions stayed in the semifinal with a scandalous 7-1 defeat in the semifinals against Germany, which ended up being the champion country.

As in the case of South Africa, Brazil 2014 could not be profitable due to similar problems as those of the African country.

Despite the large number of tourists in Brazil (the World Cup with the greatest impact in this area to date), "it was not profitable like the one in South Africa due to excessive expenses and the lack of foresight that income from tourism can give , hotels, food, which are the main items with which you make an income.

"The most criticized in South Africa and in Brazil was the use, for example, of the post-world stadiums. Brazil has two stadiums practically made in an area where there are no big teams or in areas where it was thought to bring tourism, but to In the long term, they ended up being white elephants", that is, projects that were forgotten, commented Molina.

According to data from Euromericas Sport Marketing, Brazil's spending on its World Cup amounted to some US$28,000 million, well above what countries had spent in previous cups and of which they were only able to recover US$9,500 million plus US$7,000. millions in taxes.

That is, it was not profitable.

The analysis done in the article "Comparing the Urban Impacts of the FIFA World Cup and Olympic Games From 2010 to 2016" shows that in both South Africa and Brazil a lot of infrastructure was built, but then left unused, in addition to a lot of public investment and yet, the event did not work as a catalyst or impulse for the economy of both countries.

4) Russia World Cup 2018

In 2018, Russia hosted its first FIFA World Cup, in which it was able to advance to the quarter-finals.

The winner was France after beating Croatia 4-2 (country that eliminated the Russians in the quarterfinals).

According to Euromericas Sport Marketing, Russia once again had an economically profitable World Cup: the country invested US$16,000 million, of which it was able to recover US$14,000 million.

It ended up being a viable tournament thanks to the 5% granted by FIFA.

"Russia is a World Cup that was quite austere, a successful World Cup with an economic surplus. The country aimed more than anything at the impact on its world position and an impact more than anything on image. It was a World Cup that was practically balanced in terms of what was invested and what was earned," Molina explained.

Likewise, Molina indicated that in his company they estimate that, in the six months after their World Cups, both Germany and Russia had an average GDP growth of 1.7%, which later falls to 1 or 1.3%.

In South Africa and Brazil it was the opposite, as GDP fell months after the tournament, he added.

5) World Cup in Qatar 2022

Qatar is the first Arab country to host a FIFA World Cup.

This Sunday the final is played, where Argentina and France (which is going for the two-time championship) will fight to obtain their third international title.

As mentioned above, Qatar 2022 is already considered the most expensive World Cup in history for the estimated US$ 190,000 million that the Qatari government is estimated to have invested.

This high expense was "because he made all the new stadiums with a lot of infrastructure, with a lot of technology, very expensive; he had remodeling of his airport, generation of many routes to connect the areas that are desert; generation of hotels and field infrastructure that were set up for hostels and hotels; he built a new subway, he built the entire telecommunications system to be able to broadcast all the games to the whole world," said Molina.

The World Cup in Qatar has been embroiled in controversies related to human rights, alleged bribery for the election of the venue, and even with workers who helped build the infrastructure and are now struggling to survive.

This will have a negative impact on earnings, since, according to data from Euromericas Sport Marketing, the arrival of tourists was lower than expected.

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Despite all this, it is likely that this World Cup will end up being positive for Qatar, since it has not only opened up to the eyes of the world, but also has a long-term plan for the use of all sports infrastructure, from a restructuring of its soccer league to the attraction of other sports such as tennis, added the CEO of the company.

Was Qatar profitable or not?

On what terms?

Like everything in life, only time will tell.


Source: cnnespanol

All news articles on 2022-12-17

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