World Cup economics: winners, losers and big money
What is the biggest sporting event in the world? The Olympics? No! The Super Bowl? No! The FIFA Men’s World Cup? Yes! Soccer, or real football, is the most popular sport in the world. According to various sources, the Super Bowl draws around 100 million viewers, the Olympic Games draw about 2 billion, and the FIFA World Cup (soccer) is watched by around 3.5 billion people — almost half the planet. This is not counting people around the world who have no access to television, watch it on public screens and listen to the commentary on radio.
While the Super Bowl is primarily U.S fans watching one sport (American “football” — why do we call it that?), the Olympic Games is multiple sports involving multiple countries, and the World Cup is one sport (real football because it is played with the feet) involving multiple nations. With almost two years of qualifying for the finals with a couple of hundred teams competing, it far outstrips the Olympics in terms of interest, attendance and television viewers.
FIFA stands for Federation Internationale de Football Association. Yes, that’s French for International Federation Football Association, which in English would make it IFFA, just doesn’t roll of the tongue like FIFA.
Evidence suggests that as countries literally build up to the World Cup, there are significant construction costs to build stadiums and update infrastructure as well as living facilities for players and tourists alike. For example, South Africa, which hosted in 2010, and Brazil, which hosted in 2014, updated and built new facilities, many of which after the World Cup remain empty and unused, even though they have to be maintained. During the World Cup, tourists come in droves and after they leave, there is a certain emptiness that prevails.
The World Cup is one sport only, played over several weeks. Prior to the final 32 teams competing there are elimination matches over several months. There is television viewership, advertising, compensation to the players and nations, and funds expended to build stadiums, revenue generated from numerous activities such as tourism and ancillary activities which generate additional income.
According to Robert Baade and Victor Matheson in “The Quest for the Cup: Assessing the Economic Impact of the World Cup,” hosting the World Cup is expensive. The co-hosts of the 2002 games, Japan and South Korea, spent a combined $4 billion building new facilities or refurbishing old facilities in preparation for the event. Post-event analysis of the 1994 World Cup held in the United States suggests that the economic impact of the event cannot justify this magnitude of expenditures and that host cities experienced cumulative losses of $5.5 to $9.3 billion as opposed to pre-event estimates of a $4 billion gain hyped by event promoters.
In summary, economic impact benefits include a boost in the construction industry, inflows of tourism funds that impact retail, hotels and more, and the burden of the cost of safety and security, cleanup and non-used facilities after the event is over. Potential hosts should consider whether the World Cup is an honor or a burden. The real honor of winning the World Cup is in winning the $42 million dollars for the 2022 tournament, while not hosting; even the teams who simply (I use that word loosely because qualifying is not easy) qualify each receive $9 million!
Now, just in case you are interested, who will win it all? My prediction is, USA! USA! USA! That said, we all know that economists are not very good predictors.
Kojo Quartey is president of Monroe County Community College and an economist.
This article originally appeared on The Monroe News: Kojo Quartey: World Cup economics: winners, losers and big money
