USA TODAY International Edition
World Cup isn’t all fun, games for host nations
With all the excitement around the World Cup, it may seem like hosting the matches should be a goal for any country looking to attract visitors who will spend money. But does the move pay off economically?
On June 13, the United States won the right to host the 2026 World Cup with Canada and Mexico. Months prior, the alliance of the three nations – dubbed the “United Bid” – published dazzling figures: $5 billion in short-term economic activity for the continent, 40,000 jobs, new tourists – backed by a study from The Boston Consulting Group.
Sound good?
Well, not so fast, said Dennis Coates, an economist and professor at the University of Maryland, Baltimore County.
“We’re not going to be any richer or any healthier as a country,” Coates said. “We’re throwing a party.”
Though the World Cup does bring in various forms of economic activity for host nations, that growth is marginal for a multitrillion-dollar economy such as the U.S., he said. ❚ A win for tourism? On the surface, the World Cup looks like a boon for the tourism industry of any host nation. For example, Brazil – which hosted the event in 2014 – welcomed more than 1 million foreigners to watch soccer, according to the Brazilian Ministry of Tourism.
Yet air travel trends suggest the World Cup hurts travelers’ desires to visit a host country during the time of the event. The Brazilian Airline Association reported that Brazil experienced a decrease in traffic of 11 to 15 percent in June 2014 compared with June 2013, according to The Oxford Handbook of Megaproject Management.
Many travelers who would otherwise visit a country won’t want to during the World Cup due to congestion and heightened prices, according to Andrew Zimbalist, an economist and professor at Smith College.
“In the dynamic sense, it doesn’t help tourism at all,” Zimbalist said. “It hurts tourism when you displace normal tourists with soccer tourists.”
❚ Big infrastructure costs: Construction of stadiums is one of the largest costs incurred by World Cup host nations.
For the 2010 World Cup, South Africa had to spend roughly $1.5 billion to renovate five stadiums and construct five new ones. Brazil nearly doubled that amount in 2014. And for this year’s World Cup, Russia spent $4.3 billion on stadiums.
Additionally, after the World Cup is over, some stadiums that had cost millions to construct remain unused, such as the Arena da Amazonia in Manaus, Brazil.
The United Bid isn’t expected to face similar challenges. The bid proposed 23 cities – almost all of which have soccer stadiums – across the U.S., Canada and Mexico. FIFA – the group that serves as the governing body of international soccer – will select 16 from the list.
“They already have great stadiums, so there’s no need to pay to build anything,” said Simon Kuper, co-author of “Soccernomics,” a book about the intersection of soccer and economics.
❚ State and local spending: State and local governments end up bearing a lot of the cost of hosting the World Cup.
First, they need to provide increased security.
With large amounts of people concentrated into a small area, the likelihood of a terrorist attack increases. This proved to be the case in the 1996 Centennial Olympic Park bombing in Atlanta, where domestic terrorist Eric Robert Rudolph set off a blast that killed one person and injured 111.
To combat potential terror threats, local governments within each host city will have to dish out a lot of cash on enhanced security measures to keep spectators safe.
For example, in Brazil, stationing additional police forces and improving security technology cost the nation as a whole more than $1 billion.
World Cup host nations also must focus on the maintenance of their cities where matches are held.
With public funds, municipalities typically fix potential eyesores such as potholes and step up services such as trash collection.
This beautification of certain places – roads near the airport, hotels and stadiums – might be “misdirected public spending,” Coates said.
Instead, he argues that it would be more beneficial for the U.S. to focus on maintenance in places that need it most, such as industrial sectors.
❚ Job creation: From construction to maintenance to staffers at games, any World Cup contains numerous tasks that require more workers. In the 2006 World Cup, host nation Germany created 50,000 new jobs to support the event.
According to Zimbalist, though, these jobs might actually make it harder for governments to create more jobs in the future.
“Most of the jobs will be built on debt, (which) has to be paid back,” he said. “Even if you are creating a few extra jobs today, in the future the city will have less money to issue debt to build other things.”