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Economics of the FIFA World Cup

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The FIFA World Cup is said to have a significant impact on the host country's economy.

Statistics

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Costs of World Cups
Edition Host(s) General cost (US
billions)
2022   Qatar $200[1]
2018   Russia $16[2]
2014   Brazil $19.7[3]
2010   South Africa $7.2[4][5]
2006   Germany $5.2[6][7][8]
2002   Japan
  South Korea 		$7[9]
1998   France $2.85[10]
1994   United States $0.5[11]
1990   Italy $4[12]
1982   Spain $0.44[13]
1978   Argentina $2.7[14]
1974   Germany $0.65[15]
1970   Mexico $0.07[16]

Italy (1990)

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United States (1994)

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in the United States was, as usual, hosted in a number of cities. In Los Angeles, site of the final, there was a total economic profit of $623 million that went directly into the metropolitan economy.[citation needed] In comparison, in the same year the Super Bowl only accounted for $182 million (Nodell). These figures were calculated over just the one-month period in which these games took place. In California alone, reports from the Pasadena Convention and Visitors Bureau conclude that 1,700 part-time jobs became available during the preparation and duration of the event (Deady). New York City, San Francisco, and Boston received combined revenue of $1.045 billion.[17] The overall increases from the previous year on hotels and on food and beverages were 10% and 15%.[18] This money spent on hotels and restaurants helped the entire U.S. economy.

In addition to the direct impacts of the 1994 World Cup, there were also indirect impacts: in order to host the Cup the United States had to develop a national soccer league, resulting in the formation of Major League Soccer (MLS) in 1996. Construction of new facilities, sponsorship of new teams, and the revenue of the ticket sales all resulted in economic boosts. The newly introduced professional league engendered one of the fastest growing youth sports in the country. Youth soccer took off and the selling of apparel and gear for the sport was an opportunity for private businesses.[19]

France (1998)

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South Korea / Japan (2002)

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In the 2002 World Cup, several other advantages were discovered when the competition was split between Japan and Korea. This was the first time the tournament had been hosted in two countries, with 32 matches played in each country and a total of 64 matches.[citation needed] With the three million live spectators ticket sales were 1.2 billion dollars. FIFA promised each country $110 million for hosting and all revenue from their ticket sales.[20] Each country expanded their 20 soccer facilities, with a total investment of $4.7 billion.[20] A host country can also see value in the national exposure, with so many people viewing and attending the event.

It was predicted prior to the 2002 Cup that the England team's absence[clarification needed] would cost the economy $4.7 billion in lost output, or about 0.3% of their GDP (Gross Domestic Product) were they to win the entire tournament. Should the England team lose in just the first two weeks however, the losses were only expected to reach a total of 1.8 billion.[citation needed]

Germany (2006)

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The 2006 World Cup was judged a success comparable to that of the 1994 US World Cup.[citation needed] The German government reported that tourism revenue over the month of the World Cup was up roughly 400 million dollars. They made about 3 billion more dollars in retail such as jerseys and other paraphernalia regarding the Cup. Lastly, a reported 500,000 new jobs were yielded in preparation for the tournament. This impact sends ripples through an economy. Restaurants and bars were full to capacity at all hours of the tournament, and 15 million more spectators arrived in Germany than was expected.[21]

This success drew attention to the German professional league, the Bundesliga.[citation needed] As a result, sales of tickets and team paraphernalia have increased dramatically. Many global corporations witnessed the craze in Germany during the World Cup and in recognizing the country's passion for the sport they have begun to sponsor many more German teams than prior to 2006. The global viewing of Bundesliga games has increased as well, helping these sponsors and German telecasters the profits they were expecting.[citation needed]

The 2006 World Cup had an operating budget (for staging the event, not inclusive of capital infrastructure costs) of €425 million. The German Football Association announced a profit before tax of €135 million. After tax and repaying the FIFA contribution of €40.8 million - the net profit was €56.6 million which was distributed to the German Football Association and the German Football League.[22]

For Germany 2006 that the host country was entitled to the gross receipts of all ticket sales. In October 2007 FIFA announced : reassumed responsibility for ticket sales and will establish a company named '2010 FIFA World Cup Ticketing Ltd' to this end.".[23]

South Africa (2010)

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The 2010 FIFA World Cup was held in South Africa, for the first time in the tournament's history. Even though it may not have attracted as many foreign visitors as the US and Germany World Cups, it did have an economic benefit due to the location and already emerging economy.[citation needed]

Any predictions about the economic impact of the 2010 FIFA World Cup on South Africa had to take into account the state of the South African economy, which still has one of the largest disparities between the rich and the poor.[citation needed] One main factor for South Africa is attracting international investors. To increase the international trade and foreign direct investment, South Africa must have stability throughout their whole region in their economy and government. If this is achieved then South Africa could be in the top choices for foreign direct investment and collect the potential benefits of the 2010 FIFA games.[24] Because FIFA gathers all of its finances through marketing tournaments such as the World Cup, they aim to ensure the event's success, and assist the hosting country accordingly. Since South Africa is still a developing country, FIFA will have an important role in funding the tournament. Along with other developing countries that host mega-events, the investment of larger capital investment is required.[24]

The projected[clarification needed] total direct economic value for GDP is approximately R 21.3 billion. Also, 159,000 new jobs are predicted, including full- and part- time jobs, both permanent and temporary. The government also plans to spend millions on upgrading stadiums and building a new international airport. The tournament will host 32 teams with an average of 50 people per team, 14,500 VIPs and dignitaries, 500 officials and 10,500 media. A projected number of half a million foreign visitors (located outside of Africa) are expected and staying an average of 15 days.[25]

Brazil (2014)

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In 2014, the FIFA World Cup was hosted in Brazil. This decision was based on location and close evaluation through various economical models. After years of unnecessary construction, eminent domain and countless protests, Brazil was found to be in a worse state than before. Costs of the tournament totalled $11.6 billion,[26] making it the most expensive World Cup to date,[27] until surpassed by 2018 FIFA World Cup which cost an estimated $14.2 billion.[28] FIFA was expected to spend US$2 billion on staging the finals,[29] with its greatest single expense being the US$576 million prize money pot. That money could have been allocated to other departments of the inner communities of this country including health care and education to name a few.

Russia (2018)

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Russia's official budget of 678 billion rubles spent on projects for the tournament is less than the $15bn spent by Brazil on the 2014 World Cup. FIFA has budgeted spending $791m on teams and players - including prize money, compensation, insurance for players injured on national-team duty, and the preparation costs for the 32 featured teams.[30]

2018/2022 World Cup winning bids

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On 2 December 2010, Russia and Qatar were awarded the 2018 and 2022 World Cups, respectively.

The United States was a bidder for the 2018 and 2022 World Cups, although questions were being raised about the US bid and whether its economic impact on the US would in fact be as favorable as promised.[31] A new report argues that the US World Cup in 1994 lost billions of dollars despite a positive economic impact estimate, noted that the same company is creating the estimate for the current bid, and predicts that a 2022 US World Cup could again lose billions of dollars in lost in revenue.[31]

References

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  1. ^ "Qatar shelled out $200 bln on arrangements for FIFA World Cup, says envoy". Retrieved 2023-10-20.
  2. ^ Fett, Matthias (2020-07-02). "The game has changed – a systematic approach to classify FIFA World Cups". International Journal of Sport Policy and Politics. 12 (3): 455–470. doi:10.1080/19406940.2020.1784978. ISSN 1940-6940. S2CID 221714908.
  3. ^ Fett, Matthias (2020-07-02). "The game has changed – a systematic approach to classify FIFA World Cups". International Journal of Sport Policy and Politics. 12 (3): 455–470. doi:10.1080/19406940.2020.1784978. ISSN 1940-6940. S2CID 221714908.
  4. ^ Du Plessis, S. and Venter, C. 2010. The home team scores! A first assessment of the economic impact of World Cup 2010. Stellenbosch Economic Working Papers: 21/10.]
  5. ^ Fett, Matthias (2020-07-02). "The game has changed – a systematic approach to classify FIFA World Cups". International Journal of Sport Policy and Politics. 12 (3): 455–470. doi:10.1080/19406940.2020.1784978. ISSN 1940-6940. S2CID 221714908.
  6. ^ Fett, Matthias (2020-07-02). "The game has changed – a systematic approach to classify FIFA World Cups". International Journal of Sport Policy and Politics. 12 (3): 455–470. doi:10.1080/19406940.2020.1784978. ISSN 1940-6940. S2CID 221714908.
  7. ^ Büttner, N., Maennig, W., and Messner, M. 2007. Relationships between investments costs for infrastructure and for sport stadia: the case of the World Cup 2006 in Germany (Working Paper Series, Paper No. 07-04)]
  8. ^ Fett, Matthias (2022-12-20). "(S+) Formel zu Kosten und Nutzen von Fußballweltmeisterschaften: yi,t = α + βDi,t + γXi,t + ϕ FIFA WMi,t + εi,t". Der Spiegel (in German). ISSN 2195-1349. Retrieved 2023-01-03.
  9. ^ Struck, Doug (29 June 2002). "Hosts Left to Foot World Cup Bill". Washington Post.
  10. ^ Fett, Matthias (2022-12-20). "(S+) Formel zu Kosten und Nutzen von Fußballweltmeisterschaften: yi,t = α + βDi,t + γXi,t + ϕ FIFA WMi,t + εi,t". Der Spiegel (in German). ISSN 2195-1349. Retrieved 2023-01-03.
  11. ^ Fett, Matthias (2022-12-20). "(S+) Formel zu Kosten und Nutzen von Fußballweltmeisterschaften: yi,t = α + βDi,t + γXi,t + ϕ FIFA WMi,t + εi,t". Der Spiegel (in German). ISSN 2195-1349. Retrieved 2023-01-03.
  12. ^ Fett, Matthias (2022-12-20). "(S+) Formel zu Kosten und Nutzen von Fußballweltmeisterschaften: yi,t = α + βDi,t + γXi,t + ϕ FIFA WMi,t + εi,t". Der Spiegel (in German). ISSN 2195-1349. Retrieved 2023-01-03.
  13. ^ Fett, Matthias (2020-07-02). "The game has changed – a systematic approach to classify FIFA World Cups". International Journal of Sport Policy and Politics. 12 (3): 455–470. doi:10.1080/19406940.2020.1784978. ISSN 1940-6940. S2CID 221714908.
  14. ^ Fett, Matthias (2020-07-02). "The game has changed – a systematic approach to classify FIFA World Cups". International Journal of Sport Policy and Politics. 12 (3): 455–470. doi:10.1080/19406940.2020.1784978. ISSN 1940-6940. S2CID 221714908.
  15. ^ Fett, Matthias (2020-07-02). "The game has changed – a systematic approach to classify FIFA World Cups". International Journal of Sport Policy and Politics. 12 (3): 455–470. doi:10.1080/19406940.2020.1784978. ISSN 1940-6940. S2CID 221714908.
  16. ^ Fett, Matthias (2020-07-02). "The game has changed – a systematic approach to classify FIFA World Cups". International Journal of Sport Policy and Politics. 12 (3): 455–470. doi:10.1080/19406940.2020.1784978. ISSN 1940-6940. S2CID 221714908.
  17. ^ Nodell, Bobbi (14 June 1993). "Tourism industry to be real winner at World Cup – Special Report: Tourism" (Reprinted at Find Articles). Los Angeles Business Journal.
  18. ^ Keegan, Peter O. (27 June 1994). "Let the games begin: NJ welcomes World Games" (Reprinted at Find Articles). Nation’s Restaurant News.
  19. ^ Deady, Tim (25 July 1994). "World Cup gives boost to local economy but hoteliers fall short" (Reprinted at Find Articles). Los Angeles Business Journal.
  20. ^ a b "Economic doubts about World Cup- World Cup". Business Asia. May 2002. Retrieved 1 May 2008.
  21. ^ "Germany's World Cup Report Hails Economic, Social Success". Deutsche Welle. 7 December 2006. Retrieved 1 May 2008..
  22. ^ "HM Treasury - Hosting the World Cup: A Feasibility Study" (PDF). February 2007. Archived from the original (PDF) on 15 October 2009. Retrieved 3 May 2010..
  23. ^ "Rotation ends in 2018". 29 October 2007. Archived from the original on 1 November 2007. Retrieved 3 May 2010..
  24. ^ a b Bohlmann, Heinrich (May 2006). "Predicting the Economic Impact of the 2010 FIFA World Cup on South Africa" (PDF). Department of Economics Working Paper Series. Department of Economics, University of Pretoria. Archived from the original (PDF) on 2011-07-28. Retrieved 1 May 2008..
  25. ^ Bailey, Gary (December 2006). "2010 with Gary Bailey". ELan Investor Club Official Newsletter (14). Archived from the original on 2012-07-31. Retrieved 1 May 2008..
  26. ^ FIFA.com
  27. ^ "World Cup set to be most lucrative ever". ESPN. 23 May 2014.
  28. ^ Непредвиденные расходы: как менялась смета ЧМ-2018 08 ИЮН, 07:01, RBC
  29. ^ Dunbar, Graham (22 May 2014). "Record World Cup numbers game for FIFA, Brazil". USA Today.
  30. ^ "Fifa likely to beat profit _target with Russia World Cup – Gains probable despite sponsorship struggles for what is overwhelmingly the main source of income for the world governing body of football". The National. June 12, 2018. Retrieved January 1, 2019.
  31. ^ a b Coates, Dennis. "World Cup Economics: What Americans Need to Know about a US World Cup Bid" (PDF). umbc.edu. Archived from the original (PDF) on 30 June 2011. Retrieved 3 July 2017.
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