The 2014 WORLD CUP: A FEW BILLION TOO many?

Article published on June 18, 2014
Article published on June 18, 2014

The football World Cup is one of the most well known and popular sporting events on the planet. However, away from the matches, there is a whole system of actors in addition to the players and referee. The 2014 World Cup brings with it a number of positive and negative economic impacts, from which multiple contradictory conclusions have been drawn.

The World Cup has cer­tainly brought its share of prob­lems to the Brazil­ian econ­omy, but a num­ber of pos­i­tives can also be found. This has been one of the most lu­cra­tive World Cups in his­tory: FIFA has pock­eted 4.2 bil­lion dol­lars (2.5 bil­lion in TV rights and 1.7 bil­lion in spon­sor­ing). The Word Cup has also brought more than 3.7 mil­lion tourists to Brazil, gen­er­at­ing some 9.2 bil­lion dol­lars (or about 2,500 euros per tourist) in tourist rev­enue. The World Cup has also helped to lower Brazil's un­em­ploy­ment rate by cre­at­ing 3.63 mil­lion jobs. Dur­ing the con­struc­tion process, Brazil was able to mod­ernise its in­fra­struc­ture and in­vest in the building of new sta­dia. How­ever, these mod­erni­sa­tion pro­jects caused a num­ber of major in­con­ve­niences.

The con­struc­tion of the sta­di­ums fell be­hind sched­ule. These de­lays meant that the pro­ject sur­passed its ini­tial bud­get by 12.6%. The ini­tial es­ti­mate was 3.1 bil­lion dol­lars, but the final amount spent was 3.68 bil­lion dol­lars - an enor­mous over­spend! For ex­am­ple, the cost of the most ex­pen­sive sta­dium rose to 444 mil­lion euros and the cheap­est to 103 mil­lion euros. A num­ber of pro­jects in par­tic­u­lar were aban­doned due to over­spend­ing; re­tractable roofs and other hare­brained ideas fell by the way­side. Due to the de­lays ac­cu­mu­lated in build­ing the sta­di­ums in Cuiabá and Ma­naus, the Brazil­ian gov­ern­ment ex­ceeded its pro­vi­sional bud­get.

Dur­ing the con­struc­tion of these sta­di­ums, a num­ber of cities al­most pulled out of the pro­ject. The city of Porto Al­lègre, for ex­am­ple, threat­ened to with­draw un­less taxes were low­ered; the city was fac­ing se­vere fi­nan­cial dif­fi­cul­ties.

FIFA and the Brazil­ian gov­ern­ment have had to re­solve these se­ri­ous prob­lems. Meet­ings took place to de­cide on a "Plan B" to mit­i­gate the de­lays in the con­struc­tion of the sta­di­ums, but noth­ing came of them: al­most all the sta­di­ums built for this World Cup have been over bud­get.

It is thus pos­si­ble to claim that the or­gan­is­ers of this World Cup have not lived up to ex­pec­ta­tions: be­tween the sta­di­ums com­ing in over bud­get and the de­lays the losses are huge. This all points to a dif­fer­ent ques­tion: Could Brazil have spent all this money on some­thing more in­ter­est­ing?