tournament hurts host countries, says study

The only exception to the loss is the Russian Cup in 2018, which made a profit of US$ 250 million.

Will the US$ 300 billion that Qatar spent over 12 years to host the 2022 World Cup have any financial return for the country?

If the last 14 cups are the parameter, the answer is no, according to a study by researchers Martin Müller, David Gogishvili and Sven Daniel Wolfe, from the University of Lausanne, France.

Published in May of this year, the study created a base from public data and analyzed major events ? Cups and Olympics ? since 1964.

Economists’ analysis shows that of the 14 World Cups held since 1966, 12 resulted in losses for the host countries.

The Mexico Cup is not considered a loss as the available data are incomplete, but it was probably also a loss, according to economists.

By the researchers’ metrics, the World Cup held in Brazil in 2014 was also unprofitable, but had one of the lowest losses among the most recent countries to host the event, of US$ 240 million (R$ 940 million, in 2018 values). ).

The only exception to the loss is the Russian Cup in 2018, which made a profit of US$ 250 million.

And this with the study including only direct expenses, with locations and with logistics, such as the construction of stadiums, hiring of workers and security. Indirect expenses, with investment in infrastructure, such as expansion of the metro and creation of new hotels, were not considered.

“Indirect costs are typically those related to general infrastructure, such as transportation, accommodation and others, which may or may not have been caused by the mega-event and whose usefulness is not primarily limited to the event itself. Thus, an expansion of the airport in preparation for hosting the World Cup may have been occasioned by the World Cup, but it may serve the region long after the World Cup is over,” explain the researchers in the paper.

The conclusion of the analysis is that the World Cups and the Olympic Games suffer from a structural deficit, could not exist without external subsidies and do not have “financial sustainability”.

According to the survey, on average, the balance of such an event is negative (-3.8% return on investment).

data - BBC - BBC

Graph with the loss or profit of the host countries of the World Cups

Image: BBC

“Are the Olympics and football World Cups profitable for the International Olympic Committee (IOC) and the International Federation of Football Associations (FIFA), who own the rights to these events? Yes, and a lot”, say the researchers in study. “Are they profitable for the host city and the government? Hardly ever.”

The explanation is that FIFA keeps most of the main revenues of the event: from sponsorships and broadcasting rights to ticket sales.

However, the entity practically does not inject money, covering only some operating costs. Virtually all costs for the Cup are borne by the host country.

BBC News Brasil reached out to FIFA to comment on the matter, but had no response until the publication of this report.

The researchers, however, recognize that being the host of an event like the World Cup can have motivations that are not economic, such as attracting international attention and prestige, taking a political stand or developing an urban area.

“An economic evaluation such as this brings to light only one element necessary for a complete cost-benefit analysis,” the study says.

The high cost of sporting mega-events is something that has been extensively studied, with studies published in 2021 (by Bent Flyvbjerg, from the University of Oxford) and in 2016 (by economist Robert A. Baade).

Previous research had looked at the size of mega-event spending or revenues, but tended to focus on individual cases or not distinguish between direct and indirect spending.

There are also many studies on the negative impacts on host cities, such as the creation of large structures that are later abandoned, or on the economic impact of events in certain regions or countries.

They tend to measure economic indicators such as changes in GDP, number of jobs, tax revenues, etc. And they arrive at a conclusion similar to that of the research at the University of Lausanne: that the economic impacts, when they are positive, do not justify the expenses.

But the study by the Lausanne researchers was the first to analyze both the expenditures and revenues of both the World Cups and the Olympics considering all events over the past 60 years.

big losses

Among the analyzed World Cups, the biggest loss for the host countries was in 2002, in the Japan and South Korea Cups, when the government spent around US$ 7 billion (in values ​​updated for 2018) with the organization and construction of stadiums and returned just over $2 billion – ending up with a loss of $4.81 billion.

Another very deficit World Cup was the 2010 in South Africa, which had a loss of US$ 2.85 billion as the host of the event.

Only the oldest cups included in the study, from 1966 (England), 1970 (Mexico) and 1982 (Spain) had smaller losses, US$ 30 million for England and Mexico and US$ 220 million for Spain.

The costs of being a World Cup host have increased over the years, explain the researchers. The main reason is FIFA’s requirements for stadiums, which oblige countries to build new structures.

“In Qatar, seven out of eight stadiums were built from scratch; in 1966, England built none,” says the survey.

Economists’ calculations show that the cost of the 1966 World Cup was US$200,000 per player (in updated data for 2018). In 2018, in the Russian Cup, the cost rose to US$ 7 million per player.

Russia, by the way, is the only country analyzed that made a profit (US$ 235 million) hosting the event, mainly because it made a lucrative deal to sell the broadcasting rights.

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